UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from __________ to __________
Commission
file number:
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| (Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of Company or organization) |
(I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
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☒ | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Applicable only to Corporate Issuers:
Indicate
the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date:
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii | |
| PART I | ||
| Item 1. | Financial Statements. | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 45 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk. | 74 |
| Item 4. | Controls and Procedures. | 74 |
| PART II | ||
| Item 1. | Legal Proceedings. | 75 |
| Item 1A. | Risk Factors. | 75 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 84 |
| Item 3. | Defaults Upon Senior Securities. | 84 |
| Item 4. | Mine Safety Disclosures. | 84 |
| Item 5. | Other Information. | 84 |
| Item 6. | Exhibits. | 85 |
| SIGNATURES | 86 | |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.
We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. In particular, information included under “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this report contain forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Bit Digital, Inc.’s (“Bit Digital”) management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond Bit Digital’s control. Except as may be required by law, Bit Digital undertakes no obligation to modify or revise any forward-looking statements to reflect new information, events or circumstances occurring after the date of this report. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”).
ii
Item 1. Financial Statements and Supplementary Data
BIT DIGITAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2025 and December 31, 2024
(Expressed in US dollars, except for the number of shares)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ |
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$ |
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| Restricted cash |
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| Accounts receivable, net |
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| USDC |
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| Digital assets |
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| Digital intangible assets |
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| Net investment in lease – current, net |
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| Loans receivable |
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| Other current assets, net |
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| Total Current Assets |
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| Non-Current Assets | ||||||||
| Deposits for property, plant, and equipment |
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| Property, plant, and equipment, net |
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| Goodwill |
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| Intangible assets, net |
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| Operating lease right-of-use assets |
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| Net investment in lease - non-current, net |
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| Investment securities |
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| Deferred tax asset |
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| Other non-current assets, net |
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| Total Non-Current Assets |
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| Total Assets | $ |
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$ |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ |
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$ |
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| Current portion of deferred revenue |
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| Current portion of operating lease liability |
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| Dividend payable |
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| Income tax payable |
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| Other payables and accrued liabilities |
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| Total Current Liabilities |
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| Non-Current Liabilities | ||||||||
| Non-current portion of deferred revenue |
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| Non-current portion of operating lease liability |
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| Long-term income tax payable |
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| Deferred tax liability |
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| Other long-term liabilities |
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| Total Non-Current Liabilities |
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||||||
| Total Liabilities |
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||||||
| Commitments and Contingencies – Note 19 | ||||||||
| Bit Digital Shareholders’ Equity | ||||||||
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Preferred shares, $
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||||||
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Ordinary shares, $
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Treasury stock, at cost,
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(
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) |
(
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) | ||||
| Additional paid-in capital |
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| Retained earnings (Accumulated deficit) |
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(
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) | |||||
| Accumulated other comprehensive income (loss) |
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(
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| Total Bit Digital Shareholders’ Equity |
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| Noncontrolling Interests |
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| Total Equity |
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||||||
| Total Liabilities and Equity | $ |
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$ |
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||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
BIT DIGITAL, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
INCOME (LOSS)
For the Three and Nine Months Ended September 30, 2025 and 2024
(Expressed in US dollars, except for the number of shares)
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | ||||||||||||||||
| Digital asset mining | $ |
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$ |
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$ |
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$ |
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| Cloud services |
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| Colocation services |
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| ETH staking |
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| Other |
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| Total Revenues |
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| Operating costs and expenses | ||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | ||||||||||||||||
| Digital asset mining |
(
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) |
(
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(
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) |
(
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| Cloud services |
(
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(
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(
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(
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| Colocation services |
(
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(
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| ETH staking |
(
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(
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(
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(
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| Depreciation and amortization expenses |
(
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(
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(
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(
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) | ||||||||
| General and administrative expenses |
(
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(
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) |
(
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(
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| Gains (losses) on digital assets |
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(
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|||||||||||
| Impairment of digital intangible assets |
(
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(
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| Total operating income/ (expenses) |
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(
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(
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| Income (loss) from operations |
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(
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) |
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(
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) | ||||||||||
| Net loss from disposal of property, plant and equipment |
(
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(
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| Other income (loss), net |
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(
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| Total other income (loss), net |
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(
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| Income (loss) before income taxes |
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| Income tax expenses |
(
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(
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(
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(
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| Net income (loss) |
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(
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(
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| Net loss attributable to noncontrolling interest |
(
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(
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) | ||||||||||||
| Net Income (loss) attributable to Bit Digital shareholders | $ |
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$ |
(
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) | $ |
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$ |
(
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) | ||||||
| Weighted average number of ordinary share outstanding | ||||||||||||||||
| Basic |
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| Diluted |
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| Earnings (loss) per share | ||||||||||||||||
| Basic | $ |
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$ |
(
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) | $ |
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$ |
(
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) | ||||||
| Diluted | $ |
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$ |
(
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) | $ |
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$ |
(
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) | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
BIT DIGITAL, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2025 and 2024
(Expressed in US dollars, except for the number of shares)
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income (loss) | $ |
|
$ |
(
|
) | $ |
|
$ |
(
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) | ||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Foreign currency translation adjustments |
(
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) |
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|||||||||||||
| Comprehensive income (loss) |
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(
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) |
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(
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) | ||||||||||
| Comprehensive loss attributable to noncontrolling interests |
(
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) |
(
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) | ||||||||||||
| Comprehensive income (loss) attributable to Bit Digital shareholders | $ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
BIT DIGITAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Nine Months Ended September 30, 2025 and 2024
(Expressed in U.S. dollars, except for the number of shares)
| Preferred Shares | Common Shares | Treasury |
Additional
paid -in |
Retained
Earnings (Accumulated |
Accumulated
other comprehensive |
Noncontrolling |
Total
Stockholders’ |
|||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Par Value | Shares | Amount | capital | deficit) | (loss) income | interest | Equity | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 |
|
|
|
|
(
|
) |
(
|
) |
|
(
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) |
|
||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - |
|
|
|||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares/At-the-market offering, net of offering costs |
|
|
- |
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|
|||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees |
|
|
- |
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|||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants |
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|
- |
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|
|||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to director |
|
|
- |
|
|
|||||||||||||||||||||||||||||||||||||||
| Cumulative effect upon adoption of ASU 2023-08 | - | - | - |
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|||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - |
|
|
|||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 |
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|
|
|
(
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) |
(
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) |
|
(
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) |
|
||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - |
|
|
|||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares/At-the-market offering, net of offering costs |
|
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- |
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|||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees |
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- |
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| Net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 |
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(
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) |
(
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) |
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(
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) |
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||||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - |
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|||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares/At-the-market offering, net of offering costs | - |
|
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- |
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||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | - |
|
|
- |
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||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | - |
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- |
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| Net loss | - | - | - | - |
(
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) |
(
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) | ||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 |
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(
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) |
(
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) |
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(
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) |
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| Balance, December 31, 2024 |
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(
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) |
(
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) |
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(
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) |
(
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) |
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||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - |
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| Issuance of ordinary shares/At-the-market offering, net of offering costs |
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- |
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| Share-based compensation in connection with issuance of ordinary shares to employees |
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- |
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| Share-based compensation in connection with issuance of ordinary shares to consultants |
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- |
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| Share-based compensation in connection with issuance of ordinary shares to director |
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- |
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| Other comprehensive loss | - | - | - |
(
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(
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) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 |
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(
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) |
(
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) |
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(
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) |
(
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) |
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||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - |
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| Issuance of ordinary shares/At-the-market offering, net of offering costs |
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- |
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|||||||||||||||||||||||||||||||||||||||
| Issuance of common stock/public offering, net of offering costs | - |
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- |
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||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants |
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- |
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| Share-based compensation in connection with issuance of ordinary shares to employees |
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- |
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|||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - |
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|||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - |
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|||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 |
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|
|
|
(
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) |
(
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) |
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(
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) |
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|
|||||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||||||
| Changes in ownership interests in a subsidiary - IPO | - | - | - |
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||||||||||||||||||||||||||||||||||||||
| Changes in ownership interests in a subsidiary - underwriters’ over-allotment option exercise | - | - | - |
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||||||||||||||||||||||||||||||||||||||
| Changes in ownership interests in a subsidiary - settlement of subsidiary RSUs | - | - | - |
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|
|||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares/At-the-market offering, net of offering costs | - |
|
|
- |
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|
||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares/public offering, net of offering costs | - |
|
|
- |
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|
||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | - |
|
|
- |
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|
||||||||||||||||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | - |
|
|
- |
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|
||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - |
(
|
) |
(
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) |
(
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) | |||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - |
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(
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) |
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|||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 |
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(
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) |
(
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) |
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|||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
BIT DIGITAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2025 and 2024
(Expressed in US dollars)
|
For
the Nine Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ |
|
(
|
) | ||||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization expenses |
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|
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| Loss from disposal of property, plant, and equipment |
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|||||||
| Gains on digital assets |
(
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) |
(
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) | ||||
| Share-based compensation expenses |
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|
||||||
| Realized and unrealized gains on digital assets held within Investment Fund |
(
|
) | ||||||
| Changes in fair value of investment security |
(
|
) |
|
|||||
| Current expected credit losses |
|
|||||||
| Digital assets mined |
(
|
) |
(
|
) | ||||
| Digital assets earned from staking |
(
|
) |
(
|
) | ||||
| Impairment of digital intangible assets |
|
|||||||
| Changes in operating assets and liabilities: | ||||||||
| Digital assets and stable coins |
(
|
) |
|
|||||
| Digital intangible assets |
(
|
) | ||||||
| Operating lease right-of-use assets |
|
(
|
) | |||||
| Deferred revenue |
(
|
) |
|
|||||
| Lease liability |
(
|
) |
|
|||||
| Other current assets |
|
(
|
) | |||||
| Other non-current assets |
|
|
||||||
| Accounts receivable |
(
|
) |
(
|
) | ||||
| Accounts payable |
|
|
||||||
| Other payables and accrued liabilities |
(
|
) |
|
|||||
| Net investment in lease |
|
(
|
) | |||||
| Other long-term liabilities |
(
|
) | ||||||
| Income tax payable |
(
|
) |
|
|||||
| Deferred tax liability |
|
|
||||||
| Loss from divestiture of a subsidiary |
|
|||||||
| Net Cash Used in Operating Activities |
(
|
) |
(
|
) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of and deposits made for property, plant and equipment |
(
|
) |
(
|
) | ||||
| Investment in equity securities |
(
|
) |
(
|
) | ||||
| Investment in SAFE |
(
|
) | ||||||
| Proceeds from disposal of property, plant and equipment |
|
|
||||||
| Net Cash Used in Investing Activities |
(
|
) |
(
|
) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from issuance of ordinary shares/public offering |
|
|||||||
| Net proceeds from IPO over-allotment option exercise |
|
|||||||
| Net proceeds from subsidiary IPO |
|
|||||||
| Net proceeds from issuance of ordinary shares/registered direct offering |
|
|||||||
| Net proceeds from issuance of ordinary shares/At-the-market offering |
|
|
||||||
| Payment of dividends |
(
|
) | ||||||
| Net Cash Provided by Financing Activities |
|
|
||||||
| Net increase in cash, cash equivalents and restricted cash |
|
|
||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|||||||
| Cash, cash equivalents and restricted cash, beginning of period |
|
|
||||||
| Cash, cash equivalents and restricted cash, end of period | $ |
|
$ |
|
||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for income taxes, net of refunds | $ |
|
$ |
|
||||
| Non-cash Transactions of Investing and Financing Activities | ||||||||
| Reclassification of deposits to property and equipment | $ |
|
$ |
|
||||
| Right of use assets exchanged for operating lease liability | $ |
|
$ |
|
||||
| Net investment in sales-type lease of equipment | $ |
|
$ |
|
||||
| Issuance of subsidiary shares to employees in settlement of RSUs | $ |
|
||||||
Reconciliation of cash, cash equivalents and restricted cash
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cash and cash equivalents | $ |
|
$ |
|
||||
| Restricted cash |
|
|
||||||
| Cash, cash equivalents and restricted cash | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
BIT DIGITAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Bit
Digital, Inc. (“BTBT” or the “Company”), is a holding company incorporated on
On August 17, 2023, WhiteFiber Iceland ehf (f/k/a Bit Digital Iceland ehf) was incorporated to support the Company’s cloud services in Iceland.
On
June 27, 2024, WhiteFiber HPC, Inc. (f/k/a Bit Digital HPC, Inc.) (“WF HPC”) was incorporated to support the Company’s
cloud services in the United States. WhiteFiber HPC, Inc. is
On August 15, 2024, WhiteFiber, Inc. (f/k/a Celer, Inc.) (“WhiteFiber”) was incorporated to support the Company’s generative artificial intelligence (“AI”) workstreams. WhiteFiber was
On
October 11, 2024, the Company completed the acquisition of Enovum Data Centers Corp (“Enovum”), a Montreal-based owner, operator,
and developer of HPC data centers. Enovum is
On
March 11, 2025, WhiteFiber Canada, Inc. (“WF Canada”) was incorporated to support the Company’s generative AI workstreams
in Canada. WF Canada is
On
May 7, 2025, Enovum NC-1 BIDCO, LLC (“Enovum NC”) was incorporated to support the HPC data centers workstreams in North Carolina.
Enovum NC is
On
May 22, 2025, WhiteFiber Japan GK (“WF Japan”) was incorporated to support the Company’s generative AI workstreams
in Japan. WF Japan is
On
August 8, 2025, WhiteFiber completed its initial public offering (“IPO”) of its ordinary shares. Prior to the consummation
of the IPO, the Company entered into a contribution agreement (the “Contribution Agreement”) with WhiteFiber, pursuant to
which the Company contributed (the “Contribution”) its HPC business through the transfer of
6
The accompanying unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities:
| Name | Background | Ownership | |||
| Bit Digital USA, Inc. (“BT USA”) | ● |
|
|
||
| ● |
|
||||
| ● |
|
||||
| Bit Digital Canada, Inc. (“BT Canada”) | ● |
|
|
||
| ● |
|
||||
| ● |
|
||||
| ● |
|
||||
| Bit Digital Hong Kong Limited (“BT HK”) | ● |
|
|
||
| ● |
|
||||
| ● |
|
||||
| Bit Digital Strategies Limited | ● |
|
|
||
| (“BT Strategies”) | ● |
|
|||
| ● |
|
||||
| Bit Digital Singapore Pte. Ltd. | ● |
|
|
||
| (“BT Singapore”) | ● |
|
|||
| ● |
|
||||
| Bit Digital Investment Management | ● |
|
|
||
| Limited (“BT IM”) | ● |
|
|||
| ● |
|
||||
| ● |
|
||||
| Bit Digital Innovation Master Fund | ● |
|
|
||
| SPC Limited (“BT SPC”) | ● |
|
|||
| ● |
|
||||
| ● |
|
||||
| WhiteFiber, Inc. (f/k/a Celer, Inc.) | ● |
|
|
||
| (“WhiteFiber”) | ● |
|
|||
| ● |
|
||||
| WhiteFiber AI, Inc. (f/k/a Bit Digital | ● |
|
|
||
| AI, Inc.) (“WF AI”) | ● |
|
|||
| ● |
|
||||
7
| WhiteFiber Iceland ehf (f/k/a Bit Digital | ● |
|
|
||
| Iceland ehf) (“WF Iceland”) | ● |
|
|||
| ● |
|
||||
| WhiteFiber HPC, Inc. (f/k/a Bit Digital | ● |
|
|
||
| HPC, Inc.) (“WF HPC”) | ● |
|
|||
| ● |
|
||||
| Enovum Data Centers Corp (“Enovum”) | ● |
|
|
||
| ● |
|
||||
| ● |
|
||||
| WhiteFiber Canada, Inc. (“WF Canada”) | ● |
|
|
||
| ● |
|
||||
| ● |
|
||||
| Enovum NC-1 BIDCO, LLC | ● |
|
|
||
| (“Enovum NC”) | ● |
|
|||
| ● |
|
||||
| WhiteFiber Japan GK (“WF Japan”) | ● |
|
|
||
| ● |
|
||||
| ● |
|
| (1) |
|
8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The interim unaudited condensed consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States (“US GAAP”).
The unaudited condensed consolidated financial information as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 has been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with US GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 14, 2025.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2024. The results of operations for the three and nine months ended September 30, 2025, and 2024 are not necessarily indicative of the results for the full years.
Initial Public Offering of WhiteFiber
On
August 8, 2025, WhiteFiber closed its initial public offering (IPO) of
On
September 2, 2025, the Underwriters fully exercised their option to purchase the additional
Following
the IPO (including the underwriters’ exercise of their option to purchase additional ordinary shares), the Company owned approximately
Use of estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of digital assets and other current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. Actual results could differ from those estimates.
9
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 - inputs to the valuation methodology are unobservable. |
Fair value of digital assets is based on Level 1 inputs as these were based on observable quoted prices in the Company’s principal market for identical assets. The fair value of the Company’s other financial instruments, including cash and cash equivalents, restricted cash, loans receivable, deposits, accounts receivable, other receivables, accounts payable, and other payables, approximate their fair values because of the short-term nature of these assets and liabilities. Non-financial assets, such as goodwill, intangible assets, operating lease right-of-use assets, and property, plant and equipment, are adjusted to fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only upon recognition of an impairment charge.
USDC
USD Coin (“USDC”) is accounted for as a financial instrument that can be redeemed one USDC for one U.S. dollar on demand from the issuer. While not accounted for as cash or cash equivalents, we treat our USDC holdings as a liquidity resource.
Accounts receivable, net
Accounts receivable consist of amounts due from our customers. Receivables are recorded at the invoiced amount less current expected credit losses for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. In accordance with ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine current expected credit losses that reflects its best estimate of the lifetime expected credit losses. Uncollectible accounts are written off against the current expected credit losses when collection does not appear probable.
Due to the short-term nature of the Company’s accounts receivable, the estimate of expected credit loss is based on the aging of accounts using an aging schedule as of period ends. In determining the amount of the current expected credit losses, the Company considers historical collection history based on past due status, the current aging of receivables, customer-specific credit risk factors, including their current financial condition, current market conditions, and probable future economic conditions which inform adjustments to historical loss patterns. Credit loss expense, inclusive of credit loss expense on all categories of financial assets, is recorded within general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss).
