Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about our market risk exposures involves forward-looking statements. Actual results could differ materially from those projected in our forward-looking statements. For more information regarding the forward-looking statements used in this section and elsewhere in this Annual Report, see the “Cautionary Note Regarding Forward-Looking Statements” at the forepart of this Annual Report.
The sensitivity analyses disclosed below provide only a limited, point-in-time view of the market risk of the financial instruments discussed. The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analyses.
Risk Regarding the Price of Bitcoin.
Our business and development strategy is focused on maintaining and expanding our Bitcoin Mining operations to maximize the amount of new Bitcoin rewards we earn. As of December 31, 2024, we held 17,722 Bitcoin that was recognized at its fair value of $1.7 billion. Of our Bitcoin held 11,938 were produced from our Bitcoin Mining operations and 5,784 were acquired using proceeds of approximately $577.5 million from the offering of the 2030 Notes.
We cannot accurately predict the future market price of Bitcoin, the future value of which will affect revenue from our operations, and any future declines in the fair value of the Bitcoin we mine and hold for our account would be reported in our financial statements and results of operations as a charge against net income, which could have a material adverse effect on the market price for our securities.
The following table presents the impact of 10% changes in the price of Bitcoin on our Bitcoin holdings during the applicable year :
For the year ended December 31, 2024
For the year ended December 31, 2023
10% Increase in
10% Decrease in
10% Increase in
10% Decrease in
Price of Bitcoin
Price of Bitcoin
Price of Bitcoin
Price of Bitcoin
Increase/(Decrease) in Net Income
$
108,907
$
(108,907)
$
48,922
$
(48,922)
The increased sensitivity to price changes in 2024 as compared to 2023 was primarily due to the significant increase in Bitcoin throughout 2024 and as of December 31, 2024 as compared to December 31, 2023.
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Risk Regarding the Price of Power
The following table presents the impact of 10% changes in the future power prices (taking into account the dates of maturity of our various fixed price PPAs) used to derive the fair value of the Rockdale PPA and the Corsicana PPA derivative assets:
For the year ended December 31, 2024
For the year ended December 31, 2023
10% Increase in
10% Decrease in
10% Increase in
10% Decrease in
Future Power Prices
Future Power Prices
Future Power Prices
Future Power Prices
Increase/(Decrease) in Net Income
$
44,438
$
(44,438)
$
43,217
$
(43,217)
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