What changed in this filing

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Item 1. Business

2023-03-02 compared with 2022-03-16 · 264 added, 1176 removed, 18 unchanged (99% of the section changed)

We are a vertically integrated Bitcoin

mining company principally engaged in enhancing our capabilities to mine Bitcoin.

We also provide the critical mining infrastructure for

our institutional scale clients to mine Bitcoin at our Bitcoin mining facility in Rockdale, Texas (the “Whinstone Facility”).

Our Whinstone Facility is believed to be the largest Bitcoin mining facility, as measured by developed capacity, in North America.

We operate in an environment which is consistently

evolving based on the proliferation of Bitcoin and cryptocurrencies in general.

A significant component of our strategy is to effectively

and efficiently allocate capital between opportunities that we believe will generate the highest return on our capital.

We operate in three business segments:

(1) Bitcoin Mining (“Mining”), (2) Data Center Hosting (“Hosting”), and (3) Electrical Products and Engineering

(“Engineering”).

We are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin.

We also provide comprehensive and critical mining infrastructure for institutional-scale hosted clients to mine Bitcoin at our Bitcoin mining facility in Rockdale, Texas (the “Rockdale Facility”).

Our Rockdale Facility currently provides 700 megawatts in total developed capacity for our Bitcoin mining and data center hosting services for institutional-scale hosted clients.

Our Rockdale Facility is believed to be the largest Bitcoin mining facility in North America, as measured by developed capacity, and we are currently growing its capacity.

Additionally, we are developing a second large-scale Bitcoin mining and data center facility outside of Corsicana, Texas (the “Corsicana Facility”), which, upon completion, is expected to have approximately one gigawatt of capacity available for our own Bitcoin mining and data center hosting services for institutional-scale hosted clients.

We operate in an environment that is consistently evolving based on the market outlook, and demand of, Bitcoin and cryptocurrencies in general.

A significant component of our strategy is to effectively and efficiently allocate capital between opportunities that we believe will generate the highest return on our investment.

We are organized and operate in three reportable business segments:

Bitcoin Mining, Data Center Hosting, and Engineering, which are organized based on purpose and services performed.

Each of our business segments is further discussed herein.

Amounts disclosed in this Annual Report are in thousands except for share, per share, Bitcoin, and miner amounts, or as otherwise noted.

Business Segments

Bitcoin Mining

At December 31, 2021, our Mining business operated

approximately 30,907 miners, with a hash rate capacity of 3.1 exahash per second (“EH/s”), utilizing approximately 96 megawatts

(“MW”) of capacity.

In 2021, we mined 3,813 Bitcoin, which represented an increase of 269% over the 1,033 Bitcoin we mined

Based on our existing operations and expected deliveries of miners we have purchased, we anticipate having approximately 120,150

miners in operation, utilizing approximately 370 MW of capacity by the end of 2022.

Our Mining operations are focused on maximizing

our ability to successfully mine Bitcoin by growing our hash rate (the amount of computer power we devote to supporting the Bitcoin blockchain)

to increase our chances of successfully verifying transactions to be recorded in the decentralized digital ledger comprising the Bitcoin

blockchain (a process known as “solving a block”).

Generally, the greater share of the Bitcoin blockchain’s total network

hash rate (the aggregate hash rate deployed to solving a block on the Bitcoin blockchain) represented by a miner’s hash rate, the

greater the miner’s chances of earning Bitcoin rewards.

As additional miner operators have entered the market in response to increased

demand for Bitcoin, the Bitcoin blockchain’s network hash rate has grown.

We expect this trend to continue, so we expect to need

to continue to grow our hash rate to compete in our dynamic and highly competitive industry.

We plan to achieve this growth by acquiring

highly specialized computer servers (known in the industry as “miners”) built to operate application-specific integrated circuit

(“ASIC”) chips designed specifically to mine Bitcoin and deploying them at-scale in our Whinstone Facility, including in immersion-cooled

environments.

The Whinstone Facility has a dedicated best-in-class team that supports our mining operations and provides us with the necessary

infrastructure and available power capacity for us to further scale our Mining business in the future.

We believe ASIC miners are the

most effective and energy-efficient miners available today, and we believe deploying them at-scale, including in immersion-cooled environments,

with its more efficient heat dissipation and reduced wear-and-tear versus traditional air-cooled hardware, will enable us to grow our

hash rate and optimize the output and longevity of our miners once they are deployed.

During the year ended December 31, 2021, we

executed additional purchase orders totaling $480 million with Bitmain Technologies Limited (“Bitmain”) for an additional

82,500 ASIC miners, including 30,000 of Bitmain’s latest generation Antminer model S19XP (140 TH/s) miners, and 52,500 S19j and

S19j Pro miners, including 43,500 model S19j (90 TH/s) miners and 9,000 model S19j Pro (100 TH/s) miners, with anticipated monthly delivery

and deployment schedules set through December 2022.

For additional discussion of our purchase orders with Bitmain, see the discussion

under the heading “Mining Operations” in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition

and Results of Operations” of this Annual Report, as well as the purchase orders themselves, which are incorporated by reference

as exhibits to this Annual Report.

We also deploy miners with Coinmint, LLC (“Coinmint”)

under a month-to-month co-location mining services agreement (the “Coinmint Agreement”) at Coinmint’s Massena, New York

facility (the “Coinmint Facility”).

We continually evaluate our mining performance at the Coinmint Facility to determine the

optimal deployment strategy.

We have primarily held the Bitcoin we mine on our balance sheet

as a Bitcoin mining company, but we are constantly evaluating our Bitcoin retention policy to determine the most efficient use of that

As of December 31, 2022, our Bitcoin Mining business segment operated 88,556 miners, with a hash rate capacity of 9.7 exahash per second (“EH/s”).

In 2022, we mined 5,554 Bitcoin, which represented an increase of 45.7% over the 3,812 Bitcoin we mined in 2021.

Based on our existing operations and expected deliveries and deployment of miners we have purchased, we anticipate having approximately 111,216 miners in operation by the end of 2023.

Our Bitcoin Mining operations are focused on maximizing our ability to successfully mine Bitcoin by growing our hash rate (the amount of computer power we devote to supporting the Bitcoin blockchain) to increase our chances of successfully finding cryptographic hashes that create new blocks on the Bitcoin blockchain (a process known as “solving a block”).

Generally, the greater share of the Bitcoin blockchain’s total network hash rate (the aggregate hash rate deployed to solving a block on the Bitcoin blockchain) represented by a miner’s hash rate, the greater the miner’s chances of solving a block and therefore earning the block reward, which is currently 6.25 Bitcoin plus transaction fees per block.

As additional miner operators enter the market in response to increased demand for Bitcoin, the Bitcoin blockchain’s network hash rate grows.

As we expect this trend to continue, we will need to continue to grow our hash rate to compete in our dynamic and highly competitive industry.

A key component of the Bitcoin Mining segment is to acquire highly specialized computer servers (known in the industry as “miners”) built to operate application-specific integrated circuit (“ASIC”) chips designed specifically to mine Bitcoin and deploying them at-scale in our Rockdale Facility and Corsicana Facility, including in immersion-cooled environments.

The Rockdale Facility has a dedicated best-in-class team that supports our Bitcoin Mining operations and, along with our Corsicana Facility, provide the necessary infrastructure and available power capacity for us to further scale our Bitcoin Mining business in the future.

We believe ASIC miners are the most effective and energy-efficient miners available today, and we believe deploying them at-scale, including in immersion-cooled environments, with its more efficient heat dissipation and reduced wear-and-tear versus traditional air-cooled hardware, will enable us to continue to grow our hash rate and optimize the output and longevity of our miners once they are deployed.

During the year ended December 31, 2021, we executed purchase orders totaling $480 million with Bitmain Technologies Limited (“Bitmain”) for 82,500 ASIC miners, including 30,000 of Bitmain’s latest generation Antminer model S19XP (140 TH/s) miners, and 52,500 S19j and S19j Pro miners, including 43,500 model S19j (90 TH/s) miners and 9,000 model S19j Pro (100 TH/s) miners.

All miners subject to these purchase orders were delivered through December 31, 2022, except for 5,130 miners, which were delivered in January 2023.

For additional discussion of our purchase orders with Bitmain, see the discussion under the heading

“Mining Operations” in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report, as well as the purchase orders themselves, which are incorporated by reference as exhibits to this Annual Report.

The Company monitors the level of Bitcoin retained from our monthly production in consideration of operational and expansion cash requirements.

Bitcoin is classified on our balance sheet as a current asset due to our ability to sell it in a highly liquid marketplace and its intent to liquidate its Bitcoin to support operations when needed.

We constantly evaluate our Bitcoin retention policy to determine the most efficient use of that asset.

Data Center Hosting

On May 26, 2021, we completed the strategic acquisition (the

“Whinstone Acquisition”) of Whinstone US, Inc.

(“Whinstone”) from Northern Data AG, a German stock corporation

(the “Northern Data”).

For more information on the Whinstone Acquisition, see Part II, Item 7.

“Management’s Discussion

and Analysis of Financial Condition and Results of Operations” under the heading “Strategic Acquisitions” and Part II,

“Financial Statements and Supplementary Data” under Note 4, “Acquisitions” included in the Notes to our

Consolidated Financial Statements.

Our Hosting business is operated at our Whinstone Facility and

focuses on providing co-location services for institutional-scale Bitcoin mining companies.

The Whinstone Facility provides the critical

infrastructure and workforce necessary for institutional-scale miners to deploy and operate their miners.

We provide our clients with

licensed space in specifically designed buildings to operate large quantities of miners with access to sufficient amounts of electricity

to operate those miners under colocation agreements.

In pursuit of achieving the most efficient power strategy, Whinstone

combines fixed low-cost power agreements, real-time spot power procurement and income from ancillary power services revenue.

Riot benefits

from this low-cost energy to maximize its production margins.

The combination of Riot and Whinstone allows us to rapidly scale our self-mining

business at one of the world’s largest mining facilities with power costs among the lowest in the industry.

After closing the Whinstone Acquisition, we announced a large-scale

expansion of the Whinstone Facility by 400 MW, including 200 MW of immersion-cooled Bitcoin mining infrastructure, which is anticipated

to bring the Whinstone Facility to 700 MW in total capacity of Bitcoin mining infrastructure.

The expansion of the Whinstone Facility

will provide us with the necessary infrastructure to efficiently operate our miners, scale our future operations and provide additional

expansion opportunities in our Hosting business.

After completion of the Whinstone expansion, the Whinstone Facility will be comprised

of seven dedicated Bitcoin mining structures, designated as Buildings A through G.

As of December 31, 2021, our 400 MW expansion at the Whinstone

Facility had achieved multiple progress milestones while navigating the challenges with the current state of the global supply chain,

including the completion of the substation expansion to 700 MW, successful installation of the substation busbar, and 400 MW of high-voltage

transformers.

Whinstone also completed construction of Building F, our first self-mining building dedicated to immersion-cooled Bitcoin

mining, while also advancing on its second immersion-cooled dedicated building, Building G.

In December 2021, Whinstone also received

most of the structural components required for Buildings D, E, and G.

The construction completion timeline is currently on-time, despite

global supply chain shortages and delays.

Whinstone also generates engineering and construction services

revenue from hosting customers on site, including revenue derived from the fabrication, installation and maintenance services and deployment

assistance on immersion-cooling technology for Bitcoin mining.

Electrical Products and Engineering

On December 1, 2021, we acquired all of

the issued and outstanding equity interests of Ferrie Franzmann Industries, LLC (d/b/a ESS Metron) (“ESS Metron”).

is one of the world’s leading designers and manufacturers of power distribution equipment.

Our strategic acquisition of ESS Metron

provides us with access to critical electrical components and engineering services in connection with our development of our Hosting business

infrastructure at the Whinstone Facility, as well as with potential future expansion projects.

ESS Metron is a key strategic partner in

our development and deployment of our immersion-cooling technology.

For more information on the ESS Metron Acquisition, see Part II, Item

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Strategic

Acquisitions” and Part II, Item 8.

“Financial Statements and Supplementary Data” under Note 4, “Acquisitions”

included in the Notes to our Consolidated Financial Statements.

A “mining pool” is a service operated by a mining

pool operator that pools the resources of individual miners to share their processing power over a network and split rewards according

to the amount of hash rate they contributed to the probability of placing a block on the blockchain.