Digital assets holdings
The Company’s digital assets primarily include bitcoin, ETH and Liquid Staked ETH (“LsETH”), which are included in current assets in the accompanying consolidated balance sheets. The Company distinguishes between digital assets which fall within the scope of ASC 350-60 and those which do not. The Company refers to digital assets which fall within the scope of ASC 350-60 (e.g., bitcoin and ETH) as “crypto assets.” Digital assets which do not fall within the scope of ASC 350-60, Accounting for and Disclosure of Crypto Assets , are referred to as “digital intangible assets.”
Digital intangible assets comprised of LsETH that are intangible assets outside the scope of ASC 350-60. A receipt token, in general and by design, entitles the holder to redeem the crypto intangible asset(s) for which it was exchanged. Therefore, it fails the ‘other goods and services criterion’ in paragraph 350-60-15-1(b), and thus is outside the scope of Subtopic 350-60. These digital intangible assets are recorded at cost, less impairment within digital intangible assets on the consolidated balance sheets in accordance with ASC 350-30. The Company tests digital intangible assets for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The test for impairment consists of a comparison of the fair value of the digital intangible assets with their carrying amounts. Refer to Note 6, Digital Asset Holdings for additional information.
10
Digital assets purchased are recorded at cost and digital assets awarded to the Company through its mining activities and staking activities are accounted for in accordance with the Company’s revenue recognition policy disclosed below.
Effective January 1, 2024, the Company early adopted ASU 2023-08, which requires entities to measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. The Company’s digital assets are within the scope of ASU 2023-08 and the transition guidance requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any difference between the carrying amount of the Company’s digital assets and fair value.
Prior to the adoption of ASU 2023-08, digital assets were accounted for as intangible assets with indefinite useful lives and are recorded at cost less impairment in accordance with ASC 350 - Intangibles-Goodwill and Other . An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Digital assets held are accounted for as intangible assets with indefinite useful lives and are subject to impairment losses if the fair value of digital assets decreases below the carrying value at any time during the period. The fair value is measured using the quoted price of the digital assets at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company uses both exchanges and Amber Group’s OTC desk to buy and sell digital assets, including transactions involving U.S. dollars or exchanges between different types of digital assets. Prior to April 1, 2025, the Company considered CoinMarketCap to be its principal market. Effective April 1, 2025, the Company determined that Coinbase is its principal market as it provides the most reliable and greatest volume and level of activity for bitcoin and ETH for which the Company can access.
The Company recognizes mining revenue by utilizing the spot price of Bitcoin determined using Coinbase at 0:00:00 UTC on the date of contract inception and staking revenue by utilizing the daily close prices obtained from Coinbase. In 2022, the Company also used hourly close price from CryptoCompare to recognize revenue from our digital asset mining activities. The Company believed the hourly close price can better reflect revenue recognized from our digital asset mining activities as compared to the daily close price from CoinMarketCap used at the time.
Purchases of digital assets by the Company and digital assets awarded to the Company through its mining activities and staking activities are included within operating activities on the accompanying consolidated statements of cash flows. The changes of digital assets are included within operating activities in the accompanying consolidated statements of cash flows. After adopting ASU 2023-08, changes in fair value and realized gains or losses are now reported as “gains (losses) on digital assets” in the consolidated statements of operations. Prior to this adoption, realized gains or losses were reported as “realized gains (losses) on exchange of digital assets” in the consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting.
Deposits for property, plant, and equipment
The deposits for property, plant, and equipment (“PP&E”) represented advance payments for purchases of miner, high performance computing equipment and other equipment used in our colocation services. The Company initially recognizes deposits for PP&E when cash is advanced to our suppliers. Subsequently, the Company derecognizes and reclassifies deposits for PP&E to PP&E when control is transferred to and obtained by the Company.
Below is the roll forward of the balance of deposits for PP&E for the nine months ended September 30, 2025 and for the year ended December 31, 2024, respectively.
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Opening balance | $ |
|
$ |
|
||||
| Reclassification to PP&E |
(
|
) |
(
|
) | ||||
| Addition of deposits for PP&E |
|
|
||||||
| Adjustment (a) |
(
|
) | ||||||
| Ending balance | $ |
|
$ |
|
||||
| (a) |
|
11
Property, plant, and equipment, net
Property,
plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets
or declining-balance method. Direct costs related to developing or obtaining software for internal use are capitalized as property, plant,
and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service.
|
Estimated
Useful Life |
||
| Digital asset miners |
|
|
| Cloud service equipment |
|
|
| Colocation service equipment |
|
|
| Building |
|
|
| Leasehold improvements |
|
|
| Purchased and internally developed software |
|
|
| Vehicle |
|
|
| Other property and equipment |
|
Effective
January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from
Impairment of long-lived assets
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not subject to amortization, and instead, assessed for impairment annually at the end of each fiscal year, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount in accordance with ASC 350 - Intangibles -Goodwill and Other.
The impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment is performed.
The quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit over its fair value up to the amount of goodwill allocated to the reporting unit.
12
Finite-lived intangible Assets
Intangible assets are recorded at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets acquired through business combinations are measured at fair value at the acquisition date.
Intangible
assets with finite lives are comprised of customer relationships and are amortized on straight-line basis over their estimated useful
lives. The Company assesses the appropriateness of finite-lived classification at least annually. Additionally, the carrying value and
remaining useful lives of finite-lived assets are reviewed annually to identify any circumstances that may indicate potential impairment
or the need for a revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value
exceeds the estimated future undiscounted cash flows expected to be generated from it. We apply judgment in selecting the assumptions
used in the estimated future undiscounted cash flow analysis. Impairment is measured by the amount that the carrying value exceeds fair
value. The useful lives of customer relationships is
Business combinations
The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805 - Business Combinations , by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at the acquisition date fair value. The determination of fair value involves assumptions, estimates, and judgments. The initial allocation of the purchase price is considered preliminary and therefore subject to change until the end of the measurement period (up to one year from the acquisition date). Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net assets acquired.
Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
Investment securities
As of September 30, 2025 and December 31, 2024, investment securities represent the Company’s investments in three funds, a privately held company via a simple agreement for future equity (“SAFE”), and four privately held companies over which the Company neither has control nor significant influence through investments in ordinary shares or preferred shares.
Investment in equity method investee
In accordance with ASC 323, Investments - Equity Method and Joint Ventures , the Company accounts for the investment in one privately held company using equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investee.
Under the equity method, the Company initially records its investment at cost and prospectively recognizes its proportionate share of each equity investee’s net income or loss into its consolidated statements of operations. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee.
The Company continually reviews its investment in the equity investee to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value.
Investment in funds
Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated income statements, according to ASC 321, Investments - Equity Securities . As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment in the fund. NAV is primarily determined based on information provided by the fund administrator.
13
Investment in privately held company
Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated income statements, according to ASC 321, Investments - Equity Securities . The Company elected to record the equity investments in privately held companies using the measurement alternative at cost, less impairment, with subsequent adjustments for observable price changes resulting from orderly transactions for identical or similar investments of the same issuer.
Equity investments in privately held companies accounted for using the measurement alternative are subject to periodic impairment reviews. The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of these equity securities. In computing realized gains and losses on equity securities, the Company calculates cost based on amounts paid using the average cost method. Dividend income is recognized when the right to receive the payment is established.
Investment in SAFE
SAFE investments provide the Company with the right to participate in future equity financing of preferred stock. The Company accounted for this investment under ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment under ASC 825, Financial Instruments , which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.
Investment in Innovation Fund/Digital assets held in fund
On
October 1, 2023, the Company made an investment of
The Fund qualified and operated as an investment company for accounting purposes pursuant to the accounting and reporting guidance under ASC 946, “ Financial Services – Investment Companies ” (“ASC 946”), which requires fair value measurement of the Fund. The Company retains the Fund’s investment company specific accounting principles under ASC 946 upon consolidation. The digital assets held by the Fund were traded on a number of active markets globally. A fair value measurement under ASC 820, “ Fair Value Measurement ” (“ASC 820”) for an asset assumes that the asset is exchanged in an orderly transaction between market participants either in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset (ASC 820-10-35-5). The fair value of the assets within the Fund was primarily determined using the price from CoinMarketCap. Any changes in the fair value of the assets were recorded in Other income (expense), net in the consolidated statements of operations.
On July 1, 2024, the Company entered into a share purchase agreement with Pleasanton Ventures Limited (“Pleasanton Ventures”) for the disposition of Bit Digital Innovation Master Fund SPC Ltd and Bit Digital Investment Management Limited. Refer to Note 20. Disposition of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund SPC Limited , for more information. Upon the disposition, the Company no longer has a controlling financial interest in the Fund and therefore deconsolidated the Fund in accordance with ASC 810 – “ Consolidation ” (“ASC 810”). The Company did not record any gain or loss upon deconsolidation as the digital assets in the Fund were measured at fair value. Subsequently, the investment in the Fund is included under the caption “Investment securities” as Investment in Innovation Fund. Refer to Note 10. Investment Securities for more information.
Leases
The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancellable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term.
14
For leases with a term exceeding 12 months, an operating lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding operating lease right-of-use asset equal to the initial lease liability is also recorded, adjusted for any prepayment and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. Variable lease costs are recognized in the period in which the obligation for those payments is incurred and not included in the measurement of right-of-use assets and operating lease liabilities.
For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Company’s consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant.
For sales-type leases where the Company is the lessor, the Company recognizes a net investment in lease, which comprises of the present value of the future lease payments and any unguaranteed residual value. Interest income is recognized over the lease term at a constant periodic discount rate on the remaining balance of the lease net investment using the rate implicit in the lease and is included in “Revenue – other”. Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which will be recorded in “Other income, net.”
For the operating sublease where the Company is the lessor, the Company recognizes lease payments in income over the lease term on a straight-line basis and is included in “Other income, net”.
Revenue recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. Refer to Note 3. Revenue from Contracts with Customers for further information.
Contract costs
Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, including commissions that are incurred directly related to obtaining customer contracts. We amortize the deferred contract costs on a straight-line basis over the expected period of benefit. These amounts are included in the accompanying consolidated balance sheets, with the capitalized costs to be amortized to commission expense over the expected period of benefit and commission expense payable included in Other current assets and Other long-term liabilities.
The Company capitalized lease expense incurred in December 2023 that are directly related to fulfilling its cloud services which commenced operations in January 2024. The lease expense is directly related to fulfilling customer contracts and is expected to be recovered. The capitalized lease expense was reclassified as lease expense in January 2024.
Deferred Revenue
Deferred revenue primarily pertains to prepayments received from customers for services that have not yet commenced as of September 30, 2025. Deferred revenues are recognized as revenue when recognition criteria have been met.
15
Remaining performance obligation
Remaining performance obligations represent the transaction price of contracts for work that have not yet been performed. The amount represents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation.
Cost of revenue
The Company’s cost of revenue consists primarily of (i) direct production costs related to mining operations, including electricity costs, profit-sharing fees/variable performance fees and/or other relevant costs paid to our hosting facilities, (ii) direct production costs related to our cloud services, including electricity costs, data center lease costs, and other relevant costs, (iii) direct production costs related to our colocation services, including electricity costs, lease costs, data center employees’ wage expenses and other relevant costs, and (iv) direct cost related to ETH staking business, including service fees payable to the service provider.
Cost revenue excludes depreciation expenses, which are separately stated in the Company’s consolidated statements of operations.
Foreign currency
Accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of Accumulated other comprehensive income, net of any related taxes, in total shareholders’ equity. Income statement accounts expressed in functional currencies are translated using average exchange rates during the period. Functional currencies are generally the currencies of the local operating environment. Financial statement accounts expressed in currencies other than the functional currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange gains or losses recorded in other income (expense), net.
Operating segments
Income taxes
We account for current and deferred income taxes in accordance with the authoritative guidance, which requires income tax impact to be recognized in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the financial statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on historical and projected future taxable income over the periods in which the temporary differences are expected to be recovered or settled on each jurisdiction.
In
accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax
positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight
of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than
16
Earnings (loss) per shar e
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary share participating in the earnings of the entity.
Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
The Company may also enter into contractual arrangements that result in commitments, including purchase obligations. In addition, the Company may be subject to contingent consideration obligations related to asset acquisitions, which involve potential future payments contingent upon the achievement of specified conditions or milestones.
Share-based compensation
The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant-date fair value of the awards. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk-free interest rate, the expected life of the option, and the dividend yield on the underlying stock. Expected volatility is calculated based on the historical volatility of the Company’s ordinary shares over the expected term of the option. Risk-free interest rates are calculated based on risk–free rates for the appropriate term. The Company has elected to account for forfeitures of awards as they occur.
The Company has granted RSUs to certain employees and non-employees. Some of the RSUs contain a performance condition, and vesting is determined based on achievement of a performance metric. Compensation expense is recognized on a straight-line basis over the service period based on the expected attainment of a performance metric. At each reporting period, the Company reassesses the probability of the achievement of the performance metric, and any increase or decrease in share-based compensation expense resulting from an adjustment in the number of shares expected to vest is treated as a cumulative catch-up in the period of adjustment.
Treasury stock
The Company accounts for treasury stocks using the cost method. Under this method, the cost incurred to purchase the shares is recorded in the treasury stocks account on the consolidated balance sheets.
The Company treats shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted share grants as ordinary share repurchases because they reduce the number of shares that would have been issued upon vesting.
Reclassification
Certain items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current period. The reclassification has no impact on the total assets and total liabilities as of September 30, 2025 or on the statements of operations for the three and nine months ended September 30, 2025.
Recent accounting pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.
17
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 expands existing income tax disclosures for rate reconciliations by requiring disclosure of certain specific categories and additional reconciling items that meet quantitative thresholds and expands disclosures for income taxes paid by requiring disaggregation by certain jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact, if any, of the updated guidance on its disclosures for the year ending December 31, 2025.
In November 2024, the FASB issued ASU 2024-03, I ncome Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40 ) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses specified in the updated guidance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact the updated guidance will have on its disclosures.
In May 2025, FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which amends the guidance for identifying the accounting acquirer in transactions involving the acquisition of a variable interest entity that meets the definition of a business. The new standard is effective for the Company for its annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
On September 18, 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Topic ASC 350-40) which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The ASU makes targeted improvements to ASC 350-40 but does not fully align the framework for accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally that is subject to ASC 985-20. The ASU also does not amend the guidance on costs of software licenses that are within the scope of ASC 985-20. The amendments supersede the guidance on Web site development costs in ASC 350-50 and relocate that guidance, along with the recognition requirements for development costs specific to Web sites, to ASC 350-40. The new guidance will be effective for all entities for annual periods beginning after December 15, 2027. Early adoption is permitted as of the beginning of an annual reporting period. The guidance can be applied on a fully prospective basis, a modified basis for in-process projects, or a full retrospective basis. The Company has adopted this ASU as of July 1, 2025 and prospectively applied the updated ASU.
3. Revenue from Contracts with Customers
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).
To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.
18
The Company is currently engaged in digital asset mining business, high performance computing (“HPC”) business, including cloud services and HPC data center services, and Ethereum staking activities.
In June 2025, the Company announced that it had initiated a strategic transition to become a pure play ETH staking and treasury company. In connection with the transition, the Company intends to convert its BTC holdings into ETH over time and has commenced a strategic alternatives process for its bitcoin mining operations, which is expected to result in a sale or wind-down, with any net proceeds to be re-deployed into ETH.
Disaggregation of revenues
Revenue disaggregated by reportable segment is presented in Note 17. Segment Reporting .
Cloud services
The Company provides cloud services to support customers’ generative AI workstreams. We have determined that cloud services are a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e. distinct days of service).
These services are consumed as they are received, and the Company recognizes revenue over time using the variable allocation exception as it satisfies performance obligations. We apply this exception because we concluded that the nature of our obligations and the variability of the payment terms based on the number of GPUs providing HPC services are aligned and uncertainty related to the consideration is resolved on a daily basis as we satisfy our obligations. The Company recognizes revenue net of consideration payable to customers, such as service credits, and accounted for as a reduction of the transaction price in accordance with guidance in ASC 606-10-32-25.
During
the nine months ended September 30, 2025, the Company accrued an estimated service credit of approximately $
The Company’s cloud services revenue has been generated from Iceland.
Colocation services
Colocation services generate revenue by providing customers with physical space, power, and cooling within the data center facility.
Our revenue is primarily derived from recurring revenue streams, mainly (1) colocation, which is the leasing of cabinet space and power and (2) connectivity services, which includes cross-connects. Additionally, the remainder of our revenue is from non-recurring revenue, which primarily includes installation services related to a customer’s initial deployment.
Revenues from recurring revenue streams are billed monthly and recognized ratably over the term of the contract, generally one to five years for data center colocation customers. Non-recurring installation fees, although generally paid upfront upon installation, are deferred and recognized ratably over the contract term.
We guarantee certain service levels, such as uptime, as outlined in individual customer contracts. If these service levels are not achieved due to any failure of the physical infrastructure or offerings, or in the event of certain instances of damage to customer infrastructure within our data center, we would reduce revenue for any credits or cash payments given to the customer.
The Company’s colocation services revenue has been generated from Canada.
Digital asset mining
The Company enters in contracts with mining pool operators to provide computing power to digital asset mining pools. Providing computing power for digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators.
19
Contract inception and the Company’s enforceable right to consideration begin when the Company commences providing hash calculation services to the mining pool operators. Each party to the contract has the unilateral right to terminate the contract at any time without any compensation to the other party for such termination. As such, the duration of a contract is less than 24 hours (a day) and may be continuously renewed throughout the day. The implied renewal option is not a material right because there are no upfront or incremental fees in the initial contract, and the rate of payments remains the same upon each implied renewal, as the Full-Pay-Per-Share (FPPS) formula remains the same. The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a 24-hour period beginning 00:00:00 UTC and ending 23:59:59 on a daily basis. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed digital assets award the mining pool operator receives, for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. The Company is entitled to its relative share of consideration even if a block is not successfully placed.
