Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information to assist readers in understanding our results of operations and financial condition. This MD&A should be read in conjunction with the Notes and other financial information included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Unless otherwise indicated, amounts are stated in thousands of U.S. dollars except for: share, per share, per MWh and miner amounts; bitcoin quantities, prices, and hash rate; cost to mine one bitcoin; and production value of one bitcoin mined.
Our MD&A is primarily organized as follows:
● Business Overview and Trends . Highlights of events that impacted our financial position and results of operations.
● Results of Operations . Analysis of our financial results comparing the three months ended March 31, 2026 and 2025.
● Liquidity and Capital Resources . Analysis of changes in our balance sheets and cash flows and discussion of our financial condition, including potential sources of liquidity, material cash requirements, and their general purpose.
● Critical Accounting Policies and Estimates . Accounting policies and estimates that we believe are important to understanding the assumptions and judgments underlying our reported financial results.
Forward-Looking Statements
This MD&A includes forward-looking statements based on current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of factors that may cause actual results to differ materially – and potentially adversely – from the results described in or implied by the forward-looking statements contained in this MD&A and elsewhere in this Quarterly Report.
Business Overview and Trends
General
We are a vertically integrated digital infrastructure company principally engaged in developing and optimizing our large-scale power assets. Our business strategy centers on enhancing our electrical infrastructure and deploying it across two complementary platforms: (i) bitcoin mining and (ii) scalable data center solutions designed to support non-mining workloads. By leveraging our energy portfolio, engineering capabilities, and operational footprint, we aim to capitalize on both the long-term potential of bitcoin and the accelerating demand for power-intensive compute.
We operate in three reportable business segments: Bitcoin Mining, Data Center, and Engineering.
We own and manage multiple large-scale data center facilities in Texas and Kentucky that provide mission-critical power and infrastructure for our Bitcoin Mining at our Facilities, and non-mining Data Center operations at our Rockdale Facility. Our Rockdale Facility in Texas currently provides up to approximately 700 MW of developed capacity for Bitcoin Mining and Data Center leasing and is among the largest digital infrastructure campuses in North America, as measured by developed capacity. We have completed construction of approximately 400 MW of developed capacity at our second large-scale Texas development, the Corsicana Facility. We expect the Corsicana Facility to reach approximately 1 GW of developed capacity available for Bitcoin Mining and other high-density compute workloads upon full build-out.
Our industry remains highly competitive and continues to evolve alongside broader growth in digital assets and high-performance compute. With our scale, integrated power strategy, and engineering foundation, we believe we are well positioned to participate in the rapidly converging markets for Bitcoin Mining, AI, HPC, and modern data center infrastructure.
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Data Center Development
In 2025, we began leveraging our core competencies in power optimization, strategic land acquisition, engineering design, and construction execution to pursue opportunities to develop and monetize portions of our existing facilities and power pipeline through data center leasing services. We strengthened our execution capacity by recruiting critical talent and establishing a scalable data center platform to support data center development at the Corsicana Facility. We have completed our basis of design for our standard data center build and have initiated development of our first core & shell at the Corsicana Facility.
In January 2026, we announced the execution of the AMD Lease to provide 25 MW of critical IT load capacity at our Rockdale Facility. The AMD Lease has an initial term of ten years and provides for expansion options for up to an additional 75 MW of critical IT load capacity, as well as a right of first refusal for up to an additional 100 MW. The AMD Lease also provides three successive five-year term renewal options at the lessee’s discretion.
In April 2026, we entered into the AMD Lease Amendment to exercise a portion of the existing expansion option set forth in the AMD Lease, to provide an additional deployment of 25 MW of critical IT load capacity. Under the AMD Lease Amendment, AMD holds a remaining balance of 50 MW of reserved critical IT load capacity under the existing expansion option. The AMD Lease Amendment also grants AMD a conditional, first-priority right to lease up to an additional 100 MW of critical IT load capacity, exercisable in increments of not less than 50 MW. If both the remaining 50 MW of reserved capacity under the existing expansion option and the additional 100 MW option are fully exercised, AMD’s total leased capacity at the Rockdale Facility would increase to 200 MW. This conditional, first-priority right replaces the right of first refusal for an additional 100 MW previously granted to AMD in the AMD Lease.
Business Segments
Bitcoin Mining
During the three months ended March 31, 2026, we continued to deploy miners across all our Facilities, with the objective of improving our operational efficiency and performance. As of March 31, 2026, we had a total deployed hash rate capacity of 42.5 EH/s, as compared to 38.5 EH/s as of December 31, 2025, an increase of 10.4%.
During the three months ended March 31, 2026, we mined 1,473 bitcoin, reflecting a decrease of 57 bitcoin compared to the 1,530 bitcoin mined during the three months ended March 31, 2025. The decrease was primarily due to increases in the global network hash rate, partially offset by our increase in deployed hash rate and significantly improved operational efficiency. For the three months ended March 31, 2026 and 2025, Bitcoin Mining revenue was $111.9 million and $142.9 million, respectively. The decrease of $31.0 million was primarily due to lower bitcoin prices during the 2026 period, which averaged $68,223 per bitcoin, as compared to $82,535 per bitcoin for the 2025 period, and a slight decrease in bitcoin production of 3.7% due to the substantial increase in the global network hash rate. These decreases were partially offset by a 22.6% increase in our average operating hash rate, which increased from 29.7 EH/s during the three months ended March 31, 2025 to 36.4 EH/s during the three months ended March 31, 2026.