Mining pools emerged in response

to the growing difficulty and network hash rate competing for Bitcoin rewards on the Bitcoin blockchain, as a way of lowering costs and

de-risking an individual miner’s mining activities.

The mining pool operator provides a service that coordinates

the computing power of the independent mining enterprises participating in the mining pool.

The pool uses software that coordinates the

pool members’ hash rate, identifies new block rewards, records how much work all the participants are doing, and assigns Bitcoin

rewards to its participants in proportion to the hash rate each participant contributed to the successful mining transaction.

paid to the mining pool operator to cover the costs of maintaining the pool and are deducted from amounts we may otherwise earn.

(and payouts) fluctuate and historically have been no more than approximately 2% per reward earned, on average.

Mining pools are subject

to various risks such as disruption and down time.

In the event that a pool experiences down time or is not yielding returns, our results

may be impacted.

Bitcoin mining at scale is a highly competitive

environment that operates 24/7 around the world.

The primary drivers of competition are demand for Bitcoin, sufficient capital resources

to acquire large quantities of high-quality miners, the ability to secure these miners from a limited number of suppliers on rapid delivery

schedules, and the ability to execute on those miner deployments with the best-in-class mining infrastructure to generate the highest

productivity.

Recently, there has been a significant

increase in the number of Bitcoin miners attempting to expand their mining operations at scale.

As more Bitcoin miners enter the space,

we expect additional pressure on the industry, with greater competition for access to miners and mining infrastructure which is in limited

Data center hosting-particularly in the

Bitcoin mining space-is also highly competitive.

Institutional Bitcoin mining customers demand access to mining infrastructure that can

supply large amounts of reliable, low-cost electricity, with a best-in-class team that can execute on deploying miners on compressed timelines.

We have entered into a long-term power purchase agreement with our energy supplier at the Whinstone Facility, which allows us to control

our power costs and project them long-term, enabling us to focus on developing best-in-class mining infrastructure and delivering best-in-class

Our Data Center Hosting business segment is operated at our Rockdale Facility and focuses on providing co-location services for institutional-scale Bitcoin mining companies.

The Rockdale Facility provides the critical infrastructure and workforce necessary for institutional-scale miners to deploy and operate their miners.

We provide our clients with licensed space in specifically designed buildings to operate large quantities of miners with access to electricity to operate those miners under colocation agreements.

In pursuit of achieving the most efficient power strategy, we combine fixed low-cost power agreements, real-time spot power procurement, and income from ancillary power services revenue.

We benefit from this low-cost energy by maximizing production margins.

As of December 31, 2022, our 400 MW expansion at the Rockdale Facility had achieved multiple progress milestones while navigating the challenges with the current state of the global supply chain, including the completion of the substation expansion to 700 MW, successful installation of the substation busbar, and 400 MW of high-voltage transformers.

We also completed construction of three new buildings in 2022, and a fourth is nearing completion in the first quarter of 2023, which, when completed, will finalize our Rockdale Facility expansion.

Two of the four buildings are self-mining buildings dedicated to immersion-cooled Bitcoin mining.

The construction completion timeline is currently on track, despite global supply chain shortages and delays.

Our Engineering business segment designs and manufacturers power distribution equipment and custom engineered electrical products that provide us with the ability to vertically integrate many of the critical electrical components and engineering services necessary for our Rockdale and Corsicana facilities’ expansions and to reduce our execution and counter-party risk in ongoing and future expansion projects.

Our engineering talent also allow us to continue to explore new methods to optimize and develop a best-in-class Bitcoin mining operation and have been instrumental in the development of our industrial-scale immersion-cooled Bitcoin mining hardware.

Our Engineering business segment also provides electricity distribution product design, manufacture, and installation services primarily focused on large-scale commercial 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.

Products are custom built to client and industry specifications under customers’ own Underwriters Laboratories, or UL, files;

the bulk of these products consist of medium and low voltage switchgear as well as power distribution centers.

Additionally, we utilize an in-house field service and repair department.

A “mining pool” is a service operated by a mining pool operator that pools the resources of individual miners to share their processing power over a network.

Mining pools emerged in response to the growing difficulty and network hash rate competing for Bitcoin rewards on the Bitcoin blockchain as a way of lowering costs and reducing the risk of an individual miner’s mining activities.

The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool.

Mining pools are subject to various risks such as disruption and down time.

In the event that a pool experiences down time or is not yielding returns, our results may be impacted.

During the year ended December 31, 2022, we utilized two types of mining pools:

● The first type of mining pool uses software that coordinates the pool members’ hash rate, identifies new block rewards, records how much work all the participants are doing, and assigns Bitcoin rewards to its participants in proportion to the hash rate each participant contributed to the successful mining transaction.

Fees are paid to the mining pool operator to cover the costs of maintaining the pool and are deducted from amounts we may otherwise earn.

Fees and payouts fluctuate

and historically have been no more than approximately 2% per reward earned, on average.

The Company utilized this mining pool during the years ended December 31, 2020, 2021 and throughout 2022 until mid-December 2022.

● The second type of mining pool pays Bitcoin rewards utilizing a Full-Pay-Per-Share payout of Bitcoin based on hash rate provided to the mining pool.

The Company transitioned completely to this mining pool in December 2022.

Our business is highly competitive and operates 24 hours a day, 7 days a week, on a global basis.

The primary drivers of competition are demand for Bitcoin, sufficient capital resources to acquire large quantities of high-quality miners, the ability to secure these miners from a limited number of suppliers on rapid delivery schedules, and the ability to execute on those miner deployments with the best-in-class mining infrastructure to generate the highest returns while incurring the lowest costs to mine.

Our competition in the Bitcoin mining space fluctuates due to a number of factors, including, but not limited to, the value of Bitcoin rewards for mining and public perception.

In 2022, we saw a decrease in the number of Bitcoin miners attempting to expand their mining operations at scale, however, we anticipate that over the long-term there will be a significant increase in the number of Bitcoin miners attempting to enter into, and expand, their Bitcoin mining activities as market demand recovers.

Our main competitors generally include other large Bitcoin mining companies, both publicly listed and private, as well as other Bitcoin miners who participate in mining pools.

As more Bitcoin miners enter the space, we expect additional pressure on the industry, with greater competition for access to miners and high-quality industrial scale mining infrastructure which is in limited supply.

Data center hosting, particularly in relation to Bitcoin mining, is also highly competitive.

Institutional Bitcoin mining customers demand access to mining infrastructure that can supply large amounts of reliable, low-cost electricity, with best-in-class teams that can execute on deploying miners on compressed timelines.

In order to ensure this supply of large amounts of low-cost electricity, we have entered into long-term power purchase agreements with our energy supplier at the Rockdale Facility, which allows us to control our power costs and project them over a long-term, enabling us to focus on developing best-in-class mining infrastructure and delivering best-in-class services.

Research and Development

During 2021, we announced the first industrial

scale deployment of 200 MW of immersion-cooled Bitcoin mining at the Whinstone Facility.

We expect to continue developing immersion-cooling

Bitcoin mining technologies as we build new infrastructure.

We anticipate immersion-cooling technology will present many unique opportunities

to increase efficiencies in Bitcoin mining.

We are constantly evaluating new and emerging technologies in the Bitcoin ecosystem to make

our mining operations more efficient.

During 2021, we announced the first industrial scale deployment of 200 MW of immersion-cooled Bitcoin mining at the Rockdale Facility, and during 2022, we completed the deployment of miners.

During 2022, we announced plans for the development of an additional 400 MW of immersion-cooled Bitcoin mining at the Corsicana Facility.

We anticipate immersion-cooling technology will present many unique opportunities to increase efficiencies in Bitcoin mining and are constantly evaluating new and emerging technologies in the Bitcoin ecosystem to make our mining operations more efficient.

Materials and Suppliers

We maintain several key supplier relationships

that are important to our business to secure mining hardware and infrastructure components and other materials.

Given the complexity of

mining hardware, there are few suppliers that can produce miners at scale.

Our historic purchase orders with Bitmain have future delivery

schedules that can extend out many months before those miners are delivered to our Whinstone Facility.

These fluctuations in delivery

timelines requires us to purchase miners well in advance of when we anticipate deploying those miners.

Our expansion at the Whinstone Facility requires

large quantities of electrical infrastructure components and construction materials.

We seek to procure these materials from our suppliers

in sufficient quantities so that we can deploy miners at scale on accelerated timelines.

Further, our immersion-cooled Bitcoin mining

requires large volumes of specialized non-conductive fluid, with limited manufacturers.

We have procured most of our anticipated key materials

for the expansion of the Whinstone Facility.

Cryptocurrency mining is largely an unregulated

activity at both the state and federal level.

We anticipate that cryptocurrency mining will be a focus for increased regulation in the

near- and long-term, and we cannot predict how future regulations may affect our business or operations.

State regulation of cryptocurrency mining is

important with respect to where we conduct our mining operations.

Our Whinstone Facility is located in the State of Texas, which is one

of the most favorable regulatory environments for cryptocurrency miners.

However, we also have operations in New York, which has generally

been more aggressive in its regulation of cryptocurrency.

Current New York regulations, in our view, do not impact our decision to operate

our miners at the Coinmint Facility in Massena, New York;

however, if the regulatory landscape changes, we would have to evaluate whether

to relocate our miners to our Whinstone Facility in Texas, which could be costly and we would not be able to operate the miners while

they are being relocated.

In January 2022, we received a letter from

a group of Senators and members of Congress requesting information about our current and planned energy usage.

On February 24, we replied

to the letter and provided the Senators and members of Congress with the information they requested.

Further, in March 2022, the United States announced

plans to establish a unified federal regulatory regime for cryptocurrency, and a group of United States Senators sent a letter to the

United States Treasury Department asking Treasury Secretary Yellen to investigate Treasury’s ability to monitor and restrict the

use of cryptocurrencies to evade sanctions imposed by the United States.

We are unable to predict the impact that any new regulations

may have on our business at the time of filing this Annual Report.

We continue to monitor and proactively engage in dialogue on legislative

matters related to our industry.

As the regulatory and legal environment evolves,

we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities.

For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part

“Risk Factors” beginning on page 13 of this Annual Report.

We maintain several key supplier relationships that are important to our business to secure mining hardware and infrastructure components and other materials.

Given the complexity of developing mining hardware, there are few suppliers that can produce miners at scale.

For example, our historic purchase orders with Bitmain had future delivery schedules that extended out many months before those miners are delivered to our Rockdale Facility.

These fluctuations in delivery timelines require us to plan to purchase miners well in advance of when we anticipate deploying those miners.

Our expansion at the Rockdale and Corsicana facilities requires large quantities of electrical infrastructure components and construction materials.

We seek to procure these materials from our suppliers in sufficient quantities so that we can deploy miners at scale on accelerated timelines.

Further, our immersion-cooled Bitcoin mining activities require large volumes of specialized non-conductive fluid, for which there are limited manufacturers.

Cryptocurrency mining is largely an unregulated activity at both the state and federal level.

We anticipate that cryptocurrency mining will be a focus for increased regulation in the near- and long-term, and we cannot predict how future regulations may affect our business or operations.

State regulation of cryptocurrency mining is important with respect to where we conduct our mining operations.

Our Rockdale Facility and our Corsicana Facility are both located in the State of Texas.

To the extent that there is any state regulation, Texas is one of the most favorable regulatory environments for cryptocurrency miners.

In January 2022, we received a letter from a group of Members of Congress requesting information about our current and planned energy usage.

On February 24, 2022, we replied to the letter and provided the Senators and members of Congress with the information they requested.

In March 2022, the United States announced plans to establish a unified federal regulatory regime for cryptocurrency, and a group of United States Senators sent a letter to the United States Treasury Department asking Treasury Secretary Yellen to investigate Treasury’s ability to monitor and restrict the use of cryptocurrencies to evade sanctions imposed by the United States.

We are unable to predict the impact that any new regulations may have on our business at the time of filing this Annual Report.

We continue to monitor and proactively engage in dialogue on legislative matters related to our industry.

On August 17, 2022, the Committee on Energy and Commerce of the U.S.

House of Representatives sent letters to Riot and three other public companies with Bitcoin mining operations requesting information related to the environmental impact and energy consumption of the recipients.

The letter addressed to Riot contained inquiries concerning our energy usage and sources, curtailment practices, and electronic waste.