The transaction consideration the Company receives, if any, is noncash consideration in the form of digital assets, net of pool fees charged by the mining pool operator. The Company estimates the fair value of noncash consideration at contract inception. This non-cash consideration is variable since the amount of block reward earned depends on the Company’s hash rate provided and transaction fees depend on the actual Bitcoin Network transaction fees. While the non-cash consideration is variable, the payout is settled the next day on a daily basis and the Company has the ability to estimate the variable consideration with reasonable certainty, without the risk of significant revenue reversal because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved.
Revenue is recognized on the same day that control of the contracted service transfers to the mining pool operator, which is the same day as contract inception. Revenue is estimated and recognized based on the spot price of Bitcoin determined using the Company’s Principal Market at 0:00:00 UTC on the date of contract inception.
Below table presents the Company’s revenues generated from digital asset mining business from Foundry USA Pool by country:
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| United States | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Iceland |
|
|
|
|
||||||||||||
| Canada |
|
|
||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
|||||||||
ETH staking business
The
Company generates revenue through ETH staking rewards. The Company commenced both native staking business and liquid staking business
in 2022. In the first quarter of 2024, the Company terminated its liquid staking business. During the nine months ended September 30,
2025, the Company participated in both native staking and liquid staking. In July 2025, we resumed liquid staking through the Liquid
Collective protocol with
With the introduction of staked ETH withdrawals in April 2023, we have reassessed our Ethereum network staking approaches, weighing the advantages of traditional staking against liquid staking solutions. The withdrawal feature in native staking, coupled with yields that are on par with those of liquid staking, has encouraged us to expand our collaborations with other service providers in this domain. As a result, we have terminated all liquid staking activities with StakeWise and Liquid Collection in the third quarter of 2023 and in the first quarter of 2024, respectively, reclaiming all staked Ethereum along with the accumulated rewards. In the fourth quarter of 2023, the Company terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon. Subsequently, we have ceased our native staking with MarsLand in the first quarter of 2024 and initiated our native staking with Figment Inc.
20
(a) Native staking
The Company has entered into network-based smart contracts by staking ETH on nodes run by third-party operators or nodes maintained by us in 2022. Through these contracts, the Company stakes ETH on nodes for the purpose of validating transactions and adding blocks to the Ethereum blockchain network. The Company is able to withdraw the staked ETH which was previously locked-up in staking contracts since the Shanghai upgrade was successfully completed on April 12, 2023. In exchange for staking the ETH and validating transactions on blockchain networks, the Company is entitled to the block rewards and transaction fees for successfully validating or adding a block to the blockchain. These rewards are received by the Company directly from the Ethereum network and are calculated approximately based on the proportion of the Company’s stake to the total ETH staked by all validators.
The provision of validating blockchain transactions is an output of the Company’s ordinary activities. Each separate block creation or validation under a smart contract with a network represents a performance obligation. The transaction consideration the Company receives, the digital asset awards, is a non-cash consideration, which the Company measures at fair value on the date received. The fair value of the ETH reward received is determined using the quoted price of the ETH at the time of receipt. The satisfaction of the performance obligation for transaction verification services occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are deposited to our address. At that point, revenue is recognized.
As
of September 30, 2025 and December 31, 2024, the Company had native staked
(b) Liquid staking
Liquid staking is similar to native staking in terms of performance obligations, determination of transaction price and revenue recognition. When we participated in liquid staking via Portara protocol, the Company received receipt tokens sETH-H to represent the staked ETH at 1:1 ratio. The liquid staking rewards were in the form of rETH-H which could be redeemed for ETH from the liquid staking provider or exchange for ETH via over-the-counter markets. When we participated in liquid staking via Liquid Collective protocol, the Company received receipt tokens Liquid Staked ETH (“LsETH”) to represent the staked ETH. LsETH uses a floating conversion rate, or protocol conversion rate, between the receipt token and staked tokens, reflecting the value of accrued network rewards, penalties, and fees associated with the staked tokens.
For
the three months ended September 30, 2025 and September 30, 2024, the Company generated revenues of $
Contract costs
The
Company capitalizes commission expenses directly related to obtaining customer contracts, which would not have been incurred if the contract
had not been obtained. As of September 30, 2025, capitalized costs to obtain a contract totaled $
Contract Assets
Contract
assets primarily consist of revenue allocated to complimentary services provided to customers as part of contractual arrangements. As
of September 30, 2025 and December 31, 2024, contract assets were $
21
Contract Liabilities
The
Company’s contract liabilities consist of deferred revenue and customer deposits. As of September 30, 2025 and December 31, 2024,
contract liabilities were $
During
the three months ended September 30, 2025 and 2024, $
During
the three months ended September 30, 2025 and 2024, $
Remaining performance obligation
The following table presents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation as of September 30, 2025:
| 2025 | 2026 | 2027 | 2028 | 2029 | Total | |||||||||||||||||||
| Colocation Services | $ |
|
$ |
|
$ |
|
$ |
|
$ | $ |
|
|||||||||||||
| Other Revenue |
|
|
|
|
$ |
|
|
|||||||||||||||||
| Total contract liabilities | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
The amounts presented in the table above exclude variable consideration allocated entirely to wholly unsatisfied performance obligations. Such amounts have been excluded from the disclosure of remaining performance obligations in accordance with ASC 606, as the consideration is not fixed and determinable.
4. Acquisitions
Enovum Data Centers Acquisition
On
October 11, 2024, the Company acquired
The
acquisition-date fair value of the consideration transferred totaled $
The following table summarizes the preliminary allocation of the purchase price based on the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:
| Accounts receivable | $ |
|
||
| Other current assets |
|
|||
| Property and equipment, net |
|
|||
| Operating lease right-of-use assets |
|
|||
| Intangible asset |
|
|||
| Deferred tax asset |
|
|||
| Other non-current assets |
|
|||
| Accounts payable |
(
|
) | ||
| Other payables and accrued liabilities |
(
|
) | ||
| Current portion of deferred revenue |
(
|
) | ||
| Current portion of operating lease liability |
(
|
) | ||
| Non-current portion of deferred revenue |
(
|
) | ||
| Non-current portion of operating lease liability |
(
|
) | ||
| Deferred tax liability |
(
|
) | ||
| Total identifiable assets and liabilities |
|
|||
| Goodwill |
|
|||
| Total Purchase Consideration | $ |
|
22
The
acquisition-date fair value of the acquired accounts receivable was $
The
Company recognized customer relationships as an intangible asset of $
Of
the total Goodwill recognized, $
Through
September 30, 2025, the Company recognized $
The following unaudited pro forma financial information represents the consolidated results of operations as if the acquisition had occurred on January 1, 2024:
|
For
the
Three Months Ended September 30, 2024 |
For
the
Nine Months Ended September 30, 2024 |
|||||||
| Revenue | $ |
|
$ |
|
||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
These pro forma results are presented for information purposes only and do not necessarily reflect the actual results that would have been achieved had the acquisition occurred on the date assumed, nor are they indicative of future consolidated results of operations.
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Enovum to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment, right-of-use asset and intangible assets had been applied on January 1, 2024, together with the consequential tax effects.
Enovum commenced its operations in October 2023. Therefore, is it impracticable to estimate and present proforma revenue and net income of the combined entity as though the business combination had occurred as of January 1, 2023.
Real estate Acquisition – Montreal, Canada
On
December 27, 2024, the Company, through WhiteFiber, acquired the building and land, together with all the related improvements, located
in Montreal, Canada, from an unrelated third party. The total consideration consisted of approximately $
The
acquired set of assets did not meet the definition of a business as defined in ASC 805,
Business Combinations
, as no substantive
processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included
in
Property, plant, and equipment, net
on the consolidated balance sheets. The fair value of the tangible assets acquired was
estimated to be $
23
Real estate Acquisition – Madison, North Carolina
On
May 20, 2025, the Company, through WhiteFiber, acquired the building and land, together with all the related improvements owned by Unifi
Manufacturing, Inc. (“Unifi Transaction”) that were located in Madison, North Carolina. The total consideration consisted
of $
The
acquired set of assets did not meet the definition of a business as defined in ASC 805,
Business Combinations
, as no substantive
processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included
in
Property, plant, and equipment, net
on the consolidated balance sheets. The fair value of the tangible assets acquired was
estimated to be $
In connection with the agreement, additional contingent consideration may become payable to the seller based on the timing and availability of power at the site (see Note 19. Commitments and Contingencies ).
5. USDC
|
September
30,
2025 |
December 31,
2024 |
|||||||
| USDC | $ |
|
$ |
|
||||
The following table presents additional information about USDC for the nine months ended September 30, 2025 and 2024, respectively:
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Opening balance | $ |
|
$ |
|
||||
| Receipt of USDC from sales of other digital assets |
|
|
||||||
| Payment of USDC for other expenses |
(
|
) |
(
|
) | ||||
| Payment of USDC for service charges from mining facilities |
(
|
) | ||||||
| Receipt of USDC from other income |
|
|||||||
| Receipt of USDC from sales of property, plant, and equipment |
|
|||||||
| Ending balance | $ |
|
|
|||||
6. DIGITAL ASSETS HOLDINGS
Digital Assets
Adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets
Effective
January 1, 2024, the Company early adopted ASU 2023-08, which requires entities to measure crypto assets at fair value with changes recognized
in net income each reporting period. The Company’s digital assets are within the scope of ASU 2023-08 and the transition guidance
requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any difference between the carrying amount
of the Company’s digital assets and fair value. As a result of the Company’s early adoption of ASU 2023-08, the Company recorded
a $
The following table presents the Company’s significant digital assets holdings as of September 30, 2025:
| Quantity | Cost Basis | Fair Value | ||||||||||
| BTC |
|
$ |
|
$ |
|
|||||||
| ETH |
|
|
|
|||||||||
| Total digital assets held as of September 30, 2025 | $ |
|
$ |
|
||||||||
The cost basis is equal to the post-impairment value of all BTC and ETH held as of the adoption of ASU 2023-08 on January 1, 2024. For BTC and ETH earned subsequent to the adoption of ASU 2023-08, the cost basis of the BTC and ETH represents the valuation at the time the Company determined for revenue recognition purposes.
24
The following table presents a roll-forward of BTC for the nine months ended September 30, 2025, based on the fair value model under ASU 2023-08:
| Fair value | ||||
| BTC as of December 31, 2024 | $ |
|
||
| Receipt of BTC from mining services |
|
|||
| Sales of BTC in exchange of cash |
(
|
) | ||
| Sales of BTC in exchange of ETH |
(
|
) | ||
| Sales of BTC in exchange of USDC |
(
|
) | ||
| Payment of BTC for service charges from mining facilities |
(
|
) | ||
| Payment of BTC for other expenses |
(
|
) | ||
| Change in fair value of BTC |
|
|||
| BTC fair value as of September 30, 2025 | $ |
|
||
For the additions of BTC generated by the Company’s mining business, see Note 3. Revenue from Contracts with Customers .
Bitcoin is sold on a FIFO basis. For the nine months ended September 30, 2025, gains from the sales of bitcoin are included in change in fair value of BTC which is included in the consolidated statements of operations under the caption “Gains (losses) on digital assets”.
The following table presents a roll-forward of ETH for the nine months ended September 30, 2025, based on the fair value model under ASU 2023-08:
| Fair value | ||||
| ETH as of December 31, 2024 | $ |
|
||
| Receipt of ETH from native staking business |
|
|||
| Receipt of ETH from liquid staking business |
|
|||
| Receipt of ETH from exchange of BTC |
|
|||
| Receipt of ETH from exchange of cash |
|
|||
| Sales of ETH in exchange of LsETH |
(
|
) | ||
| Investment of ETH in fund |
(
|
) | ||
| Payment of ETH for other expenses |
(
|
) | ||
| Change in fair value of ETH |
|
|||
| ETH fair value at September 30, 2025 | $ |
|
||
For the additions of ETH generated by the Company’s ETH staking business, see Note 3. Revenue from Contracts with Customers .
ETH is sold on a FIFO basis. For the nine months ended September 30, 2025, gains from the sales of ETH are included in change in fair value of ETH which is included in the consolidated statements of operations under the caption “Gains (losses) on digital assets”.
Digital Intangible Assets
The following table sets forth the cost basis, impairment amount, and carrying amount of digital intangible assets held, as shown on the consolidated balance sheet as of September 30, 2025:
| Quantity | Cost | Impairment | Net | |||||||||||||
| LsETH |
|
$ |
|
$ |
|
$ |
|
|||||||||
| Total digital intangible assets held as of September 30, 2025 | $ |
|
$ |
|
$ |
|
||||||||||
The
cost of LsETH was initially recorded at fair value of LsETH on the date of receipt. Following the receipt of LsETH in July 2025,
the price of LsETH decreased, and the Company determined that the carrying amount of the LsETH exceeded its fair value during the period
ending September 30, 2025. The fair value of the LsETH is determined in accordance with ASC 820,
Fair Value Measurement
.
For the period ending September 30, 2025, the Company recorded an impairment loss of $
25
7. OTHER CURRENT ASSETS, NET
Other current assets were comprised of the following:
|
September
30,
2025 |
December 31,
2024 |
|||||||
| Deposits (a) | $ |
|
$ |
|
||||
| Prepayments to mining facilities (b) |
|
|||||||
| Prepaid director and officer insurance expenses |
|
|
||||||
| Prepaid consulting service expenses |
|
|
||||||
| Deposit for lease |
|
|
||||||
| Deferred contract costs |
|
|
||||||
| Contract assets |
|
|||||||
| Prepayment to third parties |
|
|
||||||
| Receivable from third parties |
|
|
||||||
| Others |
|
|
||||||
| Less: Current expected credit losses |
(
|
) | ||||||
| Total | $ |
|
$ |
|
||||
| (a) |
|
| (b) |
|
8. LEASES
Lease as Lessee
For
the year ended December 31, 2023, the Company entered into a capacity lease agreement for its cloud services designed to support generative
AI workstreams. The initial lease term is
On
July 30, 2024, the Company entered into an office lease agreement for its headquarters office in New York. The initial lease term is
On
August 1, 2024, the Company entered into an additional capacity lease agreement for its cloud services. The initial lease term is
On
October 11, 2024, the Company acquired
On
December 3, 2024, the Company entered into a lease agreement in Singapore for general and administrative purposes. The initial lease
term is
On February 11, 2025, the Company, through WhiteFiber, entered into an additional office lease agreement for its headquarters office in New York. The initial lease term is 27 months with automatic renewals on a month-to-month basis.
On
March 1, 2025, the Company entered into an additional capacity lease agreement for its cloud services. The initial lease term is
On
April 1, 2025, the Company entered into a lease agreement for general and administrative purposes. The lease term is
On
April 11, 2025, the Company, through WhiteFiber, entered into a data center lease agreement in Saint-Jérôme for its data
center colocation services. The initial lease term is for
26
As
of September 30, 2025 and December 31, 2024, operating right-of-use assets were $
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating lease costs | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Short-term lease costs |
|
|
|
|
||||||||||||
| Sublease income |
(
|
) |
(
|
) | ||||||||||||
| Total lease costs |
|
|
|
|
||||||||||||
Additional information regarding the Company’s leasing activities as a lessee is as follows:
|
For the Three Months Ended
September 30, |
For the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating cash outflows from operating leases | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Weighted average remaining lease term – operating lease |
|
|
|
|
||||||||||||
| Weighted average discount rate – operating lease |
|
% |
|
% |
|
% |
|
% | ||||||||
The following table represents our future minimum operating lease payments as of September 30, 2025:
| Year | Amount | |||
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| 2030 and thereafter |
|
|||
| Total undiscounted lease payments |
|
|||
| Less: present value discount |
(
|
) | ||
| Present value of lease liability | $ |
|
||
The
Company entered into a GPU server lease agreement effective January 2024 for its cloud services designed to support generative AI workstreams.
The lease payment depends on the usage of the GPU servers and the Company concludes that the lease payments are variable and will be
recognized when they are incurred. For the three months ended September 30, 2025 and 2024, the GPU server lease expense amounted to $
Lease as Lessor
During the quarter ended March 31, 2024, the Company entered into a sales-type lease agreement as a lessor for its data storage equipment. The term of the lease is scheduled to expire in December 2026.
During the quarter ended September 30, 2024, the Company entered into a sales-type lease agreement as a lessor for its data storage equipment. The term of the lease is scheduled to expire in December 2026.
During the quarter ended December 31, 2024, the Company entered into two sales-type lease agreements as a lessor for its cloud service equipment. The term of the lease is scheduled to expire in October 2029 and November 2029 respectively.
27
During
the quarter ended December 31, 2024, the Company entered into an operating sublease agreement to partially lease out its leased data
center to a third party. The term of the sublease is scheduled to expire on
During the quarter ended June 30, 2025, the Company entered into two sales-type lease agreements as a lessor for its cloud service equipment. The term of the lease is scheduled to expire in April 2030 and May 2030, respectively.
During the quarter ended September 30, 2025, the Company entered into one sales-type lease agreement as a lessor for its cloud service equipment. The term of the lease is scheduled to expire in June 2030.
The components of lease income for the sales-type lease were as follows:
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Interest income related to net investment in lease | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
Interest income is included in the consolidated statements of operations under the caption “Revenue – Other”.