Custodians
As bitcoin is a decentralized digital asset, we are not required to use a third-party custodian and may elect to self-custody our holdings. However, we believe that our private keys associated with our bitcoin are better safeguarded within the secure environment provided by custodians. Self-custody poses an increased risk to our private keys, and we may not have the same level of protection as that offered by custody providers who are well-versed in industry best practices for safeguarding digital assets from potential theft, loss, or destruction.
Our bitcoin custodian and brokerage services relationships are non-exclusive, and we may change our custodian and brokerage relationships at any time. We continually monitor our bitcoin assets held by our custodians. Our insurance providers do not have inspection rights associated with our bitcoin assets held in cold storage. For additional information regarding our relationships with our custodians, NYDIG Trust Company LLC and Coinbase, Inc., on behalf of itself and Coinbase Custody Trust Company, LLC, and, if applicable, Coinbase or Coinbase Custody International Ltd., and a description of our underlying agreements with them, see Part I, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report.
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Bitcoin Mining Metrics
The following table presents our key Bitcoin Mining metrics:
Three Months Ended
March 31,
2026
2025
Hash rate, average operating (EH/s) (1)
Rockdale Facility
14.1
12.9
Corsicana Facility
15.4
14.2
Kentucky Facility
7.0
2.6
Combined hash rate, average operating
36.4
29.7
All-in power cost (cents/kilowatt-hour) (2)
Rockdale Facility
3.1
3.7
Corsicana Facility
2.7
3.4
Kentucky Facility
3.8
4.1
Combined all-in power cost
3.0
3.8
March 31,
2026
2025
Hash rate, deployed (EH/s) (1)
Rockdale Facility
17.3
15.0
Corsicana Facility
16.2
15.7
Kentucky Facility
9.0
3.0
Combined hash rate, deployed
42.5
33.7
Developed power capacity (MW) (3)
Rockdale Facility
700
700
Corsicana Facility
400
400
Kentucky Facility
162
65
Total power capacity
1,262
1,165
(1) Hash rate, deployed, represents the total potential hash rate of all our deployed miners as of the end of the period, whereas hash rate, average operating, represents the average total hash rate our deployed miners provided throughout the period. The difference between deployed hash rate and operating hash rate is attributable to down time of all or some of our miners for power curtailments, or repairs and maintenance of bitcoin miners or supporting infrastructure. The difference between deployed and operating hash rate is a key measure in determining the efficiency of our Bitcoin Mining operations.
(2) All-in power cost is the price we paid throughout the period for our power, net of power curtailments received. Power is overwhelmingly the largest marginal input cost in mining bitcoin and a significant contributor to profitability. Miners with a low cost of power are also able to profitably mine in a wider range of bitcoin prices.
(3) Developed power is the total amount of electricity our Facilities can utilize as of the end of the period.
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The following table presents our cost to mine one bitcoin ( amounts in thousands, except Quantity of bitcoin mined and Production value of one bitcoin mined amounts ):
Three Months Ended
March 31,
2026
2025
Cost of power for self-mining operations
$
72,317
$
61,830
Other direct cost of revenue for self-mining operations (1)(2) , excluding bitcoin miner depreciation
14,445
12,988
Cost of revenue for self-mining operations, excluding bitcoin miner depreciation
86,762
74,818
Less: power curtailment credits (3)
(21,023)
(7,801)
Cost of revenue for self-mining operations, net of power curtailment credits, excluding bitcoin miner depreciation
65,739
67,017
Bitcoin miner depreciation (4)(5)
76,086
57,062
Cost of revenue for self-mining operations, net of power curtailment credits, including bitcoin miner depreciation
$
141,825
$
124,079
Quantity of bitcoin mined
1,473
1,530
Production value of one bitcoin mined (6)
$
75,964
$
93,385
Cost to mine one bitcoin, excluding bitcoin miner depreciation
$
44,629
$
43,808
Cost to mine one bitcoin, excluding bitcoin miner depreciation, as a % of production value of one bitcoin mined
58.8
%
46.9
%
Cost to mine one bitcoin, including bitcoin miner depreciation
$
96,283
$
81,109
Cost to mine one bitcoin, including bitcoin miner depreciation, as a % of production value of one bitcoin mined
126.7
%
86.9
%
(1) Other direct cost of revenue includes compensation, insurance, repairs, and ground lease rent and related property tax.
(2) During the three months ended March 31, 2026 and 2025, we paid cash of $23.5 million and $21.0 million, respectively, in total deposits and payments for the purchase of miners. Costs to finance the purchase of miners were zero in all periods presented as the miners were paid for with cash from the Company’s cash balance. The seller did not provide any financing nor did the Company borrow from a third-party to purchase the miners.
(3) Power curtailment credits are credited against our power invoices as a result of temporarily pausing our operations to participate in ERCOT’s Demand Response Service Programs. Our fixed-price power purchase contracts enable us to strategically curtail our mining operations and participate in these programs, which significantly lower our cost to mine bitcoin. These credits are recognized in Power curtailment credits on our Condensed Consolidated Statements of Operations, outside of cost of revenue, but significantly reduce our overall cost to mine bitcoin.
(4) We capitalize the acquisition cost of our miners and include these costs in Property and equipment, net on our Condensed Consolidated Balance Sheets. The miners are depreciated over an estimated useful life of three years, during which time, they are expected to contribute to the generation of bitcoin revenue. We do not consider depreciation expense in determining whether it is economical to operate our miners because depreciation is a non-cash expense and is not a variable operating cost that can be avoided even if we curtail operations temporarily. Depreciation expense incurred is disclosed for each respective period in the table above.