Riot submitted a written response to the Committee replying to its inquiries on September 14, 2022.

In September 2022, the White House issued a report regarding the Climate and Energy Implications of Crypto-Assets in the United States.

The report states that the Department of Energy and Environmental Protection Agency should initiate a process to solicit data and develop environmental performance and energy conservation standards for crypto-asset technologies, including mining equipment.

Should such measures prove ineffective at achieving the Administration’s environmental goals, the report calls for the Administration to explore executive actions and legislation to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining.

We are unable to predict the impact that any new standards, legislation, or regulations may have on our business at the time of filing this Annual Report.

We continue to monitor and proactively engage in dialogue on regulatory and legislative matters related to our industry.

Further, in December 2022 the SEC’s Division of Corporation Finance issued guidance advising companies to disclose exposure and risk to the cryptocurrency market.

While the focus is on digital asset managers and exchanges, and not Bitcoin miners, the failure of such large asset managers and exchanges may create increased price volatility of Bitcoin.

Riot does not store our Bitcoin on such exchanges;

however, we may be impacted by such failures.

In January 2023, the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation issued a joint statement discouraging banks from doing business with clients in crypto-asset industries.

In January 2023, the Federal Reserve also issued a policy statement broadening its authority to cover state-chartered banks.

Also in January 2023, the House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets and the intention to develop a regulatory framework for the digital asset industry.

Bipartisan leadership of the Senate Banking Committee announced that goal as well.

As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities.

For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A.

“Risk Factors” of this Annual Report.

Environmental

There are increasing concerns over the

large energy usage of Bitcoin mining and its effects on the environment.

Many mainstream media reports focus exclusively on the energy

requirements of Bitcoin mining and cite it as an environmental concern.

However, those reports tend to omit the important benefits associated

with that energy consumption.

For instance, in February 2021 and 2022, we voluntarily reduced our operations and curtailed our energy

usage to allow our energy provider to redirect our power allotment back into the ERCOT market.

By curtailing our operations and reducing

our energy usage, we immediately help to stabilize the grid by redirecting our power allotment back out into the ERCOT market where it

can be delivered to the areas of greatest need, such as heating homes and powering hospitals, helping to reduce the frequency and impact

of power failures and price surges.

In exchange for powering down our systems in response to these instances of high electricity demand,

we receive the difference between our cost of power and the price at which it is sold on the ERCOT market (less applicable fees payable

to our consultants who assist with our participation in the ERCOT Demand Response Program), which ultimately benefits us, other consumers

participating in the ERCOT market, and the overall health of the Texas grid.

There are increasing concerns over the quantity of energy, particularly from non-renewable sources, used for Bitcoin mining and its effects on the environment.

Many media reports focus exclusively on the energy requirements of Bitcoin mining and cite it as an environmental concern.

However, those reports tend to omit discussion of the positive contributions associated with Bitcoin mining to other customers on the electrical grid.

Bitcoin mining operations present a stable demand for energy and can be quickly curtailed, uniquely positioning businesses that engage in Bitcoin mining to respond to increased electricity demand in emergency situations.

In February 2021 and throughout 2022, Riot voluntarily reduced our operations and curtailed our energy consumption to allow our energy provider to redirect our power allotment back into the Electric Reliability Council of Texas (“ERCOT”) market during extreme weather events.

By taking such actions, we immediately helped to stabilize the grid by allowing our power allotment to be delivered to the areas of greatest need, such as heating homes and powering hospitals.

Overall, our operations incentivize new power

generation development and our actions help to reduce the frequency and impact of power failures and electricity price surges.

In exchange for powering down our systems in response to high electricity demand, we receive benefits associated with the difference between our contractual cost of power and the price at which such power is sold on the ERCOT market (less any applicable fees payable to our consultants who assist with our participation in the ERCOT Demand Response Services Program).

Additionally, we voluntarily participate in load response programs operated by ERCOT, whereby we temporarily give ERCOT the right to curtail a set portion of our power load at their discretion in exchange for a fee.

Ultimately, these benefits are shared between us, other consumers participating in the ERCOT market, and the overall health of the Texas grid.

Human Capital Resources

At December 31, 2021, we had a total workforce

of approximately 335 employees across our entire organization and subsidiaries, including professionals in engineering, information and

technology, operations, construction, finance, legal, communications and Bitcoin mining.

Of our total workforce, approximately 285 employees

were in engineering, construction and Bitcoin mining operations and approximately 50 were in a general and administrative support function,

such as information and technology, finance, legal and communications.

Approximately 53% of our workforce was in Colorado and 44% was

Our strategy with human capital resources

is to align the interests of our employees with our key long-term success drivers.

In execution of this philosophy, we adopted a long-term

performance incentive plan in August 2021 under our Riot Blockchain, Inc.

2019 Equity Incentive Plan, as amended.

Under this performance

plan, all eligible employees are granted performance-based restricted stock units (“PSUs”) that vest based on our achievement

of certain performance milestones as an organization.

Certain eligible employees under the performance plan would be eligible to receive

cash in lieu of PSU awards based on our achievement of these same performance milestones.

We believe our performance plan is a key incentive

for our employees that aligns their long-term interests with our long-term objectives as an organization.

Our management team believes

our relations with our employees to be good.

We want to attract a pool of diverse and

best-in-class candidates and foster their career growth once they become employees.

We seek to hire the best talent available, rather

than solely rely on educational background, and have provided job openings, including in local communities and large cities, for candidates

from various backgrounds.

Our goal is a long-term, growth-oriented career for every employee.

We also believe that our ability to retain

our workforce is dependent on our ability to foster an environment that is sustainably safe, respectful, fair and inclusive of everyone

and promotes diversity, equity and inclusion inside and outside of our business.

We compare salary and wages against quantitative

benchmarks and adjust to ensure wages are competitive, and have a robust process for ensuring pay equity across the Company.

we provide a comprehensive range of benefits options, including medical plan options for employees and family members.

As of December 31, 2022, we had a total workforce of approximately 489 employees across our entire organization, including professionals in engineering, information and technology, operations, construction, manufacturing.

finance, legal, communications, and Bitcoin mining operations.

Of our total workforce, approximately 410 employees were in engineering, construction, manufacturing, and Bitcoin mining operations and approximately 79 employees were in a general or administrative support function, such as information and technology, finance, legal or communications.

Approximately 42% of our workforce was in Colorado and 56% was in Texas.

Our strategy with human capital resources is to align the interests of our employees with our key long-term success drivers.

In execution of this strategy, we adopted a long-term performance incentive plan, under which all eligible employees are granted performance-based restricted stock awards that vest based on the Company’s achievement of specific performance milestones.

Certain employees under the long-term performance plan are eligible to receive cash in lieu of restricted shares of the Company’s common stock awards based on achievement of these same performance milestones.

We believe our performance plan is a key incentive for our employees that aligns their long-term interests with our long-term objectives as an organization.

At Riot, we seek to attract a pool of diverse, best-in-class candidates and foster their career growth by hiring the best talent available, rather than relying solely on educational background.

In support of such initiative, we look for candidates in local communities and large cities alike, and from a variety of backgrounds.

Our goal is a long-term, growth-oriented career for each employee.

We also believe that our ability to retain our workforce is dependent on our ability to foster an environment that is sustainably safe, respectful, fair, and inclusive of everyone, and promotes diversity, equity, and inclusion both inside and outside of our business.

Diversity, Equity, and Inclusion

At Riot, we support diversity and inclusion in a workplace where employees can thrive.

Diverse backgrounds, experiences and opinions are encouraged and welcomed.

In support of such diversity and inclusion, we act in accordance with our Code of Conduct and Ethics to create a safe environment free from discrimination or harassment that respects the human rights of our employees.

We strive to achieve a workplace where opportunities for success are created and available for all employees.

In support of this goal, in 2022 we deployed to all employees unconscious bias and harassment trainings.

Compensation and Benefits

Riot’s compensation programs are designed to provide incentives to attract, retain, and motivate employees to achieve the Company’s long-term goals.

Specifically, we compare salary and wages against quantitative benchmarks and adjust monetary compensation to ensure wages are competitive and consistent with employee positions, skill levels, experience, and geographic location.

We maintain a robust process for ensuring pay equity across the Company and increases in incentives and compensation based on merit and performance.

We provide a comprehensive range of benefits options, including medical, dental and vision insurance for employees and family members, paid and unpaid leaves, and life and disability/accident coverage.

Benefits for employees outside of the United States are provided based on country-specific practices and are intended to support the health and well-being of our employees and their families.

Immersion-cooling

In October 2021, in connection

with the 400 MW expansion of Whinstone, we announced that 200 MW of this expansion would be committed to utilizing immersion-cooling technology.

This development encompasses two buildings currently under construction which are expected to host approximately 46,000 of the S19 Series

Antminer ASIC miners we have purchased from Bitmain, which are expected to be delivered and deployed on a rolling monthly basis throughout

When miners are immersion-cooled,

they operate in a more stable environment that is better able to dissipate the heat generated by the miners’ operation, allowing

the equipment to run at sustained higher productivity rates for longer periods of time.

Based on industry data and the Company’s

own preliminary immersion-cooling test results, an estimated 25% increase in hash rate is expected, with an estimated potential to increase

our miners’ performance by as much as 50% over traditional air-cooled techniques.

We are continuing to test our immersion-cooling

mining operations and, if our desired performance metrics are achieved, we plan to leverage our infrastructure development capabilities

to expand the implementation of our immersion-cooled Bitcoin mining hardware to increase our Bitcoin mining hash rate without relying

solely on purchasing additional new miners and mining equipment, which we believe will result in increased operating efficiencies, and,

thus, improved capital efficiencies.

Mining Results

Mining Production and Cryptocurrency Sales

The Company measures the success of its operations,

in one respect, by the number and U.S.

Dollar (“$”) value (in thousands of $) of the cryptocurrency rewards it earns from

its Mining activities.

The following table presents additional information regarding our Mining operations, including cryptocurrency production

and sales of the cryptocurrency the Company mines.

During 2021 we only mined Bitcoin, and during 2020 and 2019, nearly all of our operations

were focused on mining Bitcoin.

Balance at January 1, 2019

Revenue recognized from cryptocurrencies mined

Mining pool operating fees

Purchase of miner equipment with cryptocurrencies

Proceeds from sale of cryptocurrencies

Realized gain on sale/exchange of cryptocurrencies

Impairment of cryptocurrencies

Balance at December 31, 2019

Revenue recognized from cryptocurrencies mined

During 2021, we announced the first industrial scale deployment of 200 MW of immersion-cooled Bitcoin mining at the Rockdale Facility, and during 2022, we completed deployment.

During 2022, we also announced plans to develop an additional 400 MW of immersion-cooled Bitcoin mining operations at the Corsicana Facility.

We anticipate immersion-cooling technology will present many unique opportunities to increase efficiencies in Bitcoin mining, and are constantly evaluating new and emerging technologies in the Bitcoin ecosystem to make our mining operations more efficient.

When miners are immersion-cooled, they operate in a more stable environment that is better able to dissipate the heat generated by the miners’ operation, allowing the equipment to run at sustained higher productivity rates for longer periods of time.

We are continuing to test our immersion-cooling mining operations and, if our desired performance metrics are achieved, we plan to leverage our infrastructure development capabilities to expand the implementation of our immersion-cooled Bitcoin mining hardware to increase our Bitcoin mining hash rate without relying solely on purchasing additional new miners and mining equipment, which we believe will result in increased operating efficiencies, and, thus, improved capital efficiencies.

Bitcoin Mining Results

Bitcoin Mining Production and Bitcoin Sales

One way the Company measures the success of its operations is by the number and U.S.

Dollar value of the Bitcoin rewards it earns from its Bitcoin Mining activities.

The following table presents information regarding our Mining operations, including Bitcoin production and sales of the Bitcoin the Company mines.

Balance as of January 1, 2020

Revenue recognized from Bitcoin mined

Mining pool operating fees

Proceeds from sale of cryptocurrencies

Realized gain on sale/exchange of cryptocurrencies

Impairment of cryptocurrencies

Cryptocurrencies received from sale of equipment

Balance at December 31, 2020

Revenue recognized from cryptocurrencies mined

Proceeds from sale of cryptocurrencies

Realized gain on sale/exchange of cryptocurrencies

Impairment of cryptocurrencies

Balance at December 31, 2021

As the above table shows, we increased the

quantity of Bitcoin rewards earned from our Mining operations from 1,033 Bitcoin mined in fiscal year 2020, to 3,812 Bitcoin mined in

fiscal year 2021, representing an increase of approximately 269% in the number of Bitcoin mined.