The components of net investment in sales-type leases were as follows:
|
September
30,
2025 |
December 31,
2024 |
|||||||
| Net investment in lease - lease payment receivable | $ |
|
$ |
|
||||
The following table illustrates the Company’s future minimum receipts for sales-type lease as of September 30, 2025:
| Year |
Sales-Type
Lease |
|||
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| 2030 and thereafter |
|
|||
| Total future minimum receipts |
|
|||
| Unearned interest income |
(
|
) | ||
| Less: Current expected credit losses |
(
|
) | ||
| Net investment in sales type lease | $ |
|
||
The
present value of minimum sales-type receipts of $
The following table illustrates the future lease payments to be received from the Company’s sublease tenant as of September 30, 2025 were as follows:
| Year |
Operating
Lease |
|||
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| 2030 and thereafter |
|
|||
| Total future receipts | $ |
|
||
28
9. PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant and equipment, net was comprised of the following:
|
September
30,
2025 |
December 31,
2024 |
|||||||
| Miners for Bitcoin | $ |
|
$ |
|
||||
| Cloud service equipment |
|
|
||||||
| Colocation service equipment |
|
|
||||||
| Purchased and internal-use software development costs |
|
|
||||||
| Land |
|
|
||||||
| Building |
|
|
||||||
| Leasehold Improvements |
|
|
||||||
| Vehicle |
|
|
||||||
| Other property and equipment |
|
|
||||||
| Less: Accumulated depreciation |
(
|
) |
(
|
) | ||||
|
|
|
|||||||
| Construction in progress |
|
|
||||||
| Property, plant, and equipment, net | $ |
|
$ |
|
||||
For
the three months ended September 30, 2025 and 2024, depreciation expenses were $
During
the quarter ended March 31, 2024, we purchased data storage equipment totaling $
During
the quarter ended September 30, 2024, we purchased data storage equipment totaling $
During
the quarter ended December 31, 2024, the Company purchased servers and network equipment totaling $
During
the quarter ended June 30, 2025, the Company purchased servers and network equipment totaling $
During
the quarter ended September 30, 2025, the Company purchased servers and network equipment totaling $
Disposal of Property, Plant and Equipment
For
the nine months ended September 30, 2025, the Company sold
For
the nine months ended September 30, 2025, the Company sold
29
10. INVESTMENT SECURITIES
Investment securities were comprised of the following:
|
September
30,
2025 |
December 31,
2024 |
|||||||
| Investment in Digital Future Alliance Limited (“DFA”) (a) | $ |
|
$ |
|
||||
| Investment in Nine Blocks Offshore Feeder Fund (“Nine Blocks”) (b) |
|
|
||||||
| Investment in Auros Global Limited (c) |
|
|
||||||
| Investment in Ingonyama Ltd (d) |
|
|
||||||
| Investment in Cysic Inc. (e) |
|
|
||||||
| Investment in a SAFE (f) |
|
|
||||||
| Investment in AI Innovation Fund I (“AI fund”) (g) |
|
|
||||||
| Investment in Innovation Fund I (“Innovation fund”) (h) |
|
|
||||||
| Total | $ |
|
$ |
|
||||
(a) Investment in Digital Future Alliance Limited (“DFA”)
DFA is a privately held company, over which the Company has neither control nor significant influence through investment in ordinary shares. The Company accounted for the investment in DFA using the measurement alternative at cost, less impairment, with subsequent adjustments for observable price changes resulting from orderly transactions for identical or similar investments of the same issuer.
For the three and nine months ended September 30, 2025 and 2024, the Company did not record upward adjustments or downward adjustments on the investment. The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of the equity security. As of September 30, 2025 and December 31, 2024, the Company did not recognize impairment against the investment security.
(b) Investment in Nine Blocks Offshore Feeder Fund (“Nine Blocks”)
On
August 1, 2022, the Company entered into a subscription agreement with Nine Blocks for investment of $
As
a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment
in the fund. For the three months ended September 30, 2025 and 2024, the Company recorded cumulative upward adjustments of $
(c) Investment in Auros Global Limited (“Auros”)
On
February 24, 2023, the Company closed an investment of $
For the three and nine months ended September 30, 2025 and 2024, the Company did not record upward adjustments or downward adjustments on the investment. The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of the equity security. As of September 30, 2025 and December 31, 2024, the Company did not recognize impairment against the investment security.
(d) Investment in Ingonyama Ltd. (“Ingonyama”)
In
September 2023, the Company closed an investment of $
30
For the three and nine months ended September 30, 2025 and 2024, the Company did not record upward adjustments or downward adjustments on the investment. The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of the equity security. As of September 30, 2025 and December 31, 2024, the Company did not recognize impairment against the investment security.
(e) Investment in Cysic Inc (“Cysic”)
On
April 2, 2024, the Company closed an investment of $
For the three and nine months ended September 30, 2025, the Company did not record upward adjustments or downward adjustments on the investment. The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of the equity security. As of September 30, 2025 and December 31, 2024, the Company did not recognize impairment against the investment security.
(f) Investment in a SAFE
On
June 30, 2024 (the “Effective Date”), the Company entered into a simple agreement for future equity (“SAFE”)
agreement for an initial investment amount of $
The Company accounted for this investment under ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial Instruments , which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument, and is irrevocable once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred on the consolidated statements of operations.
At
September 30, 2025, the Company performed a qualitative assessment to identify if events or circumstances indicate that the investment
is impaired or that an observable price change has occurred. We considered available information about Canopy’s operations and
industry conditions. No events or circumstances were identified that would indicate the investment is impaired or that an observable
price change occurred. As of September 30, 2025, the investment continues to be reported at its original cost of $
(g) Investment in AI Innovation Fund I (“AI fund”)
On
July 15, 2024, the Company entered into a subscription agreement with Pleasanton Ventures Innovation Master Fund SPC Limited for investment
of $
As
a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment
in the fund. For the three months ended September 30, 2025, the Company recorded cumulative downward adjustments of $
31
(h) Investment in Innovation Fund I (“Innovation fund”)
After the Company disposed its BVI entities for its previous fund operation (See Note 20. Disposition of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund Spc Limited for more information), the Company no longer consolidates the investment in the fund. As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment in the fund.
In
March 2025, the Company invested an additional
In
August 2025, the Company invested an additional
For
the three months ended September 30, 2025 and 2024, the Company recorded cumulative upward adjustments of $
11. OTHER NON-CURRENT ASSETS, NET
Other non-current assets were comprised of the following:
|
September
30,
2025 |
December 31,
2024 |
|||||||
| Deposits (a) | $ |
|
$ |
|
||||
| Deferred contract costs |
|
|
||||||
| Contract assets |
|
|||||||
| Others |
|
|
||||||
| Less: Current expected credit losses |
(
|
) | ||||||
| Total | $ |
|
$ |
|
||||
| (a) |
|
12. SHARE-BASED COMPENSATION
Share-based
compensation such as restricted stock units (“RSUs”), incentive and non-statutory stock options, restricted shares, share
appreciation rights and share payments may be granted to any directors, employees and consultants of the Company or affiliated companies
under the 2021 Omnibus Equity Incentive Plan (“2021 Plan”), 2021 Second Omnibus Equity Incentive Plan (“2021 Second
Plan”), 2023 Omnibus Equity Incentive Plan (“2023 Plan”), and 2025 Omnibus Equity Incentive Plan (“2025 Plan”).
An aggregate of
On
February 6, 2025, the Board of Directors of WhiteFiber adopted the 2025 Omnibus Equity Incentive Plan (the “WhiteFiber 2025 Plan”).
The WhiteFiber 2025 Plan provides share-based compensation such as restricted stock units (“RSUs”), incentive and non-statutory
stock options, restricted shares, share appreciation rights and share payments may be granted to any directors, employees and consultants
of the Company or affiliated companies and up to
From time to time, WhiteFiber grants equity awards under the WhiteFiber 2025 Plan to employees of the Company as consideration for services rendered to WhiteFiber. These awards are settled in shares of WhiteFiber’s ordinary shares and might be accounted for as share-based compensation to non-employee consultants and included within general and administrative expenses.
Restricted Stock Units (“RSUs”)
As
of December 31, 2024, the Company had
On
January 14, 2025, the Company granted
On
February 10, 2025, the Company granted
32
On
May 14, 2025, the Company granted
On
June 17, 2025, the Company granted
On
June 30, 2025, the Company granted
On
July 25, 2025, the Company granted
On
July 25, 2025, the Company granted
On
July 25, 2025, the Company granted
In
August 2025, an employee left the Company and
In
August 2025, in connection with WhiteFiber’s initial public offering,
On
September 30, 2025, the Company granted
For
the three months ended September 30, 2025 and 2024, the Company recognized share-based compensation expenses of $
As
of September 30, 2025, the Company had
Share Options
For the three months ended September 30, 2025 and 2024, the Company did not grant any options.
The
Company recognizes compensation expenses related to options on a straight-line basis over the vesting periods. For the three months ended
September 30, 2025 and 2024, the Company recognized share-based compensation expenses of $
Other share-based compensation
In
January 2025, the Company entered into separate one-year service agreements with three consultants by granting each
In
April 2025, the Company entered into a one-year service agreement with a consulting firm and granted
In
April 2025, WhiteFiber entered into a one-year director agreement with David Andre pursuant to which Mr. Andre would be appointed as
a director of WhiteFiber upon the commencement of trading of our ordinary shares on the Nasdaq Capital Market. This agreement granted
In
July 2025, the Company entered into separate one-year service agreements with a consultant and granted
The
Company recognized share-based compensation expense of $
For
the three months ended September 30, 2025, WhiteFiber recognized share based compensation expense of $
33
13. SHARE CAPITAL
Ordinary shares
As
of December 31, 2024, there were
In
May 2022, the Company entered into an At-the-Market Offering Agreement with H.C. Wainwright & Co., LLC relating to the Company’s
ordinary shares. In accordance with the terms of the sales agreement, the Company may offer and sell ordinary shares having an aggregate
offering price of up to $
On
April 29, 2025, the Company filed a registration statement on Form S-3 (No. 333-286841) to register up to $
In
June 2025, the Company completed an underwritten public offering of its ordinary shares registered under the Registration Statement.
In accordance with the terms of the underwriting agreement entered into with B. Riley Securities, Inc., as representative of the several
underwriters, the Company sold
In
July, 2025, the Company entered into a placement agency agreement (the “Placement Agent Agreement”) with B. Riley Securities,
Inc. (the “Placement Agent”), pursuant to which the Placement Agent agreed to serve as the sole placement agent for the Company
in connection with a registered direct offering (the “Registered Direct Offering”) of an aggregate of
On
September 29, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Barclays Capital
Inc., Cantor Fitzgerald & Co. and B. Riley Securities, Inc. as representatives of the several underwriters named in Schedule I thereto,
in connection with the issuance and sale of $
On October 2, 2025, the Company issued the Notes. The Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”), dated as of October 2, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as supplemented by a supplemental indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”), dated as of October 2, 2025, between the Company and the Trustee.
During
the nine months ended September 30, 2025,
As
of September 30, 2025, there were
Preferred shares
As
of September 30, 2025 and December 31, 2024, there were
The
preference shares are entitled to the following preference features: 1) an annual dividend of
On
December 20, 2024, the Board of Directors declared an
Treasury stock
The Company treats ordinary shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted share grants as ordinary share repurchases because they reduce the number of ordinary shares that would have been issued upon vesting. For the nine months ended September 30, 2025 and 2024, the Company withheld ordinary shares that were surrendered to the Company for withholding taxes related to restricted stock vesting valued at $ , based on fair value of the withheld shares on the vesting date.
As
of September 30, 2025 and December 31, 2024, the Company had treasury stock of $
34
Warrants
As
of September 30, 2025 and December 31, 2024, the Company had outstanding
In accordance with ASC 815, the Company determined that the warrants meet the conditions necessary to be classified as equity because the consideration is indexed to the Company’s own equity, there are no exercise contingencies based on an observable market not based on its stock or operations, settlement is consistent with a fixed-for-fixed equity instrument, the agreement contains an explicit number of ordinary shares and there are no cash payment provisions.
The
fair value of the warrants was estimated at $
The following table provides quantitative information regarding Level 3 fair value measurements inputs for the Company’s warrants at their measurement dates:
|
As
of
October 4, 2021 |
||||
| Volatility |
|
% | ||
| Stock price |
|
|||
| Expected life of the warrants to convert |
|
|||
| Risk free rate |
|
% | ||
| Dividend yield |
|
% | ||
14. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The components of goodwill as of September 30, 2025 are as follows:
|
As
of
September 30, 2025 |
||||
| Enovum Data Centers Corp. | $ |
|
||
| Total goodwill | $ |
|
||
The
Company recorded goodwill in the amount of $
Finite-lived intangible assets
In
addition to goodwill, in connection with the acquisition of Enovum, the Company recorded an identified intangible asset, customer relationships,
with a definite useful life of
The following table presents the Company’s finite-lived intangible assets as of September 30, 2025:
| As of September 30, 2025 | ||||||||||||
| Cost |
Accumulated
amortization |
Net | ||||||||||
| Customer relationships | $ |
|
$ |
(
|
) | $ |
|
|||||
| Total | $ |
|
$ |
(
|
) | $ |
|
|||||
35
The following table presents the Company’s finite-lived intangible assets as of December 31, 2024:
| As of December 31, 2024 | ||||||||||||
| Cost |
Accumulated
amortization |
Net | ||||||||||
| Customer relationships | $ |
|
$ |
(
|
) | $ |
|
|||||
| Total | $ |
|
$ |
(
|
) | $ |
|
|||||
The following table presents the Company’s estimated future amortization of finite-lived intangible assets as of September 30, 2025:
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
| 2029 |
|
|||
| Thereafter |
|
|||
| Total | $ |
|
The Company did not identify any impairment of its finite-lived intangible assets during the nine months ended September 30, 2025.
15. INCOME TAXES
The following table provides details of income taxes:
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Income (loss) before income taxes | $ |
|
$ |
(
|
) | $ |
|
$ |
|
|||||||
| Provision for income taxes | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Effective tax rate |
|
% |
(
|
)% |
|
% |
|
% | ||||||||
Our
income tax provision was $
Our provision for income taxes remained relatively flat during the nine months ended September 30, 2025, compared to the same period in 2024.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable book gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies.
With
the enactment of the One Big Beautiful Bill Act (“OBBBA”) on July 4, 2025, the Company anticipates a reduction in our U.S.
federal cash tax payments for the remainder of 2025 as the
We also continue to monitor the adoption of Pillar Two relating to the global minimum tax in each of our tax jurisdictions to evaluate its impact on our effective income tax rate. For the three months ended September 30, 2025, the Company is not subject to Pillar Two global minimum tax.
36
16. EARNINGS (LOSS) PER SHARE
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income (loss) | $ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||||
| Weighted average number of ordinary share outstanding | ||||||||||||||||
| Basic |
|
|
|
|
||||||||||||
| Diluted |
|
|
|
|
||||||||||||
| Earnings (loss) per share | ||||||||||||||||
| Basic | $ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||||
| Diluted | $ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | ||||||
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The computation of diluted net loss per share does not include dilutive ordinary share equivalents in the weighted average shares outstanding, as they would be anti-dilutive.
For
the three and nine months ended September 30, 2025,
For
the three and nine months ended September 30, 2024,
17. SEGMENT REPORTING
The
Company has
The digital asset mining segment generates revenue from the bitcoin the Company earns through its mining activities. Cost of revenue consists primarily of direct production costs of mining operations, including electricity, management fee and maintenance cost but excluding depreciation and amortization.
The cloud services segment generates revenue from providing high performance computing services to support generative AI workstreams. Cost of revenue consists of direct production costs, including electricity costs, data center lease expense, GPU servers lease expense, and other relevant costs, but excluding depreciation and amortization.
Colocation services generate revenue by providing customers with physical space, power and cooling within the data center facility. Cost of revenue consists of direct production costs related to our HPC data center services, including electricity costs, lease costs, data center employees’ wage expenses and other relevant costs, but excluding depreciation and amortization.
The Ethereum staking segment generates revenue from both native staking and liquid staking. Cost of revenue consists of direct cost related to ETH staking business including service fee and reward-sharing fees to the service providers.
The CODM analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue. No operating segments have been aggregated to form the reportable segments.
37
Other
than the $
All Other revenue is generated from equipment leases with external customers.