(5) The following table presents the future depreciation expense of all of our bitcoin miners:
Remainder of 2026
$
197,735
2027
216,084
2028
94,489
2029
13,865
Total
$
522,173
(6) Computed as revenue recognized from bitcoin mined divided by the quantity of bitcoin mined during the same period.
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During 2023, 2024, and 2025, we entered into purchase orders under the Master Agreement to acquire new miners from MicroBT. These purchase orders represented a total hash rate of 49.2 EH/s, with a total purchase price of approximately $779.5 million, subject to downward price adjustments as provided by the Master Agreement. These miners are primarily intended for deployment at the Corsicana Facility, which commenced operations in April 2024. Delivery of these miners began in 2023, and all miners under these purchase orders are expected to be received by the second quarter of 2026, with deployment following on an ongoing basis. The Master Agreement provided us with four additional annual options to purchase miners, on the same or more favorable terms as the second purchase order executed under the Master Agreement.
For the three months ended March 31, 2026, Bitcoin Mining revenue was approximately $111.9 million.
Summary of Riot’s Bitcoin Mining Results
The following tables present additional information about our Bitcoin Mining activities, including bitcoin production and sales of bitcoin mined:
Quantity
Amounts
Balance as of January 1, 2026
18,005
$
1,575,441
Revenue recognized from bitcoin mined
1,473
111,895
Change in bitcoin receivable
(3)
130
Proceeds from sale of bitcoin
(3,778)
(289,484)
Exchange of bitcoin for employee compensation
(18)
(1,618)
Change in fair value of bitcoin
—
(326,669)
Balance as of March 31, 2026
15,679
$
1,069,695
The following reconciles Bitcoin and Restricted bitcoin as of March 31, 2026 to the amounts above:
Bitcoin
9,877
$
673,885
Restricted bitcoin (a)
5,802
395,810
Total
15,679
$
1,069,695
Quantity
Amounts
Balance as of January 1, 2025
17,722
$
1,654,468
Revenue recognized from bitcoin mined
1,530
142,859
Change in bitcoin receivable
1
208
Proceeds from sale of bitcoin
—
—
Exchange of bitcoin for employee compensation
(30)
(2,950)
Change in fair value of bitcoin
—
(208,040)
Balance as of March 31, 2025
19,223
$
1,586,545
(a) Restricted bitcoin is the Company’s bitcoin pledged as collateral for the $200 Million Credit Facility. See Note 11. Debt for more information.
Data Center
Our Data Center business designs, develops and operates large-scale data center projects designed to support the growing demand for high-density compute. This includes the lease of data center space and power capacity, which is generally paid monthly. Power costs are passed through to customers at cost. Additionally, we provide tenant fit-out services to our customers for the build-out of customer-specific equipment at cost plus a margin.
For the three months ended March 31, 2026, Data Center revenue was approximately $33.2 million, reflecting initial leasing activity and associated tenant fit-out, through the AMD Lease.
Engineering
Our Engineering business designs and manufactures power-distribution equipment and engineered-to-order electrical products. These products support our vertical integration strategy by enabling the internal development of critical electrical equipment and
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engineering services necessary for developments at our Facilities. This integration helps mitigate execution and counterparty risk in ongoing and future expansion projects. The specialized talent employed in our Engineering business allows us to explore new methods to optimize and develop best-in-class Bitcoin Mining operations and has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin Mining hardware. The vertical integration of our Engineering division gives us additional strength and security in developing and deploying our Data Center build-outs. Our Data Center business is able to leverage Engineering’s market specific expertise for best-in-class design as well as speed to market.
Our Engineering business also provides electrical distribution product design, manufacturing, and installation services primarily focused on large-scale industrial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power generation, utility, water, industrial, and alternative energy.
Engineering revenue is primarily derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation. Engineering revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract.
In December 2024, we completed the E4A Solutions Acquisition. This acquisition strengthens our vertically integrated strategy by adding engineering expertise to service our existing and future electrical infrastructure as well as providing solutions and services to the rapidly growing market for electrical infrastructure.
For the three months ended March 31, 2026, Engineering revenue was approximately $22.2 million.
Strategic Goals and Initiatives
Bitcoin Treasury Strategy
Our investment strategy with respect to our bitcoin (“Bitcoin Treasury Strategy”) is designed to balance long-term value appreciation with operational flexibility and liquidity management. We selectively sell or leverage portions of our bitcoin holdings, and may continue to do so in the future, to fund operational needs, capital expenditures, and strategic initiatives, particularly when market conditions present opportunistic pricing above predetermined thresholds that we believe maximize shareholder value.
This approach enables us to realize value from our bitcoin holdings at favorable market conditions to support our liquidity profile and fund business growth. We believe this strategy enhances our operational stability, supports our liquidity profile, and provides the financial flexibility necessary to execute on our business plan and meet our capital allocation objectives.
Power Strategy
Long-term power contracts form the foundation of our power strategy. We utilize the Rockdale PPA, Corsicana PPA, and Kentucky PPA (together, the “PPAs”) at our Facilities in the following ways:
Manual Curtailment
We power down operations and return power to the utility when prevailing market electricity prices offer the potential for us to realize power curtailment credits in excess of the Bitcoin Mining revenues we would have otherwise generated. We receive power credits for the difference in the market power price and our fixed power price. By capturing the spread between market power prices and our fixed-rate power contracts, we are able to maximize our overall profitability while supporting grid stability by reducing demand for power during periods of peak scarcity.