The revenue we recognized from our Mining

activities increased from approximately $12.0 million during fiscal year 2020 to $184.4 million during fiscal year 2021, representing

an increase of approximately 1,439% in revenue from our Mining operations.

The increase was due to higher Bitcoin values in the 2021 period,

averaging $45,744 per coin as compared to $11,461 per coin in the 2020 period and an increase in the number of miners deployed from 7,043

as of December 31, 2020 to 30,907 as of December 31, 2021.

The revenue we recognized from our Mining activities

increased from approximately $6.7 million during fiscal year 2019 to $12.0 million during fiscal year 2020, representing an increase of

approximately 78%.

The increase was due to higher Bitcoin values in the 2020 period, averaging $11,461 per coin as compared to $7,405

per coin in the 2019 period and an increase in the number of miners deployed from 4,000 as of December 31, 2019 to 7,043 as of December

See under the heading “Factors Affecting Profitability” below.

Proceeds from sale of Bitcoin

Realized gain on sale/exchange of Bitcoin (as restated)

Impairment of Bitcoin (as restated)

Bitcoin received from sale of equipment

Balance as of December 31, 2020 (as restated)

Revenue recognized from Bitcoin mined

Exchange of Bitcoin for employee compensation

Realized gain on sale/exchange of Bitcoin (as restated)

Impairment of Bitcoin (as restated)

Balance as of December 31, 2021 (as restated)

Revenue recognized from Bitcoin mined

Proceeds from sale of Bitcoin

Exchange of Bitcoin for employee compensation

Realized gain on sale/exchange of Bitcoin

Impairment of Bitcoin

Balance as of December 31, 2022

We increased the quantity of Bitcoin rewards earned from our Bitcoin Mining operations from 3,812 Bitcoin mined in 2021, to 5,554 Bitcoin mined in 2022, representing an increase of approximately 45.7%.

Revenue recognized from our Bitcoin Mining activities decreased from approximately $184.4 million during fiscal year 2021 to $156.9 million during fiscal year 2022, representing a decrease of approximately 14.9%.

The decrease was due to lower values for Bitcoin mined in 2022, averaging $28,245 per coin, as compared to $45,744 per coin in 2021, and an increase in the global network hash rate, partially offset by an increase in Bitcoin rewards earned as a result of an increase in the number of miners deployed from 30,907 as of December 31, 2021, to 88,556 as of December 31, 2022.

Factors Affecting Profitability

Market Price of Bitcoin

Our business is heavily dependent on the spot

price of Bitcoin.

The prices of cryptocurrencies, including Bitcoin, have experienced substantial volatility, meaning that high or low

prices may be based on speculation and incomplete information, may be subject to rapidly changing investor sentiment, and may be influenced

by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

Bitcoin (as well as other

cryptocurrencies) may have value based on various factors, including their acceptance as a means of exchange by consumers and producers,

scarcity, and market demand which are beyond our control.

Further affecting the industry, and particularly

for the Bitcoin blockchain, the cryptocurrency reward for solving a block is subject to periodic incremental halving.

Halving is a process

designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus algorithm.

At a predetermined block, the mining reward is cut in half, hence the term “halving”.

For Bitcoin, our most significant cryptocurrency

asset to which the majority of our mining power is devoted, the reward was initially set at 50 Bitcoin currency rewards per block.

Bitcoin blockchain has undergone halving three times since its inception as follows:

Our business is heavily dependent on the spot price of Bitcoin.

The prices of cryptocurrencies, including Bitcoin, have experienced substantial volatility, meaning that high or low prices may be based on speculation and incomplete information, subject to rapidly changing investor sentiment, and influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

Bitcoin (as well as other cryptocurrencies) may have value based on various factors, including their acceptance as a means of exchange by consumers and producers, scarcity, and market demand which are beyond our control.

Further affecting the industry, and particularly for the Bitcoin blockchain, the Bitcoin reward for solving a block is subject to periodic incremental halving.

Halving is a process designed to control the overall supply and reduce the risk of inflation in Bitcoin using a

Proof-of-Work consensus algorithm.

At a predetermined block, the mining reward is cut in half, hence the term “halving.” For Bitcoin the reward was initially set at 50 Bitcoin currency rewards per block.

The Bitcoin blockchain has undergone halvings three times since its inception as follows:

(1) on November 28, 2012, at block height 210,000;

(2) on July 9, 2016, at block height 420,000;

(3) on May 11, 2020 at block height 630,000, when the reward was reduced to its current level

of 6.25 Bitcoin per block.

The next halving for the Bitcoin blockchain is anticipated to occur in May 2024 at block height 840,000.

process will reoccur until the total amount of Bitcoin currency rewards issued reaches 21 million and the theoretical supply of new Bitcoin

is exhausted, which is expected to occur around 2140.

Many factors influence the price of Bitcoin, and potential increases or decreases

in prices in advance of or following a future halving is unknown.

(3) on May 11, 2020, at block height 630,000, when the reward was reduced to its current level of 6.25 Bitcoin per block.

The next halving for the Bitcoin blockchain is currently anticipated to occur in April 2024 at block height 840,000.

Halvings will continue to occur until the total amount of Bitcoin currency rewards issued reaches approximately 21 million and the theoretical supply of new Bitcoin is exhausted, which is expected to occur around the year 2140.

Many factors influence the price of Bitcoin, and potential increases or decreases in prices in advance of or following a future halving is unknown.

Network Hash Rate and Difficulty

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, relative to the global

network hash rate (i.e., the aggregate amount of computing power devoted to supporting the Bitcoin blockchain at a given time).

for Bitcoin has increased, the global network hash rate has increased rapidly, and as more adoption of Bitcoin occurs, we expect the demand

for new Bitcoin will likewise increase as more mining companies are drawn into the industry by this increased demand.

Further, as more

and increasingly powerful miners are deployed, the network difficulty for Bitcoin has increased.

Network difficulty is a measure of how

difficult it is to solve a block on the Bitcoin blockchain, which is adjusted every 2016 blocks (every 2 weeks approximately) so that

the average time between each block remains ten minutes.

A high difficulty means that it will take more computing power to solve a block

and earn a new Bitcoin reward, which, in turn, makes the Bitcoin network more secure by limiting the possibility of one miner or mining

pool gaining control of the network.

Therefore, as new and existing miners deploy additional hash rate, the global network hash rate will

continue to increase, meaning a miner’s share of the global network hash rate (and therefore its chance of earning Bitcoin rewards)

will decline if it fails to deploy additional hash rate at pace with the industry.

For further discussion of the factors affecting

our profitability, see the discussion under Part II, Item 7 “Management’s Discussion and Analysis” under the heading

“Summary of Mining Results” beginning on page 35 of this Annual Report, as well as the discussion of various risks, factors,

and uncertainties we believe may affect our revenue and results of operations under Part I, Item 1A.

“Risk Factors” beginning

on page 13 of this Annual Report.

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, relative to the global network hash rate (i.e., the aggregate amount of computing power devoted to supporting the Bitcoin blockchain at a given time).

As demand for Bitcoin has increased, the global network hash rate has increased rapidly, and as greater adoption of Bitcoin occurs, we expect the demand for new Bitcoin will likewise increase as more mining companies are drawn into the industry by this increased demand.

Further, as a greater number of increasingly powerful miners have been deployed, the network difficulty for Bitcoin has consequently also increased.

Network difficulty is a measure of how difficult it is to solve a block on the Bitcoin blockchain, which is adjusted every 2,016 blocks (approximately every 2 weeks) so that the average time between each block validation remains approximately ten minutes.

A high difficulty means that more computing power will be required in order to solve a block and earn a new Bitcoin reward, which, in turn, makes the Bitcoin network more secure by limiting the possibility of one miner or mining pool gaining control of the network.

Therefore, as new and existing miners deploy additional hash rate, the global network hash rate will continue to increase, meaning a miner’s share of the global network hash rate (and therefore its chance of earning Bitcoin rewards) will decline if it fails to deploy additional hash rate at pace with the industry.

For further discussion of the factors affecting our profitability, see the discussion under Part II, Item 7 “Management’s Discussion and Analysis” under the heading “Summary of Mining Results” of this Annual Report, as well as the discussion of various risks, factors, and uncertainties we believe may affect our revenue and results of operations under Part I, Item 1A.

“Risk Factors” of this Annual Report.

Performance Metrics

We seek to mine Bitcoin by using our miners

to solve complex cryptographic algorithms to support the Bitcoin blockchain (in a process known as “solving a block”).

return for solving a block, we receive a Bitcoin, depending on the blockchain, which we can hold for our account and attempt to sell on

the market to generate a profit.

Miners generally measure their capability in

terms of hash rate, which is measured in terms of the number of cryptographic hashing algorithms solved (or “hashes”) per

Generally, miners (or mining pools) with a greater hash rate relative to the global Bitcoin network hash rate deployed by miners

on the Bitcoin blockchain at a given time will, over time, have a greater chance of earning a Bitcoin reward, as compared to miners with

relatively lower total hash rates.

However, as the relative market price for Bitcoin

increases, more miners are encouraged to attempt to mine Bitcoin, which increases Bitcoin’s global network hash rate.

to remain competitive, miners seek to continually increase their total hash rate, creating a feedback loop:

as Bitcoin gains popularity

and its relative market price increases, more miners attempt to mine Bitcoin and its network hash rate is increased;

in response, existing

miners and new miners devote more and more hash rate to the Bitcoin blockchain by adding more increasingly powerful miners to attempt

to ensure their ability to earn additional Bitcoin rewards, and, in response, the network difficulty of the Bitcoin network is increased

to maintain the pace of new block additions, spurring miners to seek to deploy yet further hash rate to earn the same relative number

of new Bitcoin rewards.

We seek to mine Bitcoin by using our miners to solve complex cryptographic algorithms to support the Bitcoin blockchain (in a process known as “solving a block”).

In return for solving a block, we receive the Bitcoin reward, which we can hold or sell on the market to generate cash.

Bitcoin miners generally measure their capability in terms of hash rate, which is measured in terms of the number of cryptographic hashing algorithms solved (or “hashes”) per second.

Generally, miners (or mining pools) with a greater hash rate relative to the global Bitcoin network hash rate at a given time will, over time, have a greater chance of earning a Bitcoin reward, as compared to miners with relatively lower total hash rates.

However, as the relative market price for Bitcoin increases, more miners are encouraged to attempt to mine Bitcoin, which increases Bitcoin’s global network hash rate.

Therefore, to remain competitive, miners seek to continually increase their total hash rate, creating a feedback loop:

as Bitcoin gains popularity and its relative market price increases, more miners attempt to mine Bitcoin and its network hash rate is increased;

in response, existing miners and new miners devote more and more hash rate to the Bitcoin blockchain by adding more, and increasingly powerful, miners to attempt to ensure their ability to earn additional Bitcoin rewards, and, in response, the network difficulty of the Bitcoin network is increased to maintain the pace of new block additions, spurring miners to seek to deploy yet further hash rate to earn the same relative number of new Bitcoin rewards.

In theory, this process should continually replicate itself until the supply of available Bitcoin is exhausted.

In response, miners have attempted to achieve

greater hash rate by deploying increasingly sophisticated miners in ever greater quantities.

This has become the Bitcoin mining industry’s

great “arms race.” There are very few manufacturers of miners capable of producing a sufficient number of miners of adequate

quality to meet this need, and scarcity results, leading to higher prices.

Compounding this phenomenon, it has been observed that some

manufacturers of Bitcoin miners may increase the prices for new miners as the market price of Bitcoin increases.

Further, these manufacturers

have been impacted by the ongoing global supply chain crisis resulting from COVID-19, both in terms of increased prices for the components

of these new miners resulting from the constrained supply of the semiconductors used in the production of the highly specialized ASIC

chips miners rely on, and in terms of labor costs to manufacture new miners as workforces are affected by increased absenteeism due to

COVID-19 restrictions and employee burnout.

Thus, miner manufacturers are subject to increasing price pressures due to both increased

demand for new miners and decreased supply of necessary components and labor, ultimately leading to higher prices for new miners.