The following tables present segment revenue and segment gross profit reviewed by the CODM:
Three Months Ended September 30, 2025
|
Digital asset
mining |
Cloud
services |
Colocation
services |
ETH
staking |
Total | ||||||||||||||||
| Revenue from external customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Reconciliation of revenue | ||||||||||||||||||||
| Other revenue (a) |
|
|||||||||||||||||||
| Total consolidated revenue |
|
|||||||||||||||||||
| Less: | ||||||||||||||||||||
| Electricity costs |
|
|
|
|
||||||||||||||||
| Profit sharing fees |
|
|
||||||||||||||||||
| Datacenter lease expense |
|
|
|
|||||||||||||||||
| GPU lease expense |
|
|
||||||||||||||||||
| Wage expense |
|
|
||||||||||||||||||
| Service costs - ETH staking |
|
|
||||||||||||||||||
| Other segment items (b) |
|
|
|
|
||||||||||||||||
| Segment gross profit | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| (a) |
|
| (b) |
|
Three Months Ended September 30, 2024
|
Digital asset
mining |
Cloud
services |
ETH
staking |
Total | |||||||||||||
| Revenue from external customers | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Reconciliation of revenue | ||||||||||||||||
| Other revenue (a) |
|
|||||||||||||||
| Total consolidated revenue |
|
|||||||||||||||
| Less: | ||||||||||||||||
| Electricity costs |
|
|
|
|||||||||||||
| Profit sharing fees |
|
|
||||||||||||||
| Datacenter lease expense |
|
|
||||||||||||||
| GPU lease expense |
|
|
||||||||||||||
| Service costs - ETH staking |
|
|
||||||||||||||
| Other segment items (b) |
|
|
|
|||||||||||||
| Segment gross profit | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| (a) | Other revenue is primarily attributable to Equipment Leasing revenue and is therefore not included in the total for segment gross profit. |
| (b) | All amounts included within Other segment items are individually insignificant. |
38
Nine Months Ended September 30, 2025
|
Digital asset
mining |
Cloud
services |
Colocation
services |
ETH
staking |
Total | ||||||||||||||||
| Revenue from external customers | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Reconciliation of revenue | ||||||||||||||||||||
| Other revenue (a) |
|
|||||||||||||||||||
| Total consolidated revenue |
|
|||||||||||||||||||
| Less: | ||||||||||||||||||||
| Electricity costs |
|
|
|
|
||||||||||||||||
| Profit sharing fees |
|
|
||||||||||||||||||
| Data center lease expense |
|
|
|
|||||||||||||||||
| GPU lease expense |
|
|
||||||||||||||||||
| Wage expense |
|
- |
|
|||||||||||||||||
| Service costs - ETH staking |
|
|
||||||||||||||||||
| Other segment items (b) |
|
|
|
|
||||||||||||||||
| Segment gross profit | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| (a) |
|
| (b) | All amounts included within Other segment items are individually insignificant. |
Nine Months Ended September 30, 2024
|
Digital asset
mining |
Cloud
services |
ETH
staking |
Total | |||||||||||||
| Revenue from external customers | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Reconciliation of revenue | ||||||||||||||||
| Other revenue (a) |
|
|||||||||||||||
| Total consolidated revenue |
|
|||||||||||||||
| Less: | ||||||||||||||||
| Electricity costs |
|
|
- |
|
||||||||||||
| Profit sharing fees |
|
- | - |
|
||||||||||||
| Data center lease expense | - |
|
- |
|
||||||||||||
| GPU lease expense | - |
|
- |
|
||||||||||||
| Service costs - ETH staking | - | - |
|
|
||||||||||||
| Other segment items (b) |
|
|
|
|
||||||||||||
| Segment gross profit | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| (a) | Other revenue is primarily attributable to Equipment Leasing and is therefore not included in the total for segment gross profit. |
| (b) | All amounts included within Other segment items are individually insignificant. |
39
The following table presents the reconciliation of segment gross profit to net (loss) income before taxes:
|
For
the Three Months Ended
September 30, |
For
the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Segment gross profit | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Reconciling Items: | ||||||||||||||||
| Other profit (a) |
|
|
|
|
||||||||||||
| Depreciation and amortization expenses |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| General and administrative expenses |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Gains (losses) on digital assets |
|
(
|
) |
|
|
|||||||||||
| Impairment of digital intangible assets |
(
|
) | - |
(
|
) | - | ||||||||||
| Net loss from disposal of property, plant and equipment |
(
|
) |
(
|
) | ||||||||||||
| Other income, net |
|
(
|
) |
|
|
|||||||||||
| Net income (loss) before taxes |
|
(
|
) |
|
|
|||||||||||
| (a) |
|
18. RELATED PARTIES
On
December 20, 2024, the Board of Directors declared an eight (
Bit
Digital Iceland ehf appointed Daniel Jonsson as its part-time Chief Executive Officer starting November 7, 2023, for a six-month term
with a three-month probation. His compensation includes a monthly salary of $
On
August 8, 2025, WhiteFiber, a subsidiary of the Company, completed its initial public offering (the “Offering”) of
Prior
to the consummation of the Offering, the Company entered into a contribution agreement (the “Contribution Agreement”) with
WhiteFiber, pursuant to which the Company contributed its HPC business through the transfer of
In addition, prior to the consummation of the
Offering, the Company entered into a transition services agreement (the “Transition Services Agreement”) with WhiteFiber,
pursuant to which the Company will provide certain services to WhiteFiber, on a transitional basis which will generally be up to 24 months
following the effective date of WhiteFiber’s IPO registration statement. The Transition Services Agreement provides for the performance
of certain services by the Company for the benefit of WhiteFiber, or in some cases certain services provided by WhiteFiber for the benefit
of the Company, for a limited period of time after the Offering, including certain services provided by Sam Tabar, our Chief Executive
Officer, and Erke Huang, our Chief Financial Officer and a Director. During such transition period, Messrs. Tabar and Huang will continue
to hold the same position with the Company as well as WhiteFiber. Messrs. Tabar and Huang have committed to provide the requisite time
and effort to fulfil their responsibilities as a full-time officer of WhiteFiber, supervising a full staff and are expected to provide
certain services, representing not more than approximately 30% of their working time, in respect of the Company’s operations. The
services to be provided will include financial reporting, tax, legal, human resources, information technology, insurance and other general
and administrative functions. All services are to be provided at cost, except if otherwise agreed to. For the three months ended September
30, 2025, the fees payable, by WhiteFiber to Bit Digital are $
40
19. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company from time to time may become involved in legal proceedings in the ordinary course of our business. The Company may also pursue litigation to assert its legal rights and assets, and such litigation may be costly and divert the efforts and attention of its management and technical personnel which could adversely affect its business. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters may materially affect our business, results of operations, financial position, or cash flows.
Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, U.S. GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.
Bit Digital USA, Inc. v. Blockfusion USA, Inc., C.A. No. N24C-05-306 PRW (CCLD)
On
June 3, 2024, the Company filed suit in the Superior Court of the State of Delaware, Complex Commercial Litigation Division, against
Blockfusion USA, Inc. (“Blockfusion”) alleging claims for breach of contract and related causes of action arising out of
a terminated mining services relationship. The Company initially sought in excess of $
Following
limited discovery, on June 18, 2025, the Court entered a stipulation and order amending the Case Management Order to extend multiple
discovery deadlines and vacate the previously scheduled trial date. On August 1, 2025, the Company moved for leave to file a Second Amended
Complaint, which adds claims for fraud and related causes of action arising out of Blockfusion’s conduct both at the inception
of and during the parties’ relationship. The Second Amended Complaint also names Blockfusion’s CEO, Alexander Martini-Lomanto,
as an additional defendant. The Company continues to seek the recovery of its original investment, invoice payments, and unpaid late
development fees, and now seeks additional damages for the tort and equitable claims contained in the Second Amended Complaint, including
punitive damages. The total amount of damages sought exceeds $
Blockfusion has filed a motion to dismiss the Second Amended Complaint and a hearing on the motion has been scheduled for January 6, 2026. The Company cannot yet estimate a reasonably possible range of loss or recovery.
Contingent Consideration Liabilities
As part of the Unifi Transaction (See Note 4. Acquisitions ), the Company may be required to make additional contingent payments to the seller based on the timing and availability of electric service to the property, as follows:
| ● |
A contingent payment of $
|
| ● |
If an Electric Service Agreement for at least 99MW is provided, or the property receives 99MW of power within three years, the Company may instead be required to make a contingent payment of $
|
| ● |
If an Electric Service Agreement is provided, or the property receives more than 99MW of power within four years, the Company may be required to make an additional payment of $
|
41
Royal Bank of Canada Facility Agreement
On
June 18, 2025, the Company entered into a definitive credit agreement with the Royal Bank of Canada (“RBC”), to finance its
data center business. The credit agreement provides for an aggregate amount of up to approximately USD $
| ● |
Non-revolving three year lease facility in the amount of USD $
|
| ● |
Non-revolving term loan facility in the amount of USD $
|
| ● |
Revolver by way of letters of credit and letters of guaranty with fees to be determined on a transaction-by-transaction basis. This facility will be available for the
|
The Company agreed to certain financial covenants that are not yet in effect. The facilities have not yet been authorized for use by the lender, as certain conditions precedent have not yet been satisfied. Accordingly, no amounts were drawn, and no borrowings were available under the facility as of the reporting date.
Electric Service Agreement with Duke Energy
An existing Electric Service Agreement (“ESA”) with Duke Energy Carolinas, LLC (“Duke Energy”) for the provision of electric power to the facility located at 805 Island Drive, Madison, North Carolina was assigned to the Company’s wholly owned subsidiary, Enovum NC-1 Bidco LLC, from Unifi as of August 4, 2025.
The ESA establishes a minimum monthly bill for electric service, based on Duke Energy’s Rate of $8,754, irrespective of actual usage levels. In addition to standard service, Duke Energy has installed and maintains “Extra Facilities” (including overhead lines, substations, transformers, breakers, and metering equipment). The cost of these Extra Facilities totals approximately $1,137,975, for which the Company pays a monthly facilities charge of $11,405.
The ESA represents a continuing commitment to purchase power at or above the established minimum levels throughout the contract term. As such, the Company is obligated to pay the minimum monthly charges regardless of operational activity.
Under the termination clause, either party may cancel the ESA with at least 60 days’ written notice. In the event of early termination, the Company remains liable for all amounts due under the ESA through the termination date and may incur additional charges associated with the Extra Facilities if service is discontinued prior to the expiration of the facilities term.
As of September 30, 2025 management has no present intention to reduce operations at Madison or terminate the ESA. Accordingly, no liability has been recognized in the financial statements in connection with the ESA.
20. DISPOSITION OF BIT DIGITAL INVESTMENT MANAGEMENT LIMITED AND BIT DIGITAL INNOVATION MASTER FUND SPC LIMITED
On
July 1, 2024, the Company entered into a share purchase agreement (the “Disposition SPA”) with Pleasanton Ventures Limited
(“Pleasanton Ventures”), an unrelated Hong Kong entity (the “Purchaser”). Pursuant to the Disposition SPA, the
Purchaser purchased Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund SPC Limited in exchange for a consideration
of $
On the same date, the parties completed all of the share transfer registration procedures as required by the laws of the British Virgin Islands and all other closing conditions had been satisfied. As a result, the disposition contemplated by the Disposition SPA was completed. Upon completion of the disposition, the Purchaser became the sole shareholder of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund SPC Limited. Upon the closing of the transactions, the Company does not bear any contractual commitment or obligation to the business of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund SPC Limited, nor to the Purchaser.
Bit
Digital Investment Management Limited was incorporated on April 17, 2023 and engaged in fund and investment management activities. Bit
Digital Investment Management Limited had total assets of $
42
Bit
Digital Innovation Master Fund SPC Limited was incorporated on May 31, 2023 and is a segregated portfolio company. Bit Digital Innovation
Master Fund SPC Limited did not have any net assets as of September 30, 2024. The Company recorded a gain of $
Management believes that the disposition of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund SPC Limited does not represent a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. The disposition is not accounted for discontinued operations in accordance with ASC 205-20.
21. SUBSEQUENT EVENTS
On
October 31, 2025, the Company entered into an amendment to its At The Market Offering Agreement, originally dated April 29, 2025, with
H.C. Wainwright & Co., LLC, to reflect the effectiveness of its new shelf registration statement on Form S-3. On the same date, the
registration statement on Form S-3 (File No. 333-291205) was automatically effective upon its filing with the U.S. Securities and Exchange
Commission, allowing the Company to offer and sell up to $
Subsequent
to September 30, 2025, the Company sold
MTL-3 Colocation agreement with Cerebras
The
Company began generating revenue in early October 2025 and, effective November 1, 2025, commenced billing its customer the full monthly
contractual amount of CAD
43
Forward Looking Statements
The discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this report. Except for the statements of historical fact, this report contains “forward-looking information” and “forward-looking statements reflecting our current expectations that involve risks and uncertainties (collectively, “forward-looking information”) that is based on expectations, estimates and projections as at the date of this report. All statements, other than statements of historical fact, included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “intends,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (Annual Report) and any subsequently filed Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this report.
The following discussion may contain forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. If any material risk were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part of all of your investment. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicate of future performance, and historical trends should not be used to anticipate results in the future. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the company does not assume a duty to update these forward-looking statements.
44
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our interim Condensed Consolidated Financial Statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2025 as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31, 2024 (“Form 10-K”).
Overview
Bit Digital, Inc. or the “Company”, is a global platform for high performance computing (“HPC”) business including cloud services and HPC data center services and digital asset business, including Ethereum (ETH) staking business, with headquarters in New York City. On June 25, 2025, the Company announced that it has initiated a strategic transition to become a pure play Ethereum staking and treasury company. The Company began accumulating ETH and operating staking infrastructure in 2022 and has steadily increased its holdings since that time.
HPC Business
We believe we are a leading provider of artificial intelligence (“AI”) infrastructure solutions. We own high-performance computing (“HPC”) data centers and provide cloud-based HPC graphics processing units (“GPU”) services, which we term cloud services, for customers such as AI application and machine learning (“ML”) developers (the “HPC Business”). Our Tier-3 data centers provide hosting and colocation services. Our cloud services support generative AI workstreams, especially training and inference.
Colocation/Data center services
We design, develop, and operate data centers, through which we offer our hosting and colocation services. Our operational data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 9.982% uptime and no more than 1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure to support AI workloads.
On July 30, 2025, we entered into a Contribution Agreement with WhiteFiber, pursuant to which we agreed to contribute our HPC business through the transfer of 100% of the capital shares of our cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, to WhiteFiber, upon the effectiveness of WhiteFiber’s registration statement on Form S-1, as amended (File No. 333-288650) (the “Registration Statement”) on August 6, 2025 in connection with WhiteFiber’s initial public offering (the “IPO”).
We acquired Enovum Data Centers Corp (“Enovum”) on October 11, 2024. The transaction included the lease to MTL-1, a fully operational and fully leased to customers 4 MW (gross) Tier-3 data center headquartered in Montreal, Canada.
On December 27, 2024, we acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center (“MTL-2”) expansion project near Montreal, Canada which we refer to as MTL-2. MTL-2 is a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec. We initially funded the purchase of CAD $33.5 million (approximately USD $23.3) million with cash on hand. We expect to invest approximately USD $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). However, we have prioritized other builds and preserved capital for more time sensitive projects.
On April 11, 2025, we entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, MTL-3. The MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed as a 7 MW (gross) Tier-3 data center. It will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable by December 2025. The lease term is 20 years, with two 5-year extensions at the Company’s option. Subject to our receipt of all required permits, the facility is being retrofitted to Tier-3 standards, with development costs expected to total approximately $41 million. Construction at the site was substantially completed by October 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately $979 thousand) monthly for the duration of the five-year contract.
45
On May 20, 2025 (the “Closing Date”), we completed the purchase of a former industrial/manufacturing building from Unifi Manufacturing, Inc. (“UMI”). Pursuant to the Purchase Agreement we agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land (“NC-1”) located in Madison, North Carolina, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) within two years of the Closing Date or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after the Closing Date. Additionally, the purchase price will increase by an additional $200,000 per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of the Closing Date. Separately, the Company entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to the Property by September 1, 2025, 40 MW (gross) by April 1, 2026 and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study, that the Property may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco LLC, a subsidiary of the Company, entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi’s rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke Energy consented to the assignment. Refer to Note 19. Commitments and contingencies for further detail.
On June 18, 2025, the Company entered into a definitive credit agreement (the “Facility”) with the Royal Bank of Canada (“RBC”). The Facility provides for an aggregate of up to approximately CAD $60 million (approximately USD $43.8 million) of financing. The proceeds are to be used primarily to refinance the buildout of Tier-3 AI data center at 7300 Trans Canada Highway, Pointe-Claire, Quebec (“MTL-2”) as well as USD $5.8 million of revolving term financing (the “Revolver”). The Facility is non-recourse to the Company. The Company entered into a three-year USD $18.5 million non-revolving lease facility to finance equipment costs and building improvements to build out the site. The lease facility provides for straight-line amortization of six years and capital moratorium of six months after disbursement is complete. RBC may cancel any unutilized portion of the facility after March 31, 2026. The interest rate is fixed based on the rental rate determined by RBC for the three-year term of the lease.
As part of the Facility, the Company entered into a three-year USD $19.6 million non-revolving real estate term loan facility. The purpose of this facility is to refinance the Company’s purchase of MTL-2. The interest rate of the real estate term loan facility will be determined at the time of borrowing, or a floating interest rate ranging from RBP plus 0.75% to CORRA (“Canadian Overnight Repo Rate Average”) plus 250 bps. Payment of principal and interest is due 30 days after drawdown and is repayable in full on the last day of the three-year term.
The Revolver is being provided by RBC by way of Letters of Credit and Letters of Guaranty with fees to be determined on a transaction by transaction basis. This facility will be available for the 36 month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of USD $5.8 million and other related supporting documents. The Company agreed to certain financial covenants included maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than 1.20:1 and a ratio of Net Funded Debt to EBITDA of not greater than 4.25:1 and decreasing to 3.50:1 from December 31, 2027.
As of the reporting date, the related credit facilities have not been authorized for use by the lender, as both parties are in the process of negotiating revisions to the existing agreement. These negotiations are intended to result in an amendment to the current credit facility, providing the Company with access to a potential additional non-revolving term loan facility of up to CAD 55 million (approximately $39.5 million). Accordingly, no amounts had been drawn, and no borrowings were available under the credit agreement as at the reporting date.
Cloud Services
We provide specialized cloud services to support generative AI workstreams, especially training and inference, emphasizing cost-effective utility and tailor-made solutions for each client. We are an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network (“NPN”), an authorized partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider (“CSP”) with Dell (through Dell’s exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and a commercial relationship with Quanta Computer Inc. (“QCT”). Based on Management’s knowledge of the industry, we are proud to be among the first service providers to offer H200, B200, and GB200 servers. We provide a high-standard service lease with an Uptime percentage > 99.5%.
46
We expect to leverage a global network of data centers for hosting capacity for our GPU business, in many instances, by negotiating with third-party providers to seamlessly integrate our cloud services at data centers across key regions in Europe, North America and Asia. Our initial data center partnership through which we lease capacity is at Blönduós Campus, Iceland, offering a world-class operations team with certified technicians and reliable engineers. The facility has 45kW rack density and 6 MW (gross) total capacity. We have executed contracts for 5.5 MW IT load at the data center. The center’s energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner of an IHA Blue Planet Award in 2017.
In April 2025, we received our first shipment of NVIDIA GB200 Grace Blackwell Superchip powered NVIDIA GB200 NVL72 system chips, from Quanta Cloud Technology, a leading provider of data center solutions. We believe that support with proof of concept (POC) access from Quanta will enable us to meet and exceed expectations around delivery and timeline, performance and reliability.
The following summaries reflect selected GPU cloud service agreements that we consider to be material or representative. We have entered into additional agreements that are not individually material and are not included below.
On October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support the customer’s GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.
In the second quarter of 2024, we finalized an agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer’s request, we agreed with the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.
In January 2025, the Company entered into a new agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months. This new agreement replaces the prior agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. The customer elected to defer the commencement date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced on August 20, 2025, using the Company’s inventory of B200 GPUs.
In October 2025, the Company’s existing parent guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November 2025, the customer will provide a service deposit to the Company in lieu of the parent guaranty. The deposit will be funded through fifteen consecutive monthly payments of approximately $0.24 million each, totaling $3.6 million, payable from November 2025 through January 2027. The deposit will serve as security for the customer’s performance obligations under the amended service agreements. Each monthly payment is expected to be invoiced on the first day of the month and paid within thirty days. The Company will be required to return the deposit in cash upon termination or expiration of the service agreements, provided that all obligations have been fully satisfied and no payment defaults or material breaches exist.