Ancillary Services
We competitively bid to sell ERCOT and MISO the option to control our electrical load during certain hours. ERCOT and MISO compensate us in the form of Demand Response Service Programs’ Credits, which are received whether or not we are called on to power down.
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ERCOT’s 4CP Program
At the Rockdale Facility and the Corsicana Facility, we participate in ERCOT’s 4CP Program by voluntarily powering down operations during times of peak demand in summer months. Participation in this program provides substantial savings on transmission costs in the subsequent year’s power bills and contributes to reduced overall power costs.
The following table presents our power curtailment credits:
Three Months Ended
March 31,
2026
2025
Manual curtailment power credits
$
20,932
$
7,030
Demand response power credits
91
771
Total power curtailment credits
$
21,023
$
7,801
The following graph presents the primary decision factors that guide our decision to curtail power usage or power down our mining operations, and when we might resume mining operations:
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Challenges, Risks, and Industry Trends
Increased Competition and Global Network Hash Rate
The price of bitcoin reached new all-time highs in 2025, supported by continued institutional investment in the Bitcoin spot exchange-traded funds (“ETFs”) , global adoption, and increased interest from both retail and sovereign investors, but fell in the first quarter of 2026 to prices last seen in 2024. Bitcoin spot ETFs remained a primary driver of institutional demand, with total assets under management exceeding $85 billion as of March 31, 2026. These ETFs, as investment vehicles, provide investors with a broader way to gain exposure to bitcoin through more traditional financial markets. In March 2025, the United States established the United States Bitcoin Strategic Reserve, which currently holds the largest bitcoin reserve in the world, solidifying bitcoin as a mainstream financial asset and alternative source of value to fiat currency.
During 2023 and 2024, the bitcoin mining industry experienced record growth as the price of bitcoin increased from the lows experienced in early 2023. In 2025 and the first quarter of 2026, the industry continued to grow, though at a slower pace due to increased network difficulty during 2025 and more aggressive competition for efficient energy sources globally. The rising bitcoin price renewed opportunities to access capital markets to fund growth, leading to unprecedented expansion in mining operations, which resulted in a doubling of the size of provisioned hash calculation services on the network, as measured by total hash rate. Competition among mining companies continued to intensify in 2025, with top operators focusing on mergers, acquisitions, and direct power procurement contracts to secure stable energy pricing in the face of volatile market conditions.
We have observed that when the market price for bitcoin experiences sustained increases, new miners are introduced onto the bitcoin network, contributing to an increase in the global network hash rate. Our hash rate grew by approximately 10.4% from December 31, 2025 to March 31, 2026, though the number of bitcoin we mined during the same period decreased slightly as a result of the increase in the global network hash rate as compared to the same period in 2025.
Accordingly, as the global network hash rate continues to rise, miners must scale their operations to maintain or improve their share of mining rewards. In response, we have made investments in electricity supply and distribution infrastructure and are focused on other strategic growth opportunities that enhance our long-term competitiveness. Further, we have adopted new and improved technology to increase both our mining power and efficiency, including our industrial-scale adoption of immersion cooling and our strategic acquisitions of large quantities of the latest powerful and efficient miners available.
Bitcoin Mining Industry Consolidation and Emergence of Data Center Alternative
The bitcoin mining industry is undergoing significant structural transformation. A combination of factors, including the 2024 halving event, record high network hash rates in 2025, rising mining difficulties, and constrained access to large-scale power resources, has led to increased consolidation across the industry. These dynamics have made efficient, large-scale mining operations increasingly capital-intensive and have prompted miners to seek new avenues for maximizing the value of their existing infrastructure. A notable emerging trend is the convergence of bitcoin mining operations with large-scale data center services, including those supporting AI/HPC workloads. As demand for data center infrastructure accelerates, driven by advances in machine learning, generative AI, and compute-intensive enterprise applications, access to reliable, low-cost power has become a critical constraint on the development of new data centers. Bitcoin mining companies that own and operate their facilities are increasingly repurposing or reallocating portions of their power and physical infrastructure to support data center applications. This shift is enabled by the similarities between the underlying facility requirements for Bitcoin Mining and Data Center workloads, including large electrical loads, advanced cooling systems, and high-density rack deployments.
As a result, the industry is experiencing an evolution in which mining operators with robust power portfolios are leveraging their existing assets to participate in the rapidly growing market for data center services. This trend reflects both the challenges facing the Bitcoin mining sector and the significant economic opportunities presented by the global expansion of compute-intensive digital infrastructure.
Volatile Transaction Fees
The bitcoin mining industry recently experienced an increase in transaction fees on the bitcoin network, alongside growing overall demand for bitcoin. While transaction fees remain inherently volatile, they are paid directly to miners and are representative of the
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public interest in transacting on the bitcoin network. These transaction fees, combined with the block subsidy issued by the bitcoin network, make up the total reward paid to miners upon solving a block.
Vertical Integration
Since 2021, we have focused on a vertically integrated business model. We remain committed to building long-term stockholder value by taking strategic actions to further vertically integrate our business at the current Rockdale Facility, developing the Corsicana Facility, expanding the Kentucky Facility, and integrating our acquisitions, including the Kentucky Facility and E4A Solutions. Management believes that vertical integration will strengthen each of our business segments by providing increased capacity for our Bitcoin Mining operations, expanding opportunities for implementing our proprietary power strategy, and positioning us to capitalize on supply chain efficiencies and electrical engineering services through our Engineering segment. We continue to focus on deploying our efficient Bitcoin Mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining facilities.