In response, miners have attempted to achieve greater hash rate by deploying increasingly sophisticated miners in ever greater quantities.

This has become the Bitcoin mining industry’s great “arms race.” There are very few manufacturers of miners capable of producing a sufficient number of miners of adequate quality to meet this need, and scarcity results, leading to higher prices.

Compounding this phenomenon, it has been observed that some manufacturers of Bitcoin miners may increase prices for new miners as the market price of Bitcoin increases.

Further, these manufacturers have also been impacted by the ongoing global supply chain crisis resulting from COVID-19, both in terms of increased prices for the components of these new miners resulting from the constrained supply of the semiconductors used in the production of the highly specialized ASIC chips miners rely on, and in terms

of labor costs to manufacture new miners as workforces are affected by increased absenteeism due to COVID-19 restrictions and employee burnout.

Thus, miner manufacturers are subject to increasing price pressures due to both increased demand for new miners and decreased supply of necessary components and labor, ultimately leading to higher prices for new miners.

Intellectual Property

We actively use specific hardware and software

for our Bitcoin mining operations.

The Bitcoin blockchain is generally built on open-source code and, in certain cases, the source code

and other software assets we use in our mining operations may be subject to an open-source license.

For these works, we adhere to the

terms of any license agreements that may be in place.

We also rely upon the intellectual property rights of others in certain respects

in connection with our immersion-cooling technology.

We currently rely upon trade secrets, trademarks,

service marks, trade names, copyrights, and other intellectual property rights, and to license the use of such intellectual property rights

owned and controlled by others.

In addition, we have developed and may further develop certain proprietary software and hardware applications

in connection with Bitcoin mining operations, including our immersion-cooled Bitcoin mining developments.

We actively use specific hardware and software for our Bitcoin mining operations.

The Bitcoin blockchain is generally built on open-source code and, in certain cases, the source code and other software assets we use in our mining operations may be subject to an open-source license.

For these works, we adhere to the terms of any license agreements that may be in place.

We also rely upon the intellectual property rights of others in certain respects in connection with our immersion-cooling technology.

We currently rely upon trade secrets, trademarks, service marks, trade names, copyrights, and other intellectual property rights, and to license the use of such intellectual property rights owned and controlled by others.

In addition, we have developed and may further develop certain proprietary software and hardware applications in connection with Bitcoin mining operations, including our immersion-cooled Bitcoin mining developments.

Information About Our Executive Officers

The following sets forth the name, age, and position of each of the persons who were serving as executive officers as of the filing of this annual report on Form 10-K.

There are no immediate familial relationships among our executive officers and any directors.

There are no arrangements or understandings between any of our executive officers and any other person pursuant to which any of such executive officers were selected.

Director and Chief Executive Officer (principal executive officer)

Director and Executive Chairman

Chief Financial Officer (principal financial officer)

William Jackman

Executive Vice President, General Counsel and Secretary

Senior Vice President, Chief Accounting Officer (principal accounting officer)

Jason Les (age 37) has served as our Chief Executive Officer (“CEO”) since February 2021 and as a member of the Board since October 2017.

He has been deeply involved with Bitcoin since 2013, with significant experience in cryptocurrency mining, as an engineer studying protocol development, and contributing to open-source projects.

Les was previously a founding partner of Binary Digital from May 2017 to November 2020, a software-development company where he led the engineering team and coordinated project development for artificial intelligence, reverse engineering, and inter-software compatibility projects.

Additionally, his background includes over a decade of unique experience as a former professional heads-up poker player.

He holds a Bachelor of Science, Computer Science from the University of California, Irvine.

Benjamin Yi (age 40) has served as our Executive Chairman since May 2021, as a member of the Board since October 2018, and as Chairman of the Board of Directors from November 2020 through May 2021.

Prior to joining Riot, Mr.

Yi led capital markets and corporate development at IOU Financial, a tech-enabled lender to small businesses and investee company of Neuberger Berman from January 2017 through May 2021.

Yi holds a Bachelor of Commerce, specialist in Finance, major in Economics from University of Trinity College and a Master of Finance from University of Toronto – Rotman School of Management.

Colin Yee (age 47) has served as our Chief Financial Officer (“CFO”) since September 2022.

He was previously our Head of Corporate and Financial Operations from April 2022 to September 2022.

Prior to joining Riot, Mr.

Yee founded Clear Capital Management Corporation which has been operating since September 2007.

He served as the Chief Operating Financial Officer of Avebury Partners, a leading asset management firm that operates within the real estate and construction sectors, from March 2021 to March 2022.

Yee is a Chartered Professional Accountant and holds a Bachelor of Science in Cellular Biology and a Bachelor of Commerce in Accounting from the University of Calgary.

William Jackman (age 39) has served as our Executive Vice President since September 2022, and as General Counsel and Secretary since July 2021.

Prior to joining Riot, Mr.

Jackman was a Leader of Public Companies and Securities at Roger Towers, P.A., one of Florida’s oldest and most established law firms, from March 2018 to January 2022.

Additionally, he was a Senior Corporate Attorney at Holland & Knight LLP, a multinational law firm, from May 2014 through August 2017.

Jackman holds dual Juris Doctorate law degrees from the Universities of Windsor and Detroit, as well as an MBA from Nova Southeastern, and is a member of the New York, Florida and Ontario Bar Associations.

Ryan Werner (age 43) has served as our Senior Vice President and Chief Accounting Officer since September 2022.

Previously, he was our Vice President of Finance since joining Riot in March 2021.

Prior to joining Riot, Mr.

Werner was a Senior Director, Real Estate and Transactions Accounting at UDR, a real estate investment trust, from March 2013 through March 2021.

Werner holds a Bachelor’s degree in Accounting and Business Administration with an emphasis in finance, and a Master’s in Accounting and Information Systems from the University of Kansas.

Corporate Information

Our principal executive office is located at

3855 Ambrosia Street, Suite 301, Castle Rock, CO 80109, which is where our records are kept and the principal business address for our

Chief Financial Officer and accounting staff, and our telephone number is (303) 794-2000.

We were incorporated on July 24, 2000 in the

State of Colorado under the name AspenBio, Inc.

We have gone through several subsequent name changes and, effective October 19, 2017,

we adopted our present corporate name, Riot Blockchain, Inc., and changed our state of incorporation to Nevada.

Our website address is www.riotblockchain.com.

Available Information

You can access, free of charge, our annual

reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports as filed with the SEC

under the Securities Exchange Act of 1934, as amended on the SEC’s website www.sec.gov.

These documents may also be accessed on

www.riotblockchain.com.

These documents are placed on our website as soon as is reasonably practicable after their filing

with the SEC.

The information contained in, or that can be accessed through, the website is not part of this Annual Report on Form 10-K.

— RISK FACTORS

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.

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.

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.

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.

Risks Related to Our Ability to Grow Our Business

If we fail to grow our hash rate, we

may be unable to compete, and our results of operations could suffer.

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.

As demand for Bitcoin has

increased, the global network hash rate has increased, and as more adoption of Bitcoin occurs, we expect the demand for Bitcoin will increase,

drawing more mining companies into the industry and further increasing the global network hash rate.

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.

Accordingly, to compete in this highly competitive industry, we believe

we will need to continue to acquire new miners, both to replace those lost to ordinary wear-and-tear and other damage, and to increase

our hash rate to keep up with a growing global network hash rate.

We plan to grow our hash rate by acquiring

newer, more effective and energy-efficient miners.

These new miners are highly specialized servers that are very difficult to produce

As a result, there are limited producers capable of producing large numbers of sufficiently effective miners, and, as demand

for new miners has increased in response to increased Bitcoin prices, we have observed the price of these new miners has increased.

we can’t acquire sufficient numbers of new miners or access sufficient capital to fund our acquisitions, our results of operations

and financial condition, which could adversely affect investments in our securities.

We may be impacted by macroeconomic conditions

due to the global COVID-19 pandemic and the resulting global supply chain crisis.

Global trade conditions and consumer trends

that originated during the COVID-19 pandemic continue to persist and may also have long-lasting adverse impact on us and our industry.

For example, pandemic-related issues have exacerbated port congestion and intermittent supplier shutdowns and delays, resulting in additional

expenses to expedite delivery of new miners, as well as critical materials needed for our expansion plans.

Further, miner manufacturers

have been impacted by the constrained supply of the semiconductors used in the production of the highly specialized ASIC chips miners

rely on, and increased labor costs to manufacture new miners as workforces and global supply chains continue to be affected by COVID-19,

which has ultimately lead to higher prices for new miners.

Thus, until the global supply chain crisis is resolved and these extraordinary

pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners and we may face difficulties

obtaining the new miners we need at prices or in quantities we find acceptable, if at all, and our business and results of operations

may suffer as a result.

In addition, labor shortages resulting from

the pandemic may lead to increased difficulty and labor costs in hiring and retaining the highly qualified and motivated people we need

to conduct our business and execute on our strategic growth initiatives.

Sustaining our growth plans will require the ongoing readiness

and solvency of our suppliers and vendors, a stable and motivated production workforce, and government cooperation, each of which may

be affected by macroeconomic factors outside of our immediate control.

We cannot predict the duration or direction

of current global trends or their sustained impact.

Ultimately, we continue to monitor macroeconomic conditions to remain flexible and

to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure requirements globally

and deploy our workforce and capital resources accordingly.

If we experience unfavorable global market conditions, or if we cannot or

do not maintain operations at a scope that is commensurate with such conditions or are later required to or choose to suspend such operations

again, our business, prospects, financial condition and operating results may be harmed.

We expect the cost of acquiring new miners

to continue to be affected by the global supply chain crisis.

Similarly, the global supply chain crisis,

coupled with increased demand for computer chips, has created a shortfall of semiconductors, resulting in challenges for the supply chain

and production of the miners we employ in our Bitcoin mining operations.

The miners are highly specialized servers built around ASIC chips,

which very few manufacturers are able to produce in sufficient scale and quality to suit our operations.

As a result, the cost to produce

these miners has increased, which their manufacturers have passed on to purchasers like us.

Therefore, until the global supply chain crisis

is resolved and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy

new miners, which could adversely affect our financial condition and results of operations.

We may not be able to timely complete

our future strategic growth initiatives or within our anticipated cost estimates, if at all.

As part of our efforts to grow our hash rate

and remain competitive in the market, we acquired thousands of new state-of-the-art miners from their manufacturer in 2020 and 2021, which

we have begun to deploy at our Whinstone Facility.

To accommodate these new miners, we are expanding the Whinstone Facility’s capacity

to 700 MW of electrical power through the construction of four new 100 MW structures and the associated power and facilities infrastructure

needed to operate them for industrial scale Bitcoin mining.

Moreover, we have carried out this expansion during the ongoing global supply

chain crisis and COVID-19, and our costs of supplies, labor, and material have increased as a result.

While our present expansion project

is proceeding on time as expected, we cannot guarantee we will complete this expansion (or any future strategic growth initiatives) on

time or within our cost estimates, if at all, due in part to the ongoing effects of the global supply chain crisis related to COVID-19

and changing conditions within the United States labor market.

If we are unable to complete our planned expansion on schedule and within

our anticipated cost estimates, our deployment of newly purchased miners may be delayed, which could affect our competitiveness and our

results of operation, which could have a material adverse effect on our financial condition and the market price for our securities.

We may be unable to access sufficient

additional capital for future strategic growth initiatives.

The expansion of our miner fleet and of our

Whinstone Facility have been capital-intensive projects, and we anticipate that future strategic growth initiatives will likewise be capital-intensive.

We expect to raise additional capital to fund these future strategic growth initiatives;

however, we may be unable to do in a timely manner,

in sufficient quantities, or on terms acceptable to us, if at all.

If we are unable to raise the additional capital needed to execute

these future strategic growth initiatives, we may be less competitive in our industry and our results of operations and financial condition

may suffer, and the market price for our securities may be materially and adversely affected.

Expansion of our Whinstone Facility potentially

exposes us to additional risks.

We are expanding and expect to continue to

expand our Whinstone Facility, which potentially exposes us to significant risks we may otherwise not be exposed to, including risks related

to, among other sources:

construction delays;

lack of availability of parts and/or labor, increased prices, and delays for data center

labor disputes and work stoppages, including interruptions in work due to the ongoing COVID-19 pandemic;

unanticipated environmental

issues and geological problems;

delays related to permitting and approvals to open from public agencies and utility companies;

in site readiness leading to our failure to meet commitments made in connection with such expansion.