In August 2024, we executed a binding term sheet with Boosteroid Inc. (“Boosteroid”), a global cloud gaming provider pursuant to which, we finalized initial orders of 489 GPUs, projected to generate approximately $7.9 million in contracted value in the aggregate through November 2029. The GPUs were delivered to respective data centers across the U.S. and Europe and began earning fees in November 2024. On October 9, 2024, we executed a Master Services and Lease Agreement (the “MSA”) with Boosteroid, pursuant to which Boosteroid may, from time to time, lease certain equipment, including GPUs, from the Company upon delivery of a purchase order. The MSA provides the general terms and conditions for such equipment leases. Pursuant to the MSA, we are granted a right of first refusal with respect to the next 5,000 servers that Boosteroid leases during the term of the MSA. The MSA provides Boosteroid with the option to expand in increments of 100 servers, up to 50,000 servers, representing a potential contract value of approximately $700 million over the five-year term assuming Boosteroid utilizes the GPUs and services at full capacity for the duration of the contract. Expansion depends upon the internal development roadmap of Boosteroid, Boosteroid has full discretion to decide when and the quantity to pursue separate source orders (for GPU servers) under the MSA. In the third quarter of 2025, the Company finalized additional purchase orders for 302, 120, and 279 GPUs, totaling approximately $10.4 million in contracted value over a five-year term.
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On November 6, 2024, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six month period, representing total contracted value of approximately $160,000 for the term. The deployment commenced on November 7, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, the Company signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, of which 80 remained in deployment as of the date of this report.
On November 14, 2024, we entered into a Terms of Supply and Service Level Agreement (together, the “Agreement”) and an Order Form with a new customer. The order form provides for services utilizing a total of 64 H200 GPUs on a month-to-month basis, which either party may terminate upon at least 14 days’ written notice prior to any renewal date. It represents annual revenue of approximately $1.2 million. The deployment commenced and revenue generation began on November 15, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in December 2024.
On December 30, 2024, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer, an AI Compute Fund managed by DNA Holdings Venture Inc. (“DNA Fund”). The purchase order provides for services utilizing a total of 576 H200 GPUs over a 25 month period and terminable by either party upon at least 90 days’ written notice prior to any renewal date. It represents an aggregate revenue opportunity of approximately $20.2 million. Concurrently, we placed a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in February 2025.
In April 2025, the Company signed two additional cloud services agreements with DNA Fund. The first agreement includes 104 NVIDIA H200 GPUs under a 23-month term and was deployed in May 2025. The second agreement includes 512 H200 GPUs under a 24-month term and was deployed in July 2025. With these additions, DNA Fund’s total contracted deployment increased to 1,192 GPUs. Combined, the agreements represent approximately $20.8 million of annualized revenue.
On January 6, 2025, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer. The purchase order provided for services utilizing a total of 32 H200 GPUs over a minimum of six month period, representing total revenue of approximately $300,000 for the term. The deployment commenced and revenue generation began on January 8, 2025, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in April 2025 following a change in the customer’s ownership, and the customer paid the remaining contract value as an early termination penalty.
In January 2025, we entered into a Master Services Agreement (“MSA”), along with two associated purchase orders, from a new customer. The purchase orders provide for services utilizing a total of 24 H200 GPUs over a minimum 12 month period, representing total revenue of approximately $450,000 for the term. The deployment commenced and revenue generation began on January 27, 2025, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in March 2025 after the customer ceased operations.
On January 30, 2025, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using the Company’s existing inventory of H200 GPUs. In October 2025, the purchase order was amended to reduce the number of H200 GPUs from 40 to 8 and to extend the term of service through May 2027. Between April and July 2025, the Company signed four additional agreements on a month-to-month basis for a total of 184 H200 GPUs which were terminated in August 2025.
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In March 2025, we entered a strategic partnership with Shadeform, Inc., the premier multi-cloud GPU marketplaces, to bring on-demand NVIDIA B200 GPUs to customers beginning in May 2025.
In August and September 2025, we entered into three service orders with a new customer. Each order form provides for services utilizing a total of 64 B200 GPUs on a weekly basis, which either party may terminate by not extending it with mutual written agreement. In September, the customer renewed one order form for an additional week for services utilizing a total of 64 B200 GPUs. As of the reporting date, no additional renewals have occurred.
In September 2025, we entered into a service order with a new customer, which provides services utilizing a total of 16 B200 GPUs on a monthly basis, automatically renewing for an additional one month period unless and until otherwise terminated upon at least seven days’ prior written notice. The deployment commenced and revenue generation began on September 23, 2025.
In October 2025, we entered into a service order with a new customer to provide services utilizing a total of 48 H200 GPUs. The service order has an initial term of 36 months representing total contracted value of approximately $2.2 million, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment commenced and revenue generation began on October 21, 2025.
In November 2025, we entered into a service order with a new customer to provide services utilizing a total of 128 B200 GPUs. The service order has an initial term of 12 months, representing total contracted value of approximately $3.0 million, after which it automatically renews for successive one-month periods unless terminated by either party. Deployment and revenue generation is scheduled to begin on December 1, 2025.
Digital Asset Business
The digital asset business is comprised primarily of two distinct but highly complementary operations: (i) digital asset mining (the “Digital Asset Mining Operations”); and (ii) ETH staking (the “ETH Staking Operations”).
In June 2025, the Company announced that it had initiated a strategic transition to become a pure play ETH staking and treasury company. In connection with the transition, the Company intends to convert its BTC holdings into ETH over time and has commenced a strategic alternatives process for its bitcoin mining operations, which is expected to result in a sale or wind-down, with any net proceeds to be re-deployed into ETH.
Digital Asset Mining Business
We commenced our bitcoin (“BTC”) mining business in February 2020. We initiated limited Ethereum mining operations in January 2022, however discontinued the operations by September 2022 due to Ethereum blockchain switching from proof-of-work (“PoW”) consensus mechanism to proof-of-stake (“PoS”) validation. Our mining operations, hosted by third-party providers, use specialized computers, known as miners, to generate digital assets. Our miners use application specific integrated circuit (“ASIC”) chips. These chips enable the miners to apply high computational power, expressed as “hash rate”, to provide transaction verification services (generally known as “solving a block”) which helps support the blockchain. For every block added, the blockchain provides an award equal to a set number of digital assets per block. Miners with a greater hash rate generally have a higher chance of solving a block and receiving an award.
We operate our mining assets with the primary intent of accumulating digital assets which we may sell for fiat currency from time to time depending on market conditions and management’s determination of our cash flow needs, and/or exchange into ETH or USD Coin (“USDC”). Our mining strategy has been to mine bitcoins as quickly and as many as possible given the fixed supply of bitcoins. In view of historically long delivery lead times to purchase miners from manufacturers like Bitmain Technologies Limited (“Bitmain”) and MicroBT Electronics Technology Co., Ltd (“MicroBT”), and other considerations, we have chosen to acquire miners on the spot market, which can typically result in delivery within a relatively short time.
We have signed service agreements with third-party hosting partners in North America and Iceland. These partners operate specialized mining data centers, where they install and operate the miners and provide IT consulting, maintenance, and repair work on site for us. Our mining facilities in New York are maintained by Digihost Technologies Inc. (“Digihost”). Our mining facilities in Texas are maintained by Dory Creek, LLC, a subsidiary of Bitdeer Technologies Group (“Bitdeer”) and A.R.T. Digital Holdings Corp (“KaboomRacks”). Soluna Computing, Inc and DVSL ComputeCo, LLC (collectively “Soluna”) maintained our mining facilities in Kentucky and Texas. Our mining facility in Iceland is maintained by GreenBlocks ehf, an Icelandic private limited company (“GreenBlocks”).
From time to time, the Company may change partnerships with hosting facilities to recalibrate its bitcoin mining operations. These terminations are strategic, targeting reduced operational costs, enhanced energy efficiency for a smaller carbon footprint, increased flexibility in operational control, and minimized geopolitical risks. While a short-term decrease in mining output might occur, we expect these changes to yield long-term operational improvements.
We are a sustainability-focused digital asset mining company. On June 24, 2021, we signed the Crypto Climate Accord, a private sector-led initiative that aims to decarbonize the crypto and blockchain sectors. On December 7, 2021, we became a member of the Bitcoin Mining Council (“BMC”), joining MicroStrategy and other founding members to promote transparency, share best practices, and educate the public on the benefits of bitcoin and bitcoin mining.
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Miner Deployments
During the three months ended September 30, 2025, we continued to work with our hosting partners to deploy our miners in North America and Iceland.
During the first quarter of 2025, the Company deployed an additional 1,441 miners at one of Soluna’s hosting facilities.
During the second quarter of 2025, the Company received an additional 1,720 miners, which were deployed in July 2025.
During the third quarter of 2025, the Company received an additional 1,855 miners, of which 410 miners were deployed in July 2025 and 1,445 miners were deployed in August 2025.
As of September 30, 2025, the Company’s active hash rate totals approximately 1.9 EH/s, with operations in North America and Iceland.
Power and Hosting Overview
The Company’s subsidiary, Bit Digital Canada, Inc., entered into a Mining Services Agreement effective September 1, 2022, for Blockbreakers, Inc. to provide five MW of incremental hosting capacity at its facility in Canada. The facility utilizes an energy source that is primarily hydroelectric.
On May 8, 2023, the Company entered into a Master Mining Services Agreement with Blockbreakers, pursuant to which Blockbreakers agreed to provide the Company with four (4) MW of additional mining capacity at its hosting facility in Canada. The agreement is for two (2) years automatically renewable for additional one (1) year terms unless either party gives at least 60 days’ advance written notice. The performance fee is 15% of the net profit. Additionally, Bit Digital has secured a side letter agreement with Blockbreakers, granting the Company the right of first refusal for any future mining hosting services offered by Blockbreakers in Canada. This agreement brought the Company’s total contracted hosting capacity with Blockbreakers to approximately 9 MW. Our service agreement with Blockbreakers expired in November 2024. A portion of the miners were transferred to other hosting facilities, and the inefficient units were sold.
On June 7, 2022, we entered into a Master Mining Services Agreement (the “MMSA”) with Coinmint LLC, pursuant to which Coinmint will provide the required mining colocation services for a one-year period automatically renewing for three-month periods unless earlier terminated. The Company paid Coinmint electricity costs, plus operating costs required to operate the Company’s mining equipment, as well as a performance fee equal to 27.5% of the net profit, subject to a 10% reduction if Coinmint fails to provide uptime of 98% or better for any period. We were not privy to the emissions rate at the Coinmint facility or at any other hosting facility. However, the Coinmint facility operated in an upstate New York region that reportedly utilized power that is 99% emissions-free, as determined based on the 2023 Load & Capacity Data Report published by the New York Independent System Operator, Inc. (“NYISO”).
On April 5, 2023, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to ten (10) MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Plattsburgh, New York. The agreement was for two years automatically renewing for three (3) months unless terminated by either party on at least ninety (90) days prior written notice. The performance fees under this letter agreement range from 30% to 33% of the net profit. This agreement brought the Company’s total contracted hosting capacity with Coinmint to approximately 30 MW at this facility.
On April 27, 2023, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to 10 MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement was for one year automatically renewing for three (3) months unless terminated by either party on at least 90 days prior written notice. The performance fees under this letter agreement are 33% of the net profit. This new agreement brought the Company’s total contracted hosting capacity with Coinmint to approximately 40 MW.
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On January 26, 2024, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to six MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement was for one year automatically renewing for three months unless terminated by either party on at least 90 days prior written notice. The performance fees under this letter agreement are 28% of the net profit. This agreement brought the Company’s total contracted hosting capacity with Coinmint to approximately 46 MW.
On September 5, 2024, the Company received a 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent not to renew 27 MW of the 36 MW total contracted capacity at its Massena, New York site, effective December 7, 2024. Subsequently, on October 29, 2024, the Company received an additional 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent to not renew the remaining 9 MW of the 36 MW total contracted capacity at its Massena, New York site, effective January 28, 2024. On January 3, 2025, the Company received an additional 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent not to renew the 10 MW total contracted capacity at its Plattsburgh, New York site, effective April 5, 2025. After the contracts with Coinmint expired, a portion of the miners were transferred to other hosting facilities, and the inefficient units were sold.
In June 2021, we entered into a strategic co-mining agreement with Digihost Technologies in North America. Pursuant to the terms of the agreement, Digihost provides certain premises to Bit Digital for the purpose of the operation and storage of a 20 MW bitcoin mining system to be delivered by Bit Digital. Digihost provides services to maintain the premises for a term of two years. Digihost shall also be entitled to 20% of the net profit generated by the miners.
In April 2023, we renewed the co-mining agreement with Digihost, previously executed in June 2021. Pursuant to the terms of the new agreement, Digihost provides certain premises to Bit Digital for the purpose of the operation and storage of an up to 20 MW bitcoin mining system to be delivered by Bit Digital. Digihost also provides services to maintain the premises for a term of two years, automatically renewing for a period of one (1) year. Digihost shall also be entitled to 30% of the net profit generated by the miners. As of September 30, 2025, Digihost provided approximately 6.0 MW of capacity for our miners at their facility.
On May 9, 2023 (“Effective Date”), the Company entered into a Term Loan Facility and Security Agreement (the “Loan Agreement”) with GreenBlocks. Pursuant to the Loan Agreement, GreenBlocks has requested the Company to extend one or more loans (“Advances”) under a senior secured term loan facility in an aggregate outstanding principal amount not to exceed $5 million. The interest rate of the Loan Agreement is 0% and Advances are to be repaid on the maturity date, which is the thirty-nine-month anniversary of the Effective Date. GreenBlocks will exclusively use the Advances to buy miners that will be operated for the benefit of the Company at a facility in Iceland, with an overall capacity of 8.25 MW. To secure the prompt payment of Advances, the Company has been granted a continuing first priority lien and security interest in all of GreenBlocks’s rights, title and interest to the financed miners. The miners are the sole property of GreenBlocks, of which they are responsible for the purchase, installation, operation, and maintenance.
On May 9, 2023, the Company entered into a Computation Capacity Services Agreement (the “Services Agreement”) with GreenBlocks. Pursuant to the Agreement, GreenBlocks will provide computational capacity services and other necessary ancillary services, such as operation, management, and maintenance, at the facility in Iceland for a term of two years. GreenBlocks will own and operate the miners financed through the Loan Agreement for the purpose of providing computational capacity of up to 8.25 MW. The Company will pay power costs of $0.05 per kilowatt hour, a pod fee of $22,000 per pod per month, and a depreciation fee equal to 1/36 of the facility size per month. The performance fees under this agreement are 20% of the net profit. The Company submitted to Greenblocks a deposit in the amount of $1,052,100, which was exclusively for the purpose of paying the landlord of the facility for hosting space.
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On June 1, 2023, the Company and GreenBlocks entered the Omnibus Amendment to Loan Documents and Other Agreements (“Omnibus Amendment”). This amendment revised both the Loan Agreement and the Services Agreement previously entered on May 9, 2023. While the core terms remained consistent, notable modifications pertained to the facility size and contracted capacity. Specifically, the facility size was increased from $5 million to $6.7 million. Moreover, GreenBlocks agreed to expand the computation capacity to approximately 10.7 MW. Advances of $6.4 million have been financed by the Company to GreenBlocks.
In May 2025, we amended the Services Agreement with Greenblocks, originally executed in May 2023 and previously amended in June 2023. Pursuant to the terms of the amended agreement, Greenblocks shall provide services to support 8.9 MW of power capacity from March 1, 2025 through April 30, 2025 and 5 MW of computational capacity starting May 1, 2025 through December 31, 2025. The Company will pay power costs of $0.067 per kilowatt hour and a pod fee of $10,000 per pod per month, subject to pro rata adjustment if usage falls below 2 MW. All other provisions of the original agreement and previous appendices remain in effect. The amended terms may be modified by mutual agreement, and either party may terminate with one month’s notice. As of September 30, 2025, GreenBlocks provided approximately 9.1 MW of capacity for our miners at their facility.
In October 2023, we entered into a strategic co-location agreement with Soluna Computing, Inc. for a term of one year automatically renewing on a month-to-month basis unless terminated by either party. Pursuant to the terms of the agreement, Soluna provided certain required mining colocation services at their hosting facility in Murray, Kentucky to the Company for the purpose of the operation and storage of up to 4.4 MW bitcoin mining system to be delivered by Bit Digital. Soluna was also entitled to 42.5% of the net profit generated by the miners. This agreement expired at the end of October 2024.
In October 2024, we entered into a co-location agreement with Soluna SW, Inc. to continue our business relationship. Under this agreement, Soluna provides certain required mining colocation services to the Company at their hosting facility in Murray, Kentucky for the purpose of the operation and storage of bitcoin mining system to be delivered by the Company up to 6.6 MW (3.3 MW for terms of nine months and 3.3 MW for terms of one (1) year), automatically renewing on a month-to-month basis unless terminated by either party. Soluna shall also be entitled to 35% of the net profit generated by the miners.
In December 2024, we entered into two additional co-location agreements with Soluna DVSL ComputerCo, LLC. pursuant to which Soluna agreed to provide the Company with up to 11 MW (5.5 MW and 5.5 MW, respectively) at their hosting facility in Silverton, Texas. Both agreements are for one (1) year automatically renewing on a month-to-month basis unless terminated by either party on at least 60 days prior written notice. Soluna shall also be entitled to 35% and 27.5%, respectively, of the net profit generated by the miners. These new agreements bring the Company’s total contracted hosting capacity with Soluna to approximately 17.6 MW. As of September 30, 2025, Soluna provided approximately 15.8 MW of capacity for our miners at their facility.
In November 2023, we entered into a hosting services agreement, which was amended on March 7, 2024, with Dory Creek, LLC, a subsidiary of Bitdeer Technologies Group (“Bitdeer”), for a term of one year automatically renewing on an annual basis unless terminated by either party by giving a 30-day prior notice to the other Party in writing. Pursuant to the terms of the agreement, Bitdeer provides maintenance and operation services to the Company to support 17.5 MW of capacity. Bitdeer shall also be entitled to 30% of the net profit generated by the miners. the Company shall have the first right, but not obligation, to accept services for any extra capacity under the terms of this Agreement. As of September 30, 2025, Bitdeer provided approximately 15.5 MW of capacity for our miners at their facility.
In February 2025, we entered into two hosting services agreements with A.R.T. Digital Holdings Corp (“KaboomRacks”) for terms of nine (9) months and three years automatically renewing on an annual basis unless terminated by either party. Pursuant to the terms of the agreements, KaboomRacks provides maintenance and operation services to Bit Digital to support 6 MW and 13 MW of capacity. In accordance with the agreements, we paid a refundable advance of $1.3 million, which will be applied against monthly hosting charges over an 18-month period.