Prior to the 2024 halving event, shifts in strategy by prominent bitcoin miners focused on implementing vertically-integrated business models by investing in infrastructure, and upgrading and expanding fleets at their own facilities rather than renting out space from a third-party data center. Vertical integration provides additional control over operational outcomes as well as better management of any input costs such as power and overhead fees. Flexibility, and the ability to manage expenses, becomes increasingly important as the amount of competition on the bitcoin network expands and the subsidy in bitcoin provided by the network contracts decreases.
We anticipate the bitcoin network will continue to see increased competition and consolidation in the bitcoin mining industry. Further, given our relative position and liquidity, we believe we are well positioned to benefit from such consolidation. We are continuously evaluating opportunities which we may decide to undertake as part of our strategic growth initiatives; however, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on the schedule or within the budget we anticipate, if at all, and our business and financial results may change significantly as a result of such strategic growth.
Grid Curtailment
The Public Utility Commission of Texas, ERCOT, and Oncor Electric Delivery Company (“Oncor”) collectively oversee the regulatory, administrative, and delivery aspects of our power supply in Texas. In Kentucky, MISO oversees our power supply. As the bitcoin mining industry has expanded in recent years, regulatory scrutiny on bitcoin mining facilities and their energy consumption has intensified accordingly.
As Texas’s grid operator, ERCOT is responsible for monitoring and testing market participants, including our Bitcoin Mining facilities at the Rockdale Facility and the Corsicana Facility, to evaluate their impact on grid reliability. As part of this process, ERCOT may issue curtailment notices to reduce the power usage at our Texas operations. Our Facilities in Texas are subject to periodic testing and monitoring and have experienced power curtailments in response to instructions we receive from Oncor and ERCOT. Given the inherent uncertainty regarding the duration or extent of power curtailments and testing procedures, we are currently unable to reasonably estimate their potential impact on our operations. If we cannot secure adequate access to electrical power, we may be forced to reduce or shut down our operations, which would have a material adverse effect on our business, prospects, financial condition, and operating results.
Data Center Scrutiny and Regulation
Driven by the proliferation of energy-intensive applications such as bitcoin mining and HPC, demand for energy capacity continues to outpace supply. Data centers are increasingly scrutinized by federal, state, and local authorities due to concerns regarding energy consumption, land use, carbon emissions, water usage, environmental impacts, data-sovereignty considerations, and national-security-related issues. Regulators may impose new permitting requirements, energy-efficiency standards, carbon-reduction mandates, sustainability reporting rules, or operational restrictions specific to data centers, AI infrastructure, or high-density compute environments. Such regulations, particularly at the federal level or in the States of Texas and Kentucky, where our Facilities operate, could increase our capital expenditures, delay development timelines, limit expansion opportunities, or require costly modifications to existing infrastructure.
Tax abatement programs that have historically supported development, and specifically, data center development, are subject to increasing scrutiny as residents and policymakers reassess the associated economic benefits to their communities relative to perceived impacts on energy demand, utility costs, and natural resource consumption. In response, certain jurisdictions are becoming
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more selective in offering incentives or eliminating them altogether. Certain jurisdictions have implemented, or are considering implementing, temporary moratoriums or other restrictions on new data center development due to these concerns.
See Part I, Item 1A. “Risk Factors” of the 2025 Annual Report for additional discussion regarding potential impacts that our competitive and evolving industry may have on our business.
Recent Events Affecting the Company
Global supply chain disruptions and inflationary pressures have, at times, resulted in delays to our miner delivery schedules, infrastructure development timelines, and the manufacturing and delivery schedules within our Engineering segment. These delays are primarily driven by constraints in the globalized supply chains for miners, specialized electrical distribution equipment, and construction materials. While we have effectively mitigated these delays, there can be no assurance that we will be successful in mitigating such disruptions in the future.
The development and expansion of our Facilities require significant quantities of critical components that are currently in high demand and may be difficult to source. To mitigate the risks associated with supply chain volatility, increasing demand, and uncertainty arising from U.S. tariffs and retaliatory international tariffs, we have proactively procured and currently maintain a supply of essential electrical infrastructure components and construction materials. These strategic reserves are intended to support the expansion and data center development of the Corsicana and Rockdale Facilities, the expansion of our Kentucky Facilities, and the maintenance of our existing systems, and to reduce our exposure to potential inflationary pricing and equipment delivery delays.
We sell our bitcoin to fund operations. Subsequent to the fiscal year ending December 31, 2025, we have experienced an impact from the recent volatility and downward trend in the market price of Bitcoin reducing the purchasing power of our bitcoin holdings. This decline may necessitate the sale of a greater volume of our bitcoin than previously anticipated to generate the liquidity required to fund our ongoing operations and working capital needs. By diversifying our infrastructure to support broader data services, we aim to mitigate our direct exposure to cryptocurrency price fluctuations and establish a more stable, diversified revenue stream centered on digital infrastructure.
Results of Operations
Comparative Results for the Three Months Ended March 31, 2026, and 2025:
Revenue
Total revenue for the three months ended March 31, 2026 and 2025 was $167.2 million and $161.4 million, respectively. Total revenue consists of our Bitcoin Mining revenue, Data Center revenue, Engineering revenue and Other revenue. Other revenue consists almost entirely of residual activity related to our former Data Center Hosting bitcoin mining operations. See below for explanations of changes in revenue by operating segment.