All construction related projects depend on

the skill, experience, and attentiveness of our personnel throughout the design and construction process.

Should a designer, general contractor,

significant subcontractor or key supplier experience financial problems or other problems during the design or construction process, we

could experience significant delays, increased costs to complete the project and/or other negative impacts to our expected returns.

If we are unable to overcome these risks and

additional pressures to complete our expansion projects in a timely manner, if at all, we may not realize their anticipated benefits,

and our business and financial condition may suffer as a result.

Failure to successfully integrate acquired

businesses could negatively impact our balance sheet and results of operations.

Strategic acquisitions such as the Whinstone

Acquisition and the ESS Metron Acquisition are an important element of our growth strategy and the success of any acquisition we make

depends in part on our ability to integrate the acquired business and realize anticipated synergies.

Integrating acquired businesses may

involve unforeseen difficulties and may require a disproportionate amount of our management’s attention and may require us to shift

our financial and other resources.

For example, we may encounter challenges in

the integration process such as:

challenges and difficulties associated with managing the resulting larger and more complex company;

administrative and corporate structures and standards, controls, procedures and policies, business cultures, and compensation and benefits

structures, coordinating geographically dispersed operations;

and our ability to deliver on our strategy going forward.

Further, our acquisitions may subject us to

new liabilities and risks, some of which may be unknown.

Although we and our advisors conduct due diligence on the operations of businesses

we acquire, there can be no guarantee that we are aware of all liabilities of an acquired company.

These liabilities, and any additional

risks and uncertainties related to an acquired company not known to us or that we may deem immaterial or unlikely to occur at the time

of the acquisition, could negatively impact our future business, financial condition and results of operations.

We can give no assurance that we will ultimately

be able to effectively integrate and manage the operations of any acquired business or realize anticipated synergies.

The failure to successfully

integrate the cultures, operating systems, procedures and information technologies of an acquired business could have a material adverse

effect on our financial condition and results of operations.

We may experience increased compliance

costs as a result our strategic acquisitions.

The financial statements and internal controls

of both Whinstone and ESS Metron have not, historically, been required to be in compliance with Section 404 of the Sarbanes-Oxley Act

of 2002 (“Sarbanes-Oxley Act”).

The accounting costs of bringing our subsidiaries’ financial records and internal controls

in alignment with the Sarbanes-Oxley Act following these strategic acquisitions have been within our expectations;

however, we may encounter

unanticipated costs.

Further, future strategic acquisitions could carry substantial compliance burdens, which may limit our ability to

realize the anticipated benefits of such acquisitions, and which may require our management and personnel to shift their focus to such

compliance burdens and away from their other functions.

Such increased costs and compliance burdens could affect our ability to realize

the anticipated benefits of such strategic acquisitions, and our business, results of operations, and financial condition may suffer as

We have financed our strategic growth

primarily by issuing new shares of our common stock in public offerings, which dilutes the ownership interests of our current stockholders,

and which may adversely affect the market price of our securities.

We have raised capital to finance our strategic

growth of our business through public offerings of our common stock, and we expect to need to raise additional capital through similar

public offerings to finance the completion of current and future expansion initiatives.

We may not be able to obtain additional debt or

equity financing on favorable terms, if at all, which could impair our growth and adversely impact our existing operations.

additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per share value

of our common stock could decline.

Furthermore, if we engage in debt financing, the holders of any debt we issue would likely have priority

over the holders of shares of our common stock in terms of order of payment preference.

We may be required to accept terms that restrict

our ability to incur additional indebtedness or take other actions including terms that require us to maintain specified liquidity or

other ratios that could otherwise not be in the interests of our stockholders.

We have a history of operating losses,

and we may report additional operating losses in the future.

Our primary focus is on Bitcoin mining, and

we have recorded historical losses and negative cash flow from our operations when the value of Bitcoin we mine does not exceed our associated

Further, as part of our strategic growth plans, we have made capital investments in expanding our Mining operations, including

the expansion of our Whinstone Facility, increased our employee base, and incurred additional costs associated with owning and operating

a self-mining facility.

However, future market prices of Bitcoin are difficult to predict, and we cannot guarantee that our future Mining

revenue will exceed our associated costs.

Risks Related to the Price of Bitcoin

Our ability to achieve profitability

is largely dependent on the price of Bitcoin, which has historically been volatile.

Our primary focus on our Bitcoin mining operations

and the associated expansion of our Whinstone Facility is largely based on our assumptions regarding the future value of Bitcoin, which

has been subject to significant historical volatility and may be subject to influence from malicious actors, real or perceived scarcity,

political, economic, and regulatory conditions, and speculation making its price more volatile or creating “bubble” type risks

for the trading price of Bitcoin.

Further, unlike traditional stock exchanges, which have listing requirements and vet issuers, requiring

them to comply with rigorous listing standards and rules, and which monitor transactions for fraud and other improprieties, markets for

Bitcoin and other cryptocurrencies tend to be underregulated, if they are regulated at all.

Less stringent cryptocurrency markets have

a higher risk of fraud or manipulation and any lack of oversight or perceived lack of transparency could reduce confidence in the price

of Bitcoin and other cryptocurrencies, which could adversely affect the price of Bitcoin.

These factors make it difficult to accurately

predict the future market price of Bitcoin and may also inhibit consumer trust in and market acceptance of cryptocurrencies as a means

of exchange, which could limit the future adoption of Bitcoin and, as a result, our assumptions could prove incorrect.

If our assumptions

prove incorrect and the future price of Bitcoin is not sufficiently high, our income from our Bitcoin mining operations may not exceed

our costs, and our operations may never achieve profitability.

Bitcoin is subject to halving, and our

mining operations may generate less revenue as a result.

As disclosed in Part I, Item 1, “Business”

of this Annual Report, under the subheading “Halving”, the number of new Bitcoin awarded for solving a block is cut in half

– hence, “halving” – at mathematically predetermined intervals.

While Bitcoin prices have historically increased

around these halving events, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining

If a corresponding and proportionate increase in the price of the Bitcoin does not follow future halving events, the revenue

we earn from our Mining operations would see a decrease, which could have a material adverse effect on our results of operations and financial

Transaction fees may decrease demand for Bitcoin and prevent

As the number of Bitcoins currency rewards

awarded for solving a block in a blockchain has decreased, transaction fees have increasingly been used to incentivize miners to continue

to contribute to the Bitcoin network.

However, high Bitcoin transaction fees may slow the adoption of Bitcoin as a means of payment, which

may decrease demand for Bitcoin and future prices of Bitcoin may suffer as a result.

If Bitcoin prices are not sufficiently high, our

Mining revenue may not exceed our associated costs, and our results of operations and financial condition may suffer.

Further, because

the price of shares of our common stock may be linked to the price of Bitcoin, if demand for Bitcoin decreases, causing future Bitcoin

prices to decrease, the market price of our securities may be materially and adversely affected, limiting our ability to raise additional

capital to fund our strategic growth plans.

Cryptocurrencies face significant scaling obstacles that can

lead to high fees or slow transaction settlement times.

Cryptocurrencies face significant scaling obstacles

that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective.

Scaling cryptocurrencies is essential to the widespread acceptance of cryptocurrencies as a means of payment, including Bitcoin.

cryptocurrency networks face significant scaling challenges.

For example, cryptocurrencies are limited with respect to how many transactions

can occur per second.

Participants in the cryptocurrency ecosystem debate potential approaches to increasing the average number of transactions

per second that the network can handle and have implemented mechanisms or are researching ways to increase scale, such as increasing the

allowable sizes of blocks, and therefore the number of transactions per block, and sharding (a horizontal partition of data in a database

or search engine), which would not require every single transaction to be included in every single miner’s or validator’s

However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of

cryptocurrency transactions will be effective.

If adoption of Bitcoin (and cryptocurrencies,

generally) as a means of payment does not occur on the schedule or scale we anticipate, the demand for Bitcoin may stagnate or decrease,

which could adversely affect future Bitcoin prices, and our results of operations and financial condition, which could have a material

adverse effect on the market price for our securities.

Risks Related to our Operations

To remain competitive in our industry,

we seek to grow our hash rate to match the growing network hash rate and increasing network difficulty of the Bitcoin blockchain, and

if we are unable to grow our hash rate at pace with the network hash rate, our chance of earning Bitcoin from our Mining operations would

As the adoption of Bitcoin has increased, the

price of Bitcoin has generally appreciated, causing the demand for new Bitcoin rewards for successfully solving blocks on the Bitcoin

blockchain to likewise increase.

This has encouraged more miners to attempt to mine Bitcoin, which increases the global network hash rate

deployed in support of the Bitcoin blockchain.

Because a miner’s relative chance of

successfully solving a block and earning a new Bitcoin reward is generally a function of the ratio the miner’s individual hash rate

bears to the global network hash rate, as the global network hash rate increases, a miner must increase its individual hash rate to maintain

its chances of earning new Bitcoin rewards.

Therefore, as new miners enter the industry and as miners deploy greater and greater numbers

of more and more powerful machines, existing miners must seek to continually increase their hash rate to remain competitive.

Thus, a feedback

loop is created:

as Bitcoin gains popularity and its relative market price increases, more miners attempt to mine Bitcoin and the Bitcoin

network hash rate is increased;

in response, existing miners and new miners devote more and more hash rate to the Bitcoin blockchain by

deploying greater numbers of increasingly powerful machines to attempt to ensure their ability to earn additional Bitcoin rewards does

not decrease.

Compounding this feedback loop, the network difficulty of the Bitcoin network (i.e., the amount of work (measured in hashes)

necessary to solve a block) is periodically adjusted to maintain the pace of new block additions (with one new block added to the blockchain

approximately every ten minutes), and thereby control the supply of Bitcoin.

As miners deploy more hash rate and the Bitcoin network hash

rate is increased, the Bitcoin network difficult is adjusted upwards by requiring more hash rate to be deployed to solve a block.

miners are further incentivized to grow their hash rate to maintain their chance of earning new Bitcoin rewards.

In theory, these dual

processes should continually replicate themselves until the supply of available Bitcoin is exhausted.

In response, miners have attempted

to achieve greater hash rate by deploying increasingly sophisticated miners and expensive miners in ever greater quantities.

become the Bitcoin mining industry’s great “arms race.” Moreover, because there are very few manufacturers of miners

capable of producing a sufficient number of miners of adequate quality to meet this need, scarcity results, leading to higher prices.

Compounding this phenomenon, it has been observed that some manufacturers of Bitcoin miners may increase the prices for new miners as

the market price of Bitcoin increases.

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 network hash rate.

However, as demand has increased and scarcity in the supply of new miners has resulted,

the price of new miners has increased sharply, and we expect this process to continue in the future as demand for Bitcoin increases.

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.

If this happens, our chances of earning new Bitcoin rewards would decline and, as such, our results of operations and financial condition

Because our miners are designed specifically

to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitocin’s value could

adversely affect our business and results of operations .

We have invested substantial capital in acquiring

miners using ASIC chips designed specifically to mine Bitcoin and other cryptocurrencies using the SHA-256 algorithm as efficiently and

as rapidly as possible on our assumption that we will be able to use them to mine Bitcoin and generate revenue from our operations.

our Mining operations focus exclusively on mining Bitcoin, and our Mining revenue is based on the value of Bitcoin we mine.

if the value of Bitcoin declines and fails to recover, for example, because of the development and acceptance of competing blockchain

platforms or technologies, including competing cryptocurrencies which our miners may not be able to mine, the revenue we generate from

our mining operations will likewise decline.

Moreover, because our miners use these highly specialized ASIC chips, we may not be able

to successfully repurpose them in a timely manner, if at all, if we decide to switch to mining a different cryptocurrency (or to another

purpose altogether) following a sustained decline in Bitcoin’s value or if Bitcoin is replaced by another cryptocurrency not using

the SHA-256 algorithm.

This would result in a material adverse effect on our business and could potentially impact our ability to continue

as a going concern.

Our reliance primarily on a single model of miner may subject

our operations to increased risk of design flaws.

The performance and reliability of our miners

and our technology is critical to our reputation and our operations.