On July 1, 2025, we entered into the first amendment to the hosting service agreement for 13 MW of capacity. The amendment modified the existing agreement, identifying the two facilities that will provide maintenance and operations service to Bit Digital to support 5 MW and 8 MW of capacity. KaboomRacks shall also be entitled to respective 40%, 14.75% and 22.5% of the net profit generated by the miners. As of September 30, 2025, KaboomRacks provided approximately 16.8 MW of capacity for our miners at their facility. On November 12, 2025, we received communication regarding a change in the contracting entity under its existing hosting arrangements. Effective immediately, Digital Energy Partners LLC (“DEP”) replaced KaboomRacks as the sole contracting counterparty. Under the updated terms, KaboomRacks will return all deposits previously held by it, and we will remit a one-month deposit related to electricity costs to DEP. In connection with the transition, DEP assumed the remaining portion of the $1.3 million loan, with an outstanding balance of approximately $1.1 million as of November 13, 2025.
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In May 2022, our hosting partner Blockfusion advised us that the substation at its Niagara Falls, New York facility was damaged by an explosion and fire, and power was cut off to approximately 2,515 of the Company’s bitcoin miners and approximately 710 ETH miners that had been operating at the site immediately prior to the incident. The explosion and fire are believed to have been caused by faulty equipment owned by the power utility. Blockfusion and the Company have entered into a common interest agreement to jointly pursue any claims evolving from the explosion and fire. Prior to the incident, our facility with Blockfusion in Niagara Falls, provided approximately 9.4 MW to power our miners. Power was restored to the facility in September 2022. However, we received a notice dated October 4, 2022 (the “Notice”), from the City of Niagara Falls, which ordered the cease and desist from any cryptocurrency mining or related operations at the facility until such time as Blockfusion complies with Section 1303.2.8 of the City of Niagara Falls Zoning Ordinance (the “Ordinance”), in addition to all other City ordinances and codes. Blockfusion has advised us that the Ordinance came into effect on October 1, 2022, following the expiration of a related moratorium on September 30, 2022. Blockfusion has further advised that it has submitted applications for new permits based on the Ordinance’s new standards and that the permits may take several months to process. Pursuant to the Mining Services Agreement between Bit Digital and Blockfusion dated August 25, 2021, Blockfusion represents, warrants and covenants that it “possesses, and will maintain, all licenses, registrations, authorizations and approvals required by any governmental agency, regulatory authority or other party necessary for it to operate its business and engage in the business relating to its provision of the Services.” On October 5, 2022, Bit Digital further advised Blockfusion that it expects it to comply with the directives of the Notice. Our service agreement with Blockfusion ended in September 2023. On June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion alleging claims for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to Blockfusion, the return of which is owed to the Company. The Company is seeking in excess of $4.3 million. On October 22, 2024, Blockfusion denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Following limited discovery on June 18, 2025, the court entered a stipulation and order amending the Case Management Order to extend multiple discovery deadlines and vacate the previously scheduled trial date. On August 1, 2025, the Company moved for leave to file a Second Amended Complaint, which adds claims for fraud and related causes of action arising out of Blockfusion’s, conduct both at the inception of and during the parties’ relationship. The second Amended Complaint also names Blockfusion’s CEO, Alexander Martini-Lomanto, as an additional defendant. The Company continues to seek the recovery of its original investment, invoices payments, and unpaid late development fees and now seeks additional damages for the tort and equitable claims contained in the Second Amended Complaint, including punitive damages. The total amount of damages sought exceeds of $5 million. Blockfusion has filed a motion to dismiss the Second Amended Complaint and a hearing on the motion has been scheduled for January 6, 2026. Refer to Note 19. Commitments and Contingencies for further details.
Miner Fleet Update and Overview
As of December 31, 2024, we had 24,239 miners owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 2.6 EH/s.
On December 10, 2024, we entered into an agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 191 S21 miners. As of the date of this report, all of the miners were delivered.
On December 15, 2024, we entered into an agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 750 S21 miners. As of the date of this report, all of the miners were delivered.
On December 23, 2024, we entered into an agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 4,300 S21+ miners. As of the date of this report, 2,630 miners were delivered.
For the three and nine months ended September 30, 2025, the Company disposed of 3,072 and 7,900 bitcoin miners.
As of September 30, 2025, we had 21,357 miners owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 2.8 EH/s.
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Bitcoin Production
From the inception of our bitcoin mining business in February 2020 to September 30, 2025, we earned an aggregate of 7,496.5 bitcoins.
The following table presents our bitcoin mining activities for the nine months ended September 30, 2025:
|
Number
of
bitcoins |
Amount (1) | |||||||
| Balance at December 31, 2024 | 741.9 | $ | 69,319,731 | |||||
| Receipt of BTC from mining services | 216.4 | 21,824,503 | ||||||
| Exchange of BTC into ETH | (318.4 | ) | (34,582,781 | ) | ||||
| Exchange of BTC into USDC | (25.0 | ) | (2,321,750 | ) | ||||
| Sales of and payments made in BTC | (608.8 | ) | (56,395,762 | ) | ||||
| Change in fair value of BTC | - | 2,849,527 | ||||||
| Balance at September 30, 2025 | 6.1 | $ | 693,468 | |||||
| (1) | Receipt of digital assets from mining services are the product of the number of bitcoins received multiplied by the bitcoin price obtained from Coinbase, calculated on a daily basis. Sales of bitcoin represent the carrying value of bitcoin at the time of sale. |
ETH Staking Business
In the fourth quarter of 2022, we formally commenced Ethereum staking operations. We delegate or stake our ETH holdings to an Ethereum validator node to help secure and strengthen the blockchain network. Stakers are compensated for this commitment in the form of a reward of the native network token.
Our native staking operations are enhanced by a partnership with Blockdaemon, the leading institutional-grade blockchain infrastructure company for node management and staking. In the fourth quarter of 2022, following a similar mechanism to native Ethereum staking, we also participated in liquid staking via Portara protocol (formerly known as Harbour), the liquid staking protocol developed by Blockdaemon and StakeWise and the first of its kind tailored to institutions. With the introduction of staked ETH withdrawals in April 2023, we have reassessed our Ethereum network staking approaches, weighing the advantages of traditional staking against liquid staking solutions. The withdrawal feature in native staking, coupled with yields that are on par with those of liquid staking, has encouraged us to expand our collaborations with other service providers in this domain. As a result, we terminated all liquid staking activities with StakeWise in the third quarter of 2023, reclaiming all staked Ethereum along with the accumulated rewards. In the fourth quarter of 2023, the Company terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon.
Our native staking operations with MarsProtocol Technologies Pte. Ltd. (“Marsprotocol”) commenced in the first quarter of 2023 and concluded in July 2023. After ceasing operations with Marsprotocol, we initiated our native staking with MarsLand Global Limited (“MarsLand”) in August 2023. Subsequently, we have ceased our native staking with MarsLand in the first quarter of 2024 and initiated our native staking with Figment Inc.
We started participating in liquid staking via Liquid Collective protocol on the Coinbase platform in the first quarter of 2023. Liquid staking allows participants to achieve greater capital efficiency by utilizing their staked ETH as collateral and trading their staked ETH tokens on the secondary market. In the first quarter of 2024, we have reclaimed all the liquid staked ETH from Liquid Collective protocol. In July 2025, we resumed liquid staking through the Liquid Collective protocol with 5,120 ETH. This approach provides flexibility to engage in both staking and restaking through a broader range of strategies and platforms. Subsequently, we ceased our liquid staking activities with Liquid Collective protocol in October 2025.
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Results of operations
The following table summarizes the results of our operations during the three months ended September 30, 2025 and 2024, respectively, and provides information regarding the dollar increase or (decrease) during the period. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report.
|
For
the Three Months Ended
September 30, |
Variance in | |||||||||||
| 2025 | 2024 | Amount | ||||||||||
| Revenues | ||||||||||||
| Digital asset mining | $ | 7,415,702 | $ | 10,110,221 | $ | (2,694,519 | ) | |||||
| Cloud services | 18,032,898 | 12,151,302 | 5,881,596 | |||||||||
| Colocation services | 1,692,280 | - | 1,692,280 | |||||||||
| ETH staking | 2,868,534 | 447,004 | 2,421,530 | |||||||||
| Other | 454,588 | 130,144 | 324,444 | |||||||||
| Total revenues | 30,464,002 | 22,838,671 | 7,625,331 | |||||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | ||||||||||||
| Digital asset mining | (5,032,692 | ) | (9,998,031 | ) | 4,965,339 | |||||||
| Cloud services | (6,314,548 | ) | (5,459,667 | ) | (854,881 | ) | ||||||
| Colocation services | (674,947 | ) | - | (674,947 | ) | |||||||
| ETH staking | (113,147 | ) | (11,607 | ) | (101,540 | ) | ||||||
| Depreciation and amortization expenses | (9,636,039 | ) | (8,383,055 | ) | (1,252,984 | ) | ||||||
| General and administrative expenses | (33,094,746 | ) | (13,681,750 | ) | (19,412,996 | ) | ||||||
| Gains (losses) on digital assets | 168,040,717 | (21,916,244 | ) | 189,956,961 | ||||||||
| Impairment on digital intangible assets | (1,836,192 | ) | - | (1,836,192 | ) | |||||||
| Total operating expenses | 111,338,406 | (59,450,354 | ) | 170,788,760 | ||||||||
| Income (loss) from operations | 141,802,408 | (36,611,683 | ) | 178,414,091 | ||||||||
| Net loss from disposal of property, plant and equipment | (539,378 | ) | - | (539,378 | ) | |||||||
| Other income (loss), net | 6,159,448 | (1,555,573 | ) | 7,715,021 | ||||||||
| Total other income (loss), net | 5,620,070 | (1,555,573 | ) | 7,175,643 | ||||||||
| Income (loss) before income taxes | 147,422,478 | (38,167,256 | ) | 185,589,734 | ||||||||
| Income tax expenses | (697,668 | ) | (628,230 | ) | (69,438 | ) | ||||||
| Net income (loss) | $ | 146,724,810 | $ | (38,795,486 | ) | $ | 185,520,296 | |||||
Revenue
We generate revenues from cloud services, colocation services, digital asset mining, and ETH staking businesses.
Revenue from cloud services
In the fourth quarter of 2023, we established our cloud-based HPC graphics processing unit services, which we term cloud services, a new business line to provide services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.
Our revenue from cloud services increased by $5.9 million, or 48.4%, to $18.0 million for the three months ended September 30, 2025 from $12.2 million for the three months ended September 30, 2024. The increase was primarily due to an increase in deployed GPU servers to new and existing customers in the third quarter of 2025, offset by a $2.0 million service credit accrued and expected to be issued to a customer under the terms of the contract.
Revenue from colocation services
In the fourth quarter of 2024, we acquired Enovum which holds our data center business that provides customers with physical space, power, and cooling within data center facilities.
Our revenue from colocation services was $1.7 million and $nil for the three months ended September 30, 2025 and 2024, respectively.
55
Revenue from digital asset mining
We provide computing power to digital asset mining pools, and receive consideration in the form of digital assets, the value of which is determined using the market price of the related digital asset at the time of receipt. By providing computing power to successfully add a block to the blockchain, the Company is entitled to a fractional share of the digital assets award from the mining pool operator, which is based on the proportion of computing power the Company contributed to the mining pool to the total computing power contributed by all mining pool participants in solving the current algorithm.
For the three months ended September 30, 2025, we received 64.9 bitcoins from the Foundry mining pool. As of September 30, 2025, our maximum hash rate was at an aggregate of 2.8 EH/s for our bitcoin miners. For the three months ended September 30, 2025, we recognized revenue of $7.4 million from bitcoin mining services.
For the three months ended September 30, 2024, we received 165.4 bitcoins from the Foundry mining pool. As of September 30, 2024, our maximum hash rate was at an aggregate of 4.3 EH/s for our bitcoin miners. For the three months ended September 30, 2024, we recognized revenue of $10.1 million from bitcoin mining services.
Our revenues from digital asset mining services decreased by $2.7 million, or 26.7%, to $7.4 million for the three months ended September 30, 2025 from $10.1 million for the three months ended September 30, 2024. The decrease was primarily due to a lower BTC generated from our mining business and partially offset by a higher average BTC price in the third quarter of 2025, compared to the same period in 2024.
Revenue from ETH staking
During the fourth quarter of 2022, we commenced ETH staking business, in both native staking and liquid staking.
For the ETH native staking business, we previously partnered with Blockdaemon, Marsprotocol and MarsLand. Currently, we stake ETH with Figment, using network-based smart contracts, on a node for the purpose of validating transactions and adding blocks to the network. Through these contracts, the Company stakes ETH on nodes for the purpose of validating transactions and adding blocks to the Ethereum blockchain network. The Company is able to withdraw staked ETH under contracted staking since April 12, 2023 when the announced Shanghai upgrade was completed. In exchange for staking the ETH and validating transactions on blockchain networks, the Company is entitled to block rewards and transaction fees for successfully validating or adding a block to the blockchain. These rewards are received by the Company directly from the Ethereum network and are calculated approximately based on the proportion of the Company’s stake to the total ETH staked by all validators.
In the fourth quarter of 2023, the Company terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon. Our native staking operations with Marsprotocol commenced in the first quarter of 2023 and concluded in July 2023. After ceasing operations with Marsprotocol, we initiated our native staking operations with MarsLand in August 2023. In the first quarter of 2024, we concluded our operations with MarsLand and initiated our native staking operations with Figment. As of December 31, 2024, all of our native staking operations are with Figment.
For the liquid staking business, the Company has deployed ETH into Portara protocol (formerly known as Harbour) supported by liquid staking solution provider under the consortium of Blockdaemon and Stakewise, and Liquid Collective protocol supported by Coinbase. By staking, we receive receipt tokens for the ETH staked which could be redeemed to ETH or can be traded or collateralized elsewhere, at any time. In addition, we receive rETH-h for rewards earned from Portara protocol. With the introduction of staked ETH withdrawals in April 2023, we have reassessed our Ethereum network staking approaches, weighing the advantages of traditional staking against liquid staking solutions. The withdrawal feature in native staking, coupled with yields that are on par with those of liquid staking, has encouraged us to expand our collaborations with other service providers in this domain. As a result, we terminated all liquid staking activities with StakeWise in the third quarter of 2023, reclaiming all staked Ethereum along with the accumulated rewards. In the first quarter of 2024, we ceased our liquid staking activities with Liquid Collective protocol and reclaimed all our staked Ethereum. In July 2025, we resumed liquid staking through the Liquid Collective protocol with 5,120 ETH. Subsequently, we ceased our liquid staking activities with Liquid Collective protocol in October 2025.
56
In the first quarter of 2024, the Company has restaked 3,008 ETH into EigenLayer, a protocol built on Ethereum that enables restaking of the already-staked ETH, through Figment. To mitigate potential risks, we restake our ETH without delegating to any operator and the Company received 33,568 EigenLayer in the fourth quarter of 2024 from this restaking activity. As of the date of this report, the reward earned in 2025 from this restaking activity is not significant.
For the three months ended September 30, 2025, we earned 644.3 ETH and 52.9 ETH in native staking and liquid staking, respectively. For the three months ended September 30, 2025, we recognized revenues of $2,649,831 and $218,703 from native staking and liquid staking, respectively.
For the three months ended September 30, 2024, we earned 161.9 ETH and nil ETH in native staking and liquid staking, respectively. For the three months ended September 30, 2024, we recognized revenues of $447,004 and $nil from native staking and liquid staking, respectively.
Our revenues from ETH native staking increased by $2,202,827, or 492.8%, to $2,649,831 for the three months ended September 30, 2025 from $447,004 for the three months ended September 30, 2024. The increase was primarily due to an increase of 482.4 ETH earned from staking services and the increase in the average price of ETH for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Our revenues from ETH liquid staking increased by $218,703, or 100%, to $218,703 for the three months ended September 30, 2025 from $nil for the three months ended September 30, 2024. The increase was due to the resume of liquid staking activities in the third quarter of 2025.
Cost of revenue
We incur cost of revenue from digital asset mining, cloud services, colocation services, and ETH staking businesses.
The Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company’s consolidated statements of operations. Specifically, these costs consist of:
| i. | cloud services operations - electricity costs, data center lease expense, GPU servers lease expense, and other relevant costs |
| ii. | colocation services - electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs |
| iii. | mining operations - electricity costs, profit-sharing fees and other relevant costs |
| iv. | ETH staking business - service fee and reward-sharing fees to the service providers. |
Cost of revenue - cloud services
For the three months ended September 30, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:
|
For
the Three Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Electricity costs | $ | 631,099 | $ | 210,200 | ||||
| Data center lease expenses | 1,380,553 | 1,021,758 | ||||||
| GPU servers lease expenses | 3,454,308 | 3,874,752 | ||||||
| Other costs | 848,588 | 352,957 | ||||||
| Total | $ | 6,314,548 | $ | 5,459,667 | ||||
57
Electricity costs . These expenses were incurred by the data center for the high-performance computing equipment and were closely correlated with the number of deployed GPU servers.
For the three months ended September 30, 2025, electricity costs increased by $0.4 million, or 200%, compared to the electricity costs incurred for the three months ended September 30, 2024. The increase primarily resulted from an increase in the number of deployed GPU servers.
Data center lease expenses . We entered into data center lease agreements for fixed monthly recurring costs.
For the three months ended September 30, 2025, data center lease expenses increased by $0.4 million, or 35%, compared to the data center lease expenses incurred for the three months ended September 30, 2024. The increase primarily resulted from one additional data center lease entered after the third quarter of 2024.
GPU servers lease expenses . We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.
For the three months ended September 30, 2025, GPU servers lease expenses decreased by $0.4 million, or 11%. The decrease primarily resulted from the application of a previously issued credit in connection with downtime that occurred in prior periods.
Cost of revenue - Colocation Services
In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the three months ended September 30, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:
|
For
the Three Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Electricity costs | $ | 288,797 | $ | - | ||||
| Lease expenses | 166,114 | - | ||||||
| Wage expenses | 92,494 | - | ||||||
| Other costs | 127,542 | - | ||||||
| Total | $ | 674,947 | $ | - | ||||
Electricity costs . These expenses were closely correlated with the number of deployed servers hosted by the data center.