For the three months ended March 31, 2026 and 2025, Bitcoin Mining revenue was $111.9 million and $142.9 million, respectively. The decrease of $31.0 million was primarily due to lower bitcoin prices in the 2026 period, which averaged $68,223 per bitcoin, as compared to $82,535 per bitcoin for the 2025 period, and a slight decrease in bitcoin production of 3.7% due to the substantial increase in the global network hash rate. These decreases were partially offset by a 22.6% increase in our average operating hash rate, which increased from 29.7 EH/s in the three months ended March 31, 2025 to 36.4 EH/s in the three months ended March 31, 2026.
For the three months ended March 31, 2026, Data Center revenue was approximately $33.2 million, primarily attributable to initial leasing activity and associated tenant fit-out through the AMD Lease. We recognized our new Data Center operations as a reportable segment in the three months ended March 31, 2026 . Accordingly, there were no Data Center revenues for the three months ended March 31, 2025.
For the three months ended March 31, 2026 and 2025, Engineering revenue was $22.2 million and $13.9 million, respectively. The increase was primarily attributable to the record third-party data center demand for custom electrical equipment. Our custom electrical products are used as important components in data center development and in power generation and distribution facilities. There continues to be significant third-party demand for these products due to the increased interest in data center construction, as well as growing worldwide demand for power.
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Costs and expenses
The following table presents Cost of revenue for Bitcoin Mining:
Three Months Ended
March 31,
2026
2025
Power
$
72,317
$
61,830
Compensation
5,045
4,445
Insurance on miners
1,462
1,462
Ground and facility rent, water, and property tax
5,656
344
Other (a)
2,282
6,737
Total Bitcoin Mining cost of revenue
$
86,762
$
74,818
(a) All amounts included in Other are individually insignificant.
The increase of approximately $11.9 million was primarily due to increased Bitcoin Mining capacity and power consumption due to the 125 MW of power capacity at the Rockdale Facility that was assumed in the settlement of litigation between the Company and Rhodium Encore LLC in April 2025 and the continued expansion at the Kentucky Facility. The expanded facilities require additional headcount and direct costs necessary to maintain and support our expanded Bitcoin Mining operations. Cost of revenue for Bitcoin Mining excludes depreciation and amortization, which are stated separately on our Condensed Consolidated Statements of Operations. In 2025, we acquired the Rockdale Facility land that was previously subject to a ground lease. As a result, ground rent was zero in 2026.
Cost of revenue for Engineering for the three months ended March 31, 2026 and 2025 was $18.1 million and $11.8 million, respectively, an increase of approximately $6.3 million. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs. Consistent with the causes of increased Engineering revenue noted above, the increase was primarily due to increased receipts of materials resulting in our ability to complete projects.
Selling, general, and administrative expenses for the three months ended March 31, 2026 and 2025 were $76.2 million and $71.4 million, respectively, an increase of approximately $4.8 million. Selling, general, and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs. The increase was primarily due to an $11.8 million increase in compensation expense, including stock-based compensation, as a result of hiring additional employees to support our ongoing growth and data center development. This increase was partially offset by a $5.0 million decrease in legal fees due to recently ending or settling much of our outstanding litigation. Additional decreases were from lower consulting and insurance costs.
Depreciation and amortization for the three months ended March 31, 2026 and 2025 was $97.7 million and $77.9 million, respectively, an increase of approximately $19.8 million. The increase was primarily due to increases in miners deployed.
The change in fair value of bitcoin for the three months ended March 31, 2026 and 2025 were losses of $326.7 million and $208.0 million, respectively, and was recognized to adjust the fair value of our bitcoin held at the end of each period.
The change in fair value of our derivatives for the three months ended March 31, 2026 and 2025 was a loss of $51.9 million and a gain of $41.9 million, respectively, and was recorded to adjust the fair value of our PPAs, which were classified as derivatives and measured at fair value. The loss incurred during the three months ended March 31, 2026 was primarily attributable to the average of the forward prices utilized in the discounted cash flow estimation models decreasing from $55.7 per MWh as of December 31, 2025 to $49.1 per MWh as of March 31, 2026. The gain recognized during the three months ended March 31, 2025 was primarily attributable to the average of the forward prices increasing from $51.98 per MWh as of December 31, 2024 to $55.41 per MWh as of March 31, 2025.
Power curtailment credits for the three months ended March 31, 2026 and 2025 were $21.0 million and $7.8 million, respectively, and represent sales of unused power under our PPAs and participation in ancillary services under ERCOT and MISO Demand Response Service Programs. The amount of these credits varies from period to period depending on various factors impacting the supply of power to, and the demand for power on, the power grids, such as weather and global fuel costs .
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The change in fair value of contingent consideration during the three months ended March 31, 2026 and 2025 were zero and a gain of $8.3 million, respectively, and were a result of the change in estimates for the potential earnout contingent consideration to the former sellers in the Block Mining Acquisition and the E4A Solutions Acquisition.
Other income (expense)
Interest income for the three months ended March 31, 2026 and 2025 was $2.3 million and $3.4 million, respectively, and was earned from interest on cash balances held during the period. The decrease was due to lower cash balances on hand and lower interest rates.
Interest expense for the three months ended March 31, 2026 and 2025 was $2.6 million and $2.3 million, respectively, and was primarily related to interest paid on our revolving lines of credit and letters of credit.