Because we currently only use Bitmain Antminer type miners, if there

are issues with those machines, such as a design flaw in the ASIC chips they employ, our entire system could be affected.

have encountered, and may in the future encounter, software and firmware complications associated with adapting our miners to operate

in our immersion-cooled Bitcoin mining hardware, which may delay or otherwise limit the benefits we anticipate from our adoption of immersion-cooled

Any system error or failure may significantly delay response times or even cause our system to fail.

Any disruption in our ability

to continue mining could result in lower yields and harm our reputation and business.

Any exploitable weakness, flaw, or error common

to Bitmain miners could affect all our miners;

therefore, if a defect or other flaw exists and is exploited, our entire miner fleet could

be adversely impacted.

Any interruption, delay or system failure could result in financial losses, a decrease in the trading price of

our common stock and damage to our reputation.

Our use of third-party mining pools exposes

us to additional risks.

We receive Bitcoin rewards from our mining activity

through third-party mining pool operators.

Mining pools allow miners to combine their processing power, increasing their chances of solving

a block and getting paid by the network.

The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s

overall mining power, used to solve a block on the Bitcoin blockchain.

Should the pool operator’s system suffer downtime due to

a cyber-attack, software malfunction or other issue, it will negatively impact our ability to mine and receive revenue.

Furthermore, we

are dependent on the accuracy of the mining pool operator’s record keeping to accurately record the total processing power provided

to the pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided.

we have internal methods of tracking both the hash rate we provide and the total used by the pool, the mining pool operator uses its own

record-keeping to determine our proportion of a given reward, which may not match our own.

If we are unable to consistently obtain accurate

proportionate rewards from our mining pool operators, we may experience reduced reward for our efforts, which would have an adverse effect

on our business and operations.

We may not be able to realize the benefits of forks.

The Bitcoin blockchain is subject to modification

based on a consensus of the users on its network.

When a significant minority of users on the network agree to a modification that is

not compatible with the prior network protocol, a “fork” of the network results, with one prong running the pre-modified protocol

and the other running the modified protocol.

The effect of such a fork would be the existence of two “versions” of the blockchain

running in parallel that are not interchangeable, which requires exchange-type transaction to convert between the two forks.

Additionally,

it may be unclear following a fork which of the two protocols represents the original and which is the new protocol.

Different metrics

adopted by industry participants to determine which is the original asset include:

referring to the wishes of the core developers of a

cryptocurrency;

determining based on the blockchain with the greatest amount of hash rate contributed by miners or validators;

or by reference

to the “length” of blockchain (i.e., the time between the first transaction recorded in the blockchain’s distributed

ledger, and the date of the most recent transaction).

Accordingly, we may not be able to realize the economic benefit of a fork, either

immediately or ever, which could adversely affect an investment in our securities.

Cyber-attacks, data breaches or malware

may disrupt our operations and trigger significant liability for us, which could harm our operating results and financial condition, and

damage our reputation or otherwise materially harm our business.

As a publicly traded company, we experience

cyber-attacks and other attempts to gain unauthorized access to our systems on a regular basis, and we anticipate continuing to be subject

to such attempts.

There is a risk that some or all of our cryptocurrencies could be lost or stolen as a result of one or more of these

As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats,

and, despite our implementation of strict security measures and frequent security audits, it is impossible to eliminate all such vulnerability.

For instance, we may not be able to ensure the adequacy of the security measures employed by third parties, such as our service providers

and Whinstone’s colocation customers.

Efforts to limit the ability of malicious actors to disrupt the operations of the internet

or undermine our own security efforts may be costly to implement and may not be successful.

Such breaches, whether attributable to a vulnerability

in our systems or otherwise, could result in claims of liability against us, damage our reputation and materially harm our business.

We have not to date experienced a material

however, the occurrence of any such event in the future could subject us to liability to our customers, suppliers, business

partners and others, give rise to legal and/or regulatory action, which could damage our reputation or otherwise materially harm our business,

operating results, and financial condition.

Incorrect or fraudulent Bitcoin transactions may be irreversible

and we could lose access to our Bitcoin.

Bitcoin transactions are not, from an administrative

perspective, reversible without the consent and active participation of the recipient of the Bitcoin from the transaction.

the decentralized nature of the Bitcoin blockchain, once a transaction has been verified and recorded in a block that is added to the

Bitcoin blockchain, an incorrect transfer of a Bitcoin or a theft thereof generally will not be reversible, and we may not have sufficient

recourse to recover our losses from any such transfer or theft.

It is possible that, through computer or human error, or through theft

or criminal action, our cryptocurrency rewards could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled

Though recent high profile enforcement actions against individuals laundering stolen Bitcoin have demonstrated some means of

bringing malicious actors to justice for their theft, the stolen Bitcoin is likely to remain unrecoverable.

Furthermore, we must possess

both the unique public and private keys to our digital wallets to gain access to our Bitcoin, and the loss of a private key required may

be irreversible.

Therefore, if we lose, or if a malicious actor successfully denies us access to our private keys, we may be permanently

denied access to the Bitcoin held in the wallet corresponding to the lost, stolen or blocked keys.

Though we have taken and continue to

take reasonable steps to secure our private keys and to store our Bitcoin with institutional custodians, if we were to lose access to

our private keys or otherwise experience data loss relating to our digital wallets, we could effectively lose access to and the ability

to use our Bitcoin assets.

Moreover, we may be unable to secure insurance policies for our Bitcoin assets at rates or on terms acceptable

to us, if at all, and we may choose to self-insure.

To the extent that we are unable to recover our losses from such action, error or

theft, such events could have a material adverse effect on our business, results of operations and financial condition.

The Whinstone Facility may not be adaptable

to new technologies.

The market for data centers is characterized

by rapidly changing technology, evolving industry standards, frequent new product introductions, and changing customer demands.

in industry practice or in technology could also reduce demand for the physical hosting space and infrastructure that we provide or make

previous improvements in the Whinstone Facility obsolete.

Our ability to deliver technologically sophisticated infrastructure at the Whinstone

Facility, including power and cooling, is a significant factor in our customers’ decisions to collocate with us at the Whinstone

The Whinstone Facility’s infrastructure may become obsolete due to the development of new systems that deliver power to,

or eliminate heat from, the miners or other customer equipment that we house, which may require us to expend significant capital resources

to retrofit or otherwise upgrade our current systems to compete with data centers deploying these new systems.

While we believe the Whinstone Facility is

primed to be adaptable, new technology can be, by its nature, unpredictable.

Moreover, even if we are able to respond, we may not be able

to efficiently upgrade or change these systems without incurring significant costs.

Further, operations may be negatively impacted by

these upgrades as they are in process.

This may impact our customers’ experience in the short term, which may have a negative impact

on operating cash flows, liquidity, and financial condition.

The Whinstone Facility is subject to

a ten-year ground lease, and if we are unable to renew its term, we may be unable to fully realize the anticipated benefits of our acquisition

of Whinstone and the ongoing development of the site.

The Whinstone Facility is subject to a ground

lease with an initial term of ten years, followed by three ten-year renewal periods, unless terminated earlier.

The long-term success

of our plans for the Whinstone Facility is largely based on our ability to maintain the lease in effect and to renew it going forward.

If we fail to maintain the lease or renew it once its initial term expires and the landlord requires Whinstone to vacate the premises,

we will likely incur significant costs in relocating Whinstone’s operations, if we could do so at all, and our Mining and Hosting

operations would be interrupted during such relocation.

Further, if we fail to renew the lease on terms favorable to us, and our costs

are increased, then we may not realize the anticipated benefits of our investment in the Whinstone Acquisition or any future development

of its remaining available capacity.

Any disruptions or changes to Whinstone’s present relationship with the landlord for the Whinstone

Facility could disrupt our business and our results of operations negatively.

Our business could be harmed by prolonged

power and internet outages, shortages, or capacity constraints.

Our operations require a significant amount

of electrical power and access to high-speed internet to be successful.

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.

If this occurs,

our business and results of operations may be materially and adversely affected.

We are subject to risks associated with

our need for significant electrical power.

Our operations have required significant amounts

of electrical power, and, as we continue to expand our mining fleet and our Whinstone Facility, we anticipate our demand for electrical

power will continue to grow.

If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not

realize the anticipated benefits of our significant capital investments.

Additionally, our operations could be materially

adversely affected by prolonged power outages.

Although our Whinstone Facility may be powered by backup generators on a temporary basis,

it would not be feasible or cost-effective to run miners on back-up power generators for extended periods of time.

Therefore, we may have

to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of

electrical power.

If this were to occur, our business and results of operations could be materially and adversely affected.

Our operations could be adversely affected

by events outside of our control, such as natural disasters.

We may be impacted by natural disasters, wars,

health epidemics, weather conditions, the long-term effects of climate change, power outages or other events outside of our control.

example, we voluntarily halted operations at our Whinstone Facility during the severe winter storms in the first quarter of 2022 and 2021

that had a widespread impact on utilities and transportation.

In the future, regulators or power providers may, under new or revised rules,

require us to power down the Whinstone Facility during such events.

If major disasters such as earthquakes, floods or other climate-related

events occur, the Whinstone Facility or our other offices are severely damaged, or our information system or communications could break

down or operate improperly, which may interrupt our operations.

We may incur expenses or delays relating to such events outside of our

control, which could have a material adverse impact on our business, operating results and financial condition.

Increased scrutiny and changing expectations

from stakeholders with respect to our ESG practices and the impacts of Climate Change may result in additional costs or risks.

Companies across many industries are facing

increasing scrutiny related to their environmental, social, and governance (“ESG”) practices.

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.

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.

In addition, the physical risks of climate

change may impact the availability and cost of materials and natural resources, sources and supply of energy, 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.

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 Related to Governmental Regulation and Enforcement

Changing environmental regulation and

public energy policy may expose our business to new risks.

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.

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.

For instance, our plans and strategic initiatives for the Whinstone Facility are based, in part, on our understanding of current environmental

and energy regulations, policies, and initiatives enacted by federal and Texas regulators.

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.

In addition, there continues to be a lack of

consistent climate legislation, which creates economic and regulatory uncertainty for our business because the cryptocurrency mining industry,

with its high energy demand, may become a target for future environmental and energy regulation.

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.

Further, any future climate

change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

For example, legislation proposed in the state of New York, if passed, could restrict the ability of electricity suppliers to provide

electricity to cryptocurrency mining operations in times of electricity shortage, or at all.

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.

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.

Any of the foregoing

could result in a material adverse effect on our business and financial condition.

The compliance costs of responding to

new and changing regulation could adversely affect our operations at our Whinstone Facility.

We (along with those from whom we purchase

electricity) are subject to various federal, state, local, and international environmental laws and regulations, including those relating

to the generation, storage, handling, and disposal of hazardous substances and wastes.

Certain of these laws and regulations also impose

joint and several liability, without regard to fault, for investigation and cleanup costs on current and former owners and operators of

real property and persons who have disposed of or released hazardous substances into the environment.

Our operations may involve the use

of hazardous substances and materials, such as petroleum fuel for emergency generators, as well as batteries, cleaning solutions, and

other materials.

Electricity costs could also be affected due

to existing or new regulations on greenhouse gas emissions, whether such regulations apply to all consumers of electricity or just to

specified uses, such as Bitcoin mining.

These regulations may be federal, or we may be newly exposed to such regulations due to the acquisition

of Texas-based Whinstone.

There has been interest in the U.S.

Congress and in the Legislature of the State of Texas in addressing climate

change, including through regulation of Bitcoin mining.

Past legislative proposals to address climate change include measures ranging

from taxes on carbon use or generation to federally imposed limits on greenhouse gas emissions.

Further, although Texas has historically

sought to maintain some degree of energy independence from the United States as a whole, it is unclear how future legislation and regulation

will affect the Whinstone Facility.

The course of future legislation and regulation in the United States and in Texas remains difficult

to predict, and potential increased costs associated with new legislation or regulation cannot be estimated at this time.

Regulatory changes or actions may alter

the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects,

or operations.

As cryptocurrencies have grown in both popularity

and market size, governments around the world have reacted differently to cryptocurrencies;

certain governments have deemed them illegal,

and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the U.S., subject the mining,

ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.

Ongoing and future regulatory actions could have a material adverse effect on our business, prospects or operations.

Our interactions with a blockchain may

expose us to SDN or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.

Office of Financial Assets Control (“OFAC”) of the U.S.

Department of Treasury requires us to comply with its sanction program

and not conduct business with persons named on its specially designated nationals (“SDN”) list.