For the three months ended September 30, 2025, electricity costs totaled $0.3 million. We had no electricity costs for the three months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.
Lease expenses . These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.
For the three months ended September 30, 2025, data center lease expenses totaled $0.2 million. We had no data center lease expenses for the three months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.
Wage expenses . These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.
For the three months ended September 30, 2025, wage expenses totaled $0.1 million. We had no wage expenses for the three months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.
58
Cost of revenue - digital asset mining
For the three months ended September 30, 2025 and 2024, the cost of revenue from digital asset mining was comprised of the following:
|
For
the Three Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Electricity costs | $ | 3,625,625 | $ | 8,508,918 | ||||
| Profit-sharing fees | 993,277 | 902,494 | ||||||
| Other costs | 413,790 | 586,619 | ||||||
| Total | $ | 5,032,692 | $ | 9,998,031 | ||||
Electricity costs. These expenses were incurred by mining facilities for the miners in operation and were closely correlated with the number of deployed miners.
For the three months ended September 30, 2025, electricity costs decreased by $4.9 million, or 57%, compared to the electricity costs incurred for the three months ended September 30, 2024. The decrease primarily resulted from a decrease in the number of deployed miners.
Profit-sharing fees. We enter into hosting agreements with certain mining facilities, which included performance fees calculated as a fixed percentage of net profit generated by the miners. We refer to these fees as profit-sharing fees.
For the three months ended September 30, 2025, profit-sharing fees increased by $0.1 million, or 10%, compared to profit-sharing fees incurred in the three months ended September 30, 2024. The increase in profit-sharing fees was primarily due to the higher average BTC price and partially offset by the lower bitcoin production for three months ended September 30, 2025
Cost of revenue - ETH staking
For the three months ended September 30, 2025, cost of revenue from ETH staking business increased by $101,540, or 875%, compared to the cost of revenue incurred for the three months ended September 30, 2024. The increase was primarily driven by an increased number of staked ETH from 21,568 ETH in the three months ended September 30, 2024 to 99,936 ETH in the three months ended September 30, 2025.
Depreciation and amortization expenses
For the three months ended September 30, 2025 and 2024, depreciation and amortization expenses were $9.6 million and $8.4 million, respectively, based on an estimated useful life of property, plant, and equipment.
Effective January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. Refer to Note 2. Summary of Significant Accounting Policies to our condensed consolidated financial statements.
General and administrative expenses
For the three months ended September 30, 2025, our general and administrative expenses, totaling $33.1 million, were primarily comprised of professional and consulting expenses of $11.1 million, shared-based compensation expenses of $10.9 million, salary and bonus expenses of $4.9 million, marketing expenses of $1.6 million, travel expenses of $0.2 million, and directors and officers insurance expenses of $0.3 million.
For the three months ended September 30, 2024, our general and administrative expenses, totaling $13.7 million, were primarily comprised of shared-based compensation expenses of $5.0 million, salary and bonus expenses of $1.8 million, professional and consulting expenses of $4.8 million, directors and officers insurance expenses of $0.2 million, marketing expenses of $0.6 million, and travel expenses of $0.2 million.
59
Gains (losses) on digital assets
For the three months ended September 30, 2025, a gain of $168 million was recognized, primarily attributable to the increase in the prices of bitcoin and ETH as of September 30, 2025.
For the three months ended September 30, 2024, a loss of $21.9 million was recognized, primarily attributable to the decreases in the prices of bitcoin and ETH as of September 30, 2024.
Income tax provisions
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended September 30, 2025 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company’s deferred tax assets in the United States, Singapore and Hong Kong. We continue to maintain a valuation allowance against the deferred tax assets in United States, Singapore and Hong Kong as the Company does not expect those deferred tax assets are “more likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomics, politics and profitability of the business.
Our income tax provision was $0.7 million and $0.6 million for the three months ended September 30, 2025 and 2024, respectively. The income tax provision was higher during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to increase of $1.2 million in Iceland due to the higher operation profits during the three months ended September 30, 2025 compared to the same period in 2024 and decrease of $0.3 million in the United States due to the rapid investment in infrastructures in Iceland, which results in a lower GILTI tax in the USA, during the three months ended September 30, 2025 compared to the same period in 2024 and decrease of $0.7 million due to the operating loss from Enovum during the three months ended September 30, 2025 compared to the same period in 2024.
Net income (loss) and earnings (loss) per share
For the three months ended September 30, 2025, our net income was $146.7 million, representing a change of $185.5 million from a net loss of $38.8 million for the three months ended September 30, 2024.
Basic and diluted earning per share was $0.48 and $0.47 for the three months ended September 30, 2025, respectively. Basic and diluted loss per share was $0.26 and $0.26 for the three months ended September 30, 2024, respectively.
Basic and diluted weighted average number of shares was 317,296,789 and 318,896,222 for the three months ended September 30, 2025, respectively. Basic and diluted weighted average number of shares was 149,684,237 and 149,684,237 for the three months ended September 30, 2024, respectively.
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The following table summarizes the results of our operations during the nine months ended September 30, 2025 and 2024, respectively, and provides information regarding the dollar increase or (decrease) during the period.
|
For
the Nine Months Ended
September 30, |
Variance in | |||||||||||
| 2025 | 2024 | Amount | ||||||||||
| Revenues | ||||||||||||
| Digital asset mining | $ | 21,824,503 | $ | 48,081,874 | $ | (26,257,371 | ) | |||||
| Cloud services | 49,470,499 | 32,718,083 | 16,752,416 | |||||||||
| Colocation services | 5,059,693 | - | 5,059,693 | |||||||||
| ETH staking | 3,794,507 | 1,146,562 | 2,647,945 | |||||||||
| Other | 1,073,085 | 322,396 | 750,689 | |||||||||
| Total revenues | 81,222,287 | 82,268,915 | (1,046,628 | ) | ||||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | ||||||||||||
| Digital asset mining | (17,232,166 | ) | (33,520,804 | ) | 16,288,638 | |||||||
| Cloud services | (18,793,668 | ) | (13,212,295 | ) | (5,581,373 | ) | ||||||
| Colocation services | (1,874,829 | ) | - | (1,874,829 | ) | |||||||
| ETH staking | (175,348 | ) | (52,496 | ) | (122,852 | ) | ||||||
| Depreciation and amortization expenses | (25,101,566 | ) | (23,575,637 | ) | (1,525,929 | ) | ||||||
| General and administrative expenses | (61,031,868 | ) | (25,118,009 | ) | (35,913,859 | ) | ||||||
| Gains on digital assets | 145,990,197 | 12,277,384 | 133,712,813 | |||||||||
| Impairment of digital intangible assets | (1,836,192 | ) | - | (1,836,192 | ) | |||||||
| Total operating expenses | 19,944,560 | (83,201,857 | ) | 103,146,417 | ||||||||
| Income (loss) from operations | 101,166,847 | (932,942 | ) | 102,099,789 | ||||||||
| Net loss from disposal of property, plant and equipment | (872,998 | ) | - | (872,998 | ) | |||||||
| Other income, net | 6,554,459 | 3,013,574 | 3,540,885 | |||||||||
| Total other income, net | 5,681,461 | 3,013,574 | 2,667,887 | |||||||||
| Income before income taxes | 106,848,308 | 2,080,632 | 104,767,676 | |||||||||
| Income tax expenses | (2,960,941 | ) | (2,747,361 | ) | (213,580 | ) | ||||||
| Net Income (loss) | $ | 103,887,367 | $ | (666,729 | ) | $ | 104,554,096 | |||||
Revenue
We generate revenues from cloud services, colocation services, digital asset mining, and ETH staking businesses.
Revenue from cloud services
In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide cloud services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.
Our revenue from cloud services increased by $16.8 million, or 51.2%, to $49.5 million for the nine months ended September 30, 2025 from $32.7 million for the nine months ended September 30, 2024. The increase was primarily due to an increase in deployed GPU servers to new and existing customers during the first nine months ended September 30, 2025.
61
Revenue from colocation services
In the fourth quarter of 2024, we acquired Enovum which provides customers with physical space, power, and cooling within data center facilities.
Our revenue from colocation services was $5.1 million and $nil for the nine months ended September 30, 2025 and 2024, respectively.
Revenue from digital asset mining
The Company enters in contracts with mining pool operators to provide computing power to digital asset mining pools. Providing computing power for digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators.
For the nine months ended September 30, 2025, we received 216.4 bitcoins from the Foundry USA Pool (“Foundry”) mining pool. As of September 30, 2025, our maximum hash rate was at an aggregate of 2.8 EH/s for our bitcoin miners. For the nine months ended September 30, 2025, we recognized revenue of $21.8 million from bitcoin mining services.
For the nine months ended September 30, 2024, we received 820.3 bitcoins from the Foundry mining pool. As of September 30, 2024, our maximum hash rate was at an aggregate of 4.3 EH/s for our bitcoin miners. For the nine months ended September 30, 2024, we recognized revenue of $48.1 million from bitcoin mining services.
Our revenues from digital asset mining services decreased by $26.3 million, or 54.6%, to $21.8 million for the nine months ended September 30, 2025 from $48.1 million for the nine months ended September 30, 2024. The decrease was primarily due to a decrease of 603.9 bitcoins generated from our mining business and partially offset by a higher average BTC price for the nine months ended September 30, 2025, compared to the same period in 2024.
Revenue from ETH staking
During the fourth quarter of 2022, we commenced ETH staking business, in both native staking and liquid staking.
For the ETH native staking business, we previously partnered with Blockdaemon, Marsprotocol and MarsLand. Currently, we stake ETH with Figment, using network-based smart contracts, on a node for the purpose of validating transactions and adding blocks to the network. Through these contracts, the Company stakes ETH on nodes for the purpose of validating transactions and adding blocks to the Ethereum blockchain network. The Company is able to withdraw staked ETH under contracted staking since April 12, 2023 when the announced Shanghai upgrade was completed. In exchange for staking the ETH and validating transactions on blockchain networks, the Company is entitled to block rewards and transaction fees for successfully validating or adding a block to the blockchain. These rewards are received by the Company directly from the Ethereum network and are calculated approximately based on the proportion of the Company’s stake to the total ETH staked by all validators.
In the fourth quarter of 2023, the Company terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon. Our native staking operations with Marsprotocol commenced in the first quarter of 2023 and concluded in July 2023. After ceasing operations with Marsprotocol, we initiated our native staking operations with MarsLand in August 2023. In the first quarter of 2024, we concluded our operations with MarsLand and initiated our native staking operations with Figment. As of December 31, 2024, all of our native staking operations are with Figment.
For the liquid staking business, the Company has deployed ETH into Portara protocol (formerly known as Harbour) supported by liquid staking solution provider under the consortium of Blockdaemon and Stakewise, and Liquid Collective protocol supported by Coinbase. By staking, we receive receipt tokens for the ETH staked which could be redeemed to ETH or can be traded or collateralized elsewhere, at any time. In addition, we receive rETH-h for rewards earned from Portara protocol. With the introduction of staked ETH withdrawals in April 2023, we have reassessed our Ethereum network staking approaches, weighing the advantages of traditional staking against liquid staking solutions. The withdrawal feature in native staking, coupled with yields that are on par with those of liquid staking, has encouraged us to expand our collaborations with other service providers in this domain. As a result, we terminated all liquid staking activities with StakeWise in the third quarter of 2023, reclaiming all staked Ethereum along with the accumulated rewards. In the first quarter of 2024, we ceased our liquid staking activities with Liquid Collective protocol and reclaimed all our staked Ethereum. Since the first quarter of 2024, the Company has no liquid staking activities. In July 2025, we resumed liquid staking through the Liquid Collective protocol with 5,120 ETH. This approach provides flexibility to engage in both staking and restaking through a broader range of strategies and platforms. Subsequently, we ceased our liquid staking activities with Liquid Collective protocol in October 2025.
62
In the first quarter of 2024, the Company has restaked 3,008 ETH into EigenLayer, a protocol built on Ethereum that enables restaking of the already-staked ETH, through Figment. To mitigate potential risks, we restake our ETH without delegating to any operator and the Company received 33,568 EigenLayer in the fourth quarter of 2024 from this restaking activity. As of the date of this report, the reward earned in 2025 from this restaking activity is not significant.
For the nine months ended September 30, 2025, we earned 1,022.1 ETH in native staking and 52.9 ETH in liquid staking, respectively. For the nine months ended September 30, 2025, we recognized revenues of $3,575,804 and $218,703 from native staking and liquid staking, respectively.
For the nine months ended September 30, 2024, we earned 382.4 ETH in native staking and 1.3 ETH in liquid staking, respectively. For the nine months ended September 30, 2024, we recognized revenues of $1,142,059 and $4,503 from native staking and liquid staking, respectively.
Our revenues from ETH native staking increased by $2,433,745, or 213.1%, to $3,575,804 for the nine months ended September 30, 2025 from $1,142,059 for the nine months ended September 30, 2024. The increase was primarily due to an increase of 639.7 ETH earned from staking services and the increase in the average price of ETH for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
Our revenues from ETH liquid staking increased by $214,200, or 4,756.8%, to $218,703 for the nine months ended September 30, 2025 from $4,503 for the nine months ended September 30, 2024. The increase was due to the resume of liquid staking activities in the third quarter of 2025.
Cost of revenue
We incur cost of revenue from digital asset mining, cloud services, colocation services, and ETH staking businesses.
The Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company’s consolidated statements of operations. Specifically, these costs consist of:
| i. | cloud services operations - electricity costs, data center lease expense, GPU servers lease expense, and other relevant costs |
| ii. | colocation services - electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs |
| iii. | mining operations - electricity costs, profit-sharing fees and other relevant costs |
| iv. | ETH staking business - service fee and reward-sharing fees to the service providers. |
Cost of revenue - cloud services
For the nine months ended September 30, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:
|
For
the Nine Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Electricity costs | $ | 1,802,691 | $ | 436,621 | ||||
| Data center lease expenses | 4,020,206 | 2,327,868 | ||||||
| GPU servers lease expenses | 10,951,164 | 9,786,992 | ||||||
| Other costs | 2,019,607 | 660,814 | ||||||
| Total | $ | 18,793,668 | $ | 13,212,295 | ||||
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Electricity costs . These expenses were incurred by the data center for the high performance computing equipment and were closely correlated with the number of deployed GPU servers.
For the nine months ended September 30, 2025, electricity costs increased by $1.4 million, or 317%, compared to the electricity costs incurred for the nine months ended September 30, 2024. The increase primarily resulted from an increase in the number of deployed GPU servers.
Data center lease expenses . We entered into data center lease agreements for fixed monthly recurring costs.
For the nine months ended September 30, 2025, data center lease expenses increased by $1.7 million, or 73%, compared to the data center lease expenses incurred for the nine months ended September 30, 2024. The increase primarily resulted from two additional data center leases entered into after the second quarter of 2024.
GPU servers lease expenses . We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.
For the nine months ended September 30, 2025, GPU servers lease expenses increased by $1.2 million, or 12%, compared to the GPU servers lease expenses incurred for the nine months ended September 30, 2024. The increase primarily resulted from a higher average number of GPU servers leased.
Cost of revenue - Colocation Services
In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the nine months ended September 30, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:
|
For
the Nine Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Electricity costs | $ | 781,857 | $ | - | ||||
| Lease expenses | 473,391 | - | ||||||
| Wage expenses | 262,037 | - | ||||||
| Other costs | 357,544 | - | ||||||
| Total | $ | 1,874,829 | $ | - | ||||
Electricity costs . These expenses were closely correlated with the number of deployed servers hosted by the data center.
For the nine months ended September 30, 2025, electricity costs totaled $0.8 million. We had no electricity costs for the nine months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.
Lease expenses . These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.
For the nine months ended September 30, 2025, data center lease expenses totaled $0.5 million. We had no data center lease expenses for the nine months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.
Wage expenses . These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.
For the nine months ended September 30, 2025, wage expenses totaled $0.3 million. We had no wage expenses for the nine months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.
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Cost of revenue - digital asset mining
For the nine months ended September 30, 2025 and 2024, the cost of revenue from digital asset mining was comprised of the following:
|
For
the Nine Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Electricity costs | $ | 12,192,989 | $ | 23,773,620 | ||||
| Profit-sharing fees | 3,235,388 | 7,879,937 | ||||||
| Other costs | 1,803,789 | 1,867,247 | ||||||
| Total | $ | 17,232,166 | $ | 33,520,804 | ||||
Electricity costs. These expenses were incurred by mining facilities for the miners in operation and were closely correlated with the number of deployed miners.
For the nine months ended September 30, 2025, electricity costs decreased by $11.6 million, or 49%, compared to the electricity costs incurred for the nine months ended September 30, 2024. The decrease primarily resulted from a decrease in the number of deployed miners.
Profit-sharing fees. We enter into hosting agreements with certain mining facilities, which included performance fees calculated as a fixed percentage of net profit generated by the miners. We refer to these fees as profit-sharing fees.
For the nine months ended September 30, 2025, profit-sharing fees decreased by $4.6 million, or 59%, compared to profit-sharing fees incurred in the nine months ended September 30, 2024. The decrease in profit-sharing fees was primarily due to a lower bitcoin production and partially offset by the higher average BTC price for nine months ended September 30, 2025.
Cost of revenue - ETH staking
For the nine months ended September 30, 2025, cost of revenue from ETH staking business increased by $122,852, or 234%, compared to the cost of revenue incurred for the nine months ended September 30, 2024. The increase was primarily driven by an increased number of staked ETH from 21,568 ETH in the nine months ended September 30, 2024 to 99,936 ETH in the nine months ended September 30, 2025.
Depreciation and amortization expenses
For the nine months ended September 30, 2025 and 2024, depreciation and amortization expenses were $25.1 million and $23.6 million, respectively based on an estimated useful life of property, plant, and equipment.
Effective January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. Refer to Note 2. Summary of Significant Accounting Policies .
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General and administrative expenses
For the nine months ended September 30, 2025, our general and administrative expenses, totaling $61.0 million, were primarily comprised of professional and consulting expenses of $23.3 million, shared-based compensation expenses of $18.0 million, salary and bonus expenses of $8.1 million, marketing expenses of $2.6 million, travel expenses of $0.7 million, and directors and officers insurance