The loss on equity method investment – marketable securities for the three months ended March 31, 2025, of $63.2 million was recognized to adjust the fair value of our equity method investment held at the end of each period. The equity method investment was sold in its entirety during the year ended December 31, 2025.
Non-GAAP Measures
In addition to financial measures presented under generally accepted accounting principles in the United States (“GAAP”), we consistently evaluate our use of and calculation of non-GAAP financial measures such as “Adjusted EBITDA.” EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of our core business operations. The adjustments include fair value adjustments such as derivative power contract adjustments, equity securities fair value changes, and non-cash stock-based compensation expense, in addition to financing and legacy business income and expense items.
We believe Adjusted EBITDA can be an important financial performance measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. Additionally, Adjusted EBITDA is used as a performance metric for share-based compensation.
Adjusted EBITDA is provided in addition to, and should not be considered to be a substitute for, or superior to, net income, the most comparable measure under GAAP to Adjusted EBITDA. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted net income per share or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this financial measure either in isolation or as a substitute for analyzing our results as reported under GAAP.
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The following table reconciles Adjusted EBITDA to Net income (loss) , the most comparable GAAP performance measure:
Three Months Ended
March 31,
2026
2025
Net income (loss)
$
(500,477)
$
(296,367)
Interest income
(2,313)
(3,397)
Interest expense
2,618
2,308
Income tax expense (benefit)
291
437
Depreciation and amortization
97,734
77,926
EBITDA
(402,147)
(219,093)
Adjustments:
Stock-based compensation expense
39,166
29,576
Acquisition-related costs
—
76
Change in fair value of derivatives
51,852
(41,894)
Change in fair value of contingent consideration
—
(8,252)
Loss (gain) on equity method investment - marketable securities
—
63,238
Loss (gain) on sale of equipment
—
129
Other (income) expense
12
(93)
Amortization of license fee revenue
—
(24)
Adjusted EBITDA
$
(311,117)
$
(176,337)
Liquidity and Capital Resources
We generate non-cash revenue through mining bitcoin at our Facilities, which we manage based on our Bitcoin Treasury Strategy, while financing operations and other expenses through sales of our bitcoin production, borrowing against our credit facilities, and issuance of common stock under the ATM offering program. During the three months ended March 31, 2026, no shares were sold under the ATM Program. During the three months ended March 31, 2025, we issued and sold approximately 5.4 million shares of our common stock under our ATM offering program for aggregate net proceeds (net of commissions and expenses) of $68.4 million.
As of March 31, 2026, we had net working capital of approximately $33.3 million, which included cash and cash equivalents of $205.7 million. We reported a net loss of $500.5 million during the three months ended March 31, 2026, which included $407.1 million in non-cash net losses primarily consisting of the loss from the change in fair value of bitcoin of $326.7 million, depreciation and amortization of $97.7 million, change in the fair values of derivatives of $51.9 million, and stock-based compensation of $39.2 million, partially offset by revenue recognized from bitcoin mined of $111.9 million.
During the three months ended March 31, 2026, we sold 3,778 bitcoin for proceeds of approximately $289.5 million. We monitor our balance sheet on an ongoing basis and evaluate the level of bitcoin retained in consideration of our cash requirements for ongoing operations and expansion.
Contractual Commitments and Obligations
As of March 31, 2026, we had a remaining commitment of approximately $4.8 million due to MicroBT for the contractual purchase of miners, which we expect to pay through the second quarter of 2026.
Revenue from Operations
Bitcoin Mining
We expect to generate ongoing revenue from bitcoin rewards in connection with our Bitcoin Mining operations and we will continue to evaluate our ability to liquidate bitcoin rewards at future values to generate cash for operations.
Generating bitcoin rewards which exceed our production and overhead costs is critical to our ability to report profit margins from our Bitcoin Mining operations, although accounting for our reported profitability is increasingly complex. Furthermore, regardless of our ability to generate proceeds from the sale of our bitcoin produced from our Bitcoin Mining business, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy.
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The ability to raise funds through the sale of equity, debt financings, or the sale of bitcoin to maintain our operations is subject to many risks and uncertainties and any future equity issuances or convertible debt offerings could result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through bitcoin production and successfully convert bitcoin into cash or fund overhead with bitcoin is subject to a number of risks, including regulatory, financial, and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the market price of bitcoin and, as such, future prices cannot be predicted.
Data Center
Data Center revenue is derived from lease income from the leasing of data center space and provisioning of power under long-term lease agreements, and the construction of assets to support tenants.
Lease rent and power reimbursement income is recognized on a monthly basis as costs are incurred and services are provided and revenue generated from providing tenant fit-out services is recognized using the percentage of completion model whereby total costs incurred are divided by total costs expected to be incurred, which reflects progress towards completion of the performance obligation.
Customers are typically required to make monthly rent and power reimbursement payments as well as periodic tenant fit-out progress payments based on contractually agreed-upon milestones.
Engineering
Substantially all Engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract. The length of time required to complete a custom product varies but is typically between four and 12 weeks.
Customers are typically required to make periodic progress payments based on contractually agreed-upon milestones.
If we are unable to generate sufficient revenue from our Bitcoin Mining, Data Center, or Engineering operations when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.
ATM Equity Offerings
During 2025 and 2024, we offered and sold shares of our common stock through ATM offering programs pursuant to sales agreements with sales agents (each, an “ATM Program”). For additional information regarding our ATM Program, see Note 13. Stockholders’ Equity .