However, because of the pseudonymous

nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s

Our Company’s policy prohibits any transactions with such SDN individuals, but we may not be adequately capable of determining

the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets.

Moreover, the

use of cryptocurrencies, including Bitcoin, as a potential means of avoiding federally-imposed sanctions, such as those imposed in connection

with the Russian invasion of Ukraine.

For example, on March 2, 2022, a group of United States Senators sent the Secretary of the United

States Treasury Department a letter asking Secretary Yellen to investigate its ability to enforce such sanctions vis-à-vis Bitcoin,

and on March 8, 2022, President Biden announced an executive order on cryptocurrencies which seeks to establish a unified federal regulatory

regime for cryptocurrencies.

We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the

cryptocurrency industry, or the potential impact of the use of cryptocurrencies by SDN or other blocked or sanctioned persons, which could

have material adverse effects on our business and our industry more broadly.

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.

Bitcoin and Bitcoin mining, as well as

cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect

our business prospects and operations.

Although we do not anticipate any material

adverse regulations on Bitcoin mining in our jurisdictions of operation, it is possible that state or federal regulators may seek to impose

harsh restrictions or total bans on cryptocurrency mining which may make it impossible for us to do business without relocating our mining

operations, which could be very costly and time consuming.

Further, although Bitcoin and Bitcoin mining, as well as cryptocurrencies generally,

are largely unregulated in most countries (including the United States), regulators in certain jurisdictions may undertake new or intensify

existing regulatory actions in the future that could severely restrict the right to mine, acquire, own, hold, sell, or use cryptocurrency

or to exchange it for traditional fiat currency such as the United States Dollar.

Such restrictions may adversely affect us as the large-scale

use of cryptocurrencies as a means of exchange is presently confined to certain regions globally.

Such circumstances could have a material

adverse effect on us, which could have a material adverse effect on our business, prospects or operations and potentially the value of

any Bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account, and thus harm investors.

Risks Related to Ownership of Our Common Stock

The trading price of shares of our common

stock has been subject to volatility.

The trading price of our common stock has been,

and is likely to continue to be, volatile, and may be influenced by including the risks, uncertainties and factors described in this Annual

Report and our other filings with the SEC, as well as factors beyond our control or of which we may be unaware.

If these risks come to

pass and our business and results of operation suffer as a result, the market price of our securities may decline, which could have a

material adverse effect on an investment in our securities..

We have a classified board of directors;

therefore, only one-third of the Board is up for election at each annual shareholders’ meeting, which could limit shareholders’

ability to influence directors’ decision making.

Our Bylaws provide for a classified board of

directors consisting of three classes of directors serving staggered three-year terms, and each year our stockholders elect one class

of our directors.

We believe that a classified board structure facilitates continuity and stability of leadership and policy by helping

ensure that, at any given time, a majority of our directors have prior experience as directors of our Company and are familiar with our

business and operations.

In our view, this permits more effective long-term planning and helps create long-term value for our stockholders.

The classified board structure, however, could prevent a party who acquires control of a majority of our outstanding voting stock from

obtaining control of our board of directors until the second annual stockholders’ meeting following the date that party obtains

control of a majority of our voting stock.

The classified board structure may discourage a third party from initiating a proxy contest,

making a tender offer or otherwise attempting to obtain control of us, as the structure makes it more difficult for a stockholder to replace

a majority of our directors.

Article XIV of our Bylaws, as amended,

designates the courts of the State of New York as the sole and exclusive forum for certain types of actions and proceedings that may be

initiated by our shareholders, and therefore may limit our shareholders’ ability to choose a forum for disputes with us or our directors,

officers, employees, or agents.

Article XIV of our Bylaws, as amended, provides

that, to the fullest extent permitted by law, and unless we consent to the selection of an alternative forum, the state and federal courts

in and for the State of New York shall be the sole and exclusive forum for the resolution of certain actions and proceedings that may

be initiated by our stockholders, and that, by purchasing our securities, our stockholders are deemed to have notice of and consented

to this forum selection clause.

Under Article XIV of our Bylaws, the following claims are subject to this forum selection clause:

any derivative action or proceeding brought on behalf of the Company;

(b) any action or proceeding asserting a claim of breach of a fiduciary

duty owed by any director or officer of the Company to the Company or the Company’s stockholders;

a claim against the Company arising pursuant to any provision of the Nevada Revised Statutes or the Company’s Articles of Incorporation

or Bylaws (as either might be amended from time to time);

or (d) any action or proceeding asserting a claim against the Company governed

by the internal affairs doctrine.

By its terms, the forum selection clause in

our Bylaws applies to the foregoing claims to the fullest extent permitted by law, and, as such, should not be interpreted as precluding

our stockholders from bringing claims under the Exchange Act in the appropriate federal court with jurisdiction over such claims, as provided

by Section 27 of the Exchange Act.

Likewise, the forum selection clause in our Bylaws should not be interpreted as precluding our stockholders

from bringing claims under the Securities Act in the appropriate state or federal court with jurisdiction over such claims, as provided

by Section 22 of the Securities Act.

We believe the choice-of-forum provision in

our Bylaws will help provide for the orderly, efficient, and cost-effective resolution of legal issues affecting us by designating courts

located in the State of New York as the exclusive forum for cases involving such issues.

However, this provision may limit a stockholder’s

ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers, employees,

or agents, which may discourage such actions against us and our directors, officers, employees, and agents.

Nevada revised statutes permit us to make this

selection in our Bylaws, and, while there is no New York case law addressing the enforceability of this type of provision, New York courts

have on prior occasion found persuasive authority in Delaware case law in favor of the enforceability of forum selection clauses in the

absence of statutory or case law specifically addressing an issue of corporate law.

However, if a court were to find the choice-of-forum

provision in our Bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings,

we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business,

financial condition, or results of operations.

Nevada law contains provisions that could

discourage, delay or prevent a change in control of our company, prevent attempts to replace or remove current management and reduce the

market price of our stock.

Certain provisions of Nevada law described

below may make us a less attractive candidate for acquisition, which may adversely impact the value of the shares of our capital stock

held by our stockholders.

We have not opted out of these provisions in our Bylaws, as permitted under the Nevada Revised Statutes.

Nevada Revised Statutes Sections 78.411 through

78.444 (the “Nevada Combinations Statute”) generally prohibit “combinations” including mergers, consolidations,

sales and leases of assets, issuances of securities and similar transactions by a Nevada corporation having a requisite number of stockholders

of record (of which we are one) with any person who beneficially owns (or any affiliate or associate of the corporation who within the

previous two years owned), directly or indirectly, 10% or more of the voting power of the outstanding voting shares of the corporation

(an “interested stockholder”), within two years after such person first became an interested stockholder unless (i) the board

of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before

the person first became an interested stockholder or (ii) the board of directors of the corporation has approved the combination in question

and, at or after that time, such combination is approved at an annual or special meeting of the stockholders of the target corporation,

and not by written consent, by the affirmative vote of holders of stock representing at least 60% of the outstanding voting power of the

target corporation not beneficially owned by the interested stockholder or the affiliates or associates of the interested stockholder.

Two years after the date the person first became

an interested stockholder, the Nevada Combinations Statute prohibits any combination with that interested stockholder unless (i) the board

of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before

the person first became an interested stockholder or (ii) such combination is approved by a majority of the outstanding voting power of

the corporation not beneficially owned by the interested stockholder or any affiliate or associate of the interested stockholder.

Nevada Combinations Statute does not apply to combinations with an interested stockholder after the expiration of four years from when

the person first became an interested stockholder.

Because we do not currently intend to

pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.

We currently intend to retain any future earnings

to finance the development and expansion of our business.

We do not anticipate paying any cash dividends on our common stock in the foreseeable

Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

no assurance that stockholders will be able to sell shares when desired.

We, and some of our current officers

and directors, have been named as parties to various lawsuits arising out of, or related to, allegedly false and misleading statements

made in prior securities filings, and those lawsuits could adversely affect us, require significant management time and attention, result

in significant legal expenses or damages, and cause our business, financial condition, results of operations and cash flows to suffer.

A number of securities class action complaints

and a stockholder derivative action have been filed against us and certain of our current officers and directors, as described more fully

in Item 3, “Legal Proceedings”.

Stockholders have filed three class action complaints against us in three states, accusing

us of violations of the federal securities laws based on purported material misrepresentations or omissions allegedly made by the Company.

Each class action complaint seeks unspecified money damages and other relief on behalf of a putative class of persons who purchased or

otherwise acquired our common stock between November 13, 2017 and February 15, 2018.

The stockholder derivative case alleges similar disclosure

violations and seeks unspecified monetary damages and corporate governance reforms.

If these matters cannot be resolved expeditiously,

management’s attention may be diverted to this matter and there can be no assurance that the litigation would be settled.

current litigation proceeds or if additional claims are filed, the legal and other costs associated with the defense of these actions

and their ultimate outcomes could have a material adverse effect on our business, financial condition and results of operations.

we expect insurance to cover many of the costs associated with defending such litigation, including claims for indemnification made by

our existing and former management team and members of our Board of Directors, insurance coverage may be insufficient and could require

a diversion of our resources.

There also may be adverse publicity associated with litigation that could negatively affect customer perception

of our business, regardless of whether the allegations are valid or whether we are ultimately found liable.

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.

Because there has been limited precedent set

for the financial accounting of cryptocurrencies and related revenue recognition and no official guidance has yet been provided by the

FASB or the SEC, it is unclear how companies may in the future be required to account for cryptocurrency transactions and assets and related

revenue recognition.

A change in regulatory or financial accounting standards could result in the necessity to change our accounting methods

and restate our financial statements.

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.

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 expects to acquire for our own account and harm investors.

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 our periodic reporting obligations.

We are required to comply with certain provisions

of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”).

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.

assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

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

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.

Based on our assessment, as of December 31, 2021, we concluded that our internal control over financial reporting

contained material weaknesses.

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.

We believe that these actions will remediate

the material weakness.

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.

If we fail to comply with the

requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of our annual and quarterly reports may

be materially adversely affected and 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.

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.

UNRESOLVED STAFF COMMENTS.

Our principal executive office is located at 3855 Ambrosia Street, Suite 301, Castle Rock, CO 80109, and our telephone number is (303) 794-2000.

Our records are kept at our principal executive office.

We were incorporated in the State of Colorado on July 24, 2000, under the name AspenBio, Inc., and have been through a number of subsequent name changes.

Effective October 19, 2017, we adopted the corporate name Riot Blockchain, Inc., and changed our state of incorporation to Nevada.

Effective December 30, 2022, we adopted our current corporate name, Riot Platforms, Inc., and remain incorporated in Nevada.

Our website address is www.riotplatforms.com.

Restatement of Previously Issued Consolidated Financial Statements

On February 27, 2023, the Audit Committee (the “Audit Committee”) of the Board of Directors of the Company, after consulting with management and the Company’s independent registered public accounting firm, Marcum LLP, determined that the Company’s consolidated financial statements included in its 2021 Annual Report on Form 10-K as of December 31, 2021 and for the years ended December 31, 2021 and 2020, as amended, as well as the Company’s previously issued condensed interim consolidated financial statements as of and for the interim periods in 2022 and 2021 as filed in the Company’s Quarterly Reports on Form 10-Q for the periods ended March 31, 2022 and 2021, June 30, 2022 and 2021, and September 30, 2022 and 2021 (together with the financial statements contained in the 2021 Annual Report, the “Impacted Financials”) should no longer be relied upon due to material misstatements that are described in greater detail in Note 2.

Restatement of Previously Issued Financial Statements , and Note 23.

Restatement of Previously Issued Interim Condensed Consolidated Financial Statements, of the Notes to the Consolidated Financial Statements included within this Annual Report.

Similarly, any previously filed reports, press releases, earnings releases, or investor presentations or other communications describing Riot’s financial statements and other related financial information covering the previously mentioned Impacted Financials should no longer be relied upon.

Additional Information

Our annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports, as filed with the SEC, can be accessed, free of charge, on the SEC’s website www.sec.gov.

These documents may also be accessed on our website:

www.riotplatforms.com through a link in the “Investors” section.

The contemplated documents are placed on our website as soon as practicable after their filing with the SEC.

The information on our website is not incorporated by reference in this Annual Report.

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.

What changed 10-K

Item 1. Business