The following table sets forth shares sold and net proceeds received (net of sales commissions and expenses) from shares sold under our August 2024 ATM Program:
Three Months Ended March 31,
2025
Shares
Net Proceeds
August 2024 ATM Program
5,368,600
$
68,405
As of March 31, 2026, no shares had been sold under the 2025 ATM Program, therefore all $500.0 million of our common stock remained available for issuance and sale pursuant to the 2025 ATM Program.
Legal Proceedings
We have been named a defendant in several lawsuits, as more fully described in Note 16. Commitments and Contingencies .
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Cash Flows
The following table presents a summary of our cash flows:
Three months ended March 31,
2026
2025
Net cash provided by (used in) operating activities
$
(182,651)
$
(122,060)
Net cash provided by (used in) investing activities
$
157,793
$
(59,227)
Net cash provided by (used in) financing activities
$
(2,392)
$
67,857
Operating Activities
The $60.6 million increase in cash used in operating activities for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was primarily attributable to increased power costs of $10.5 million and cash outflows during the three months ended March 31, 2026 consisting of a one-time cash payment of $20.0 million for the SBI legal settlement and $30.7 million for costs related to tenant fit-out, for which we expect to be reimbursed in the second quarter of 2026.
Investing Activities
For the three months ended March 31, 2026, net cash provided by investing activities was primarily attributable to proceeds from the sale of bitcoin of $289.5 million, partially offset by purchases and deposits paid for miners and purchases of property and equipment for our ongoing expansions, for which we paid approximately $16.2 million in deposits for the purchase of miners and other equipment, with anticipated additional payments of $4.8 million to be made through the second quarter of 2026, and payments of approximately $115.5 million for the purchase of property and equipment.
For the three months ended March 31, 2025, net cash used in investing activities was primarily attributable to payments of approximately $32.9 million for the purchase of property and equipment and $26.7 million in deposits and payments for the purchase of miners.
Financing Activities
For the three months ended March 31, 2026, no cash was provided by financing activities as we did not issue any shares under our ATM Program, issue debt, or increase the borrowings on any of our existing debt. For the three months ended March 31, 2025, net cash provided by financing activities primarily consisted of proceeds from our ATM Program offerings of $70.0 million.
We have approximately $853.7 million in total principal on our debt outstanding, primarily consisting of $594.4 million from our 2030 Notes, $200.0 million from our bitcoin-backed credit facility, $54.3 million from our revolving credit facilities, and $5.0 million of debt.
We have primarily financed our strategic growth through proceeds from the issuance of our common stock through ATM Program offerings and various credit facilities, and it is reasonably likely that we will continue to finance our ongoing growth similarly.
Critical Accounting Policies and Estimates
In preparing our financial statements in accordance with GAAP, there are certain accounting policies that may require a choice between acceptable accounting methods or may require substantial judgment or estimation in their application. The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our Condensed Consolidated Financial Statements. An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our Condensed Consolidated Financial Statements. These include: business combinations, valuation of the Rockdale PPA and the Corsicana PPA, long-lived assets and stock-based compensation. We believe these and other accounting policies set forth in Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements should be reviewed as they are integral to understanding our results of operations and financial condition.
We have discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of our Board.
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Business combinations
Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for property and equipment and contingent consideration, where applicable. Although we believe our assumptions and estimates have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. Estimates used in determining the value of property and equipment included the estimated replacement costs, which included replacement cost new, remaining life, and effective age. Estimates primarily used in determining the value of the contingent consideration included the timing and probability of achieving milestones and discount rates.
Rockdale PPA and Corsicana PPA Valuations
The Rockdale PPA and the Corsicana PPA are accounted for as derivatives, the valuations of which are based on significant unobservable inputs, which include discounted cash flow estimation models containing quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the respective terms of the Rockdale PPA and the Corsicana PPA. Significant judgment and estimations are required when creating the discounted cash flow estimation models. Should our discounted cash flow estimation models change significantly, potentially material changes to the fair value of the derivative asset may result, which could have a material impact on our financial statements.
See Note 8. Power Supply Agreements for a discussion of the unobservable inputs and their impact on the valuation.
Long-Lived Assets
Long-lived assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Judgment is necessary in estimating our various assets’ useful lives. This includes evaluating our own usage experience with our currently owned assets, the quality of materials used in construction-related projects, and for our miners, the rate of technological advancement and market-related factors such as the price of bitcoin and the bitcoin network hash rate, which impact the value of the miners. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, which is determined based on a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. Significant judgment is used when estimating future cash flows, particularly the price of bitcoin and the bitcoin network hash rate. If such assets are considered impaired, an impairment is recognized based on the amount by which the carrying amount exceeds the estimated fair value of the assets.
Should our estimates of useful lives, undiscounted future cash flows, or asset fair values change, additional and potentially material impairments may be required, which could have a material impact on our reported financial results.
Stock-Based Compensation
Stock-based compensation expense related to share-based payment awards is recognized at the grant date of the award and is estimated based on the fair market value of our common stock on the date of the grant. Compensation cost for performance-based, share-based payment awards is recognized over the performance period when achievement of the milestones and targets becomes probable. We use significant judgment in determining the likelihood of meeting milestones and market conditions. Inputs into valuation models such as Monte Carlo simulations include both the Company’s and the Russell 3000’s historical and expected annual volatilities, and depending on the inputs selected, we could calculate significantly different estimated grant date fair values, materially impacting the valuation of our stock-based awards and the stock-based compensation expense we recognize in future periods.
Recent Accounting Pronouncements
See Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements for a description of applicable recent accounting pronouncements and any material impact on our financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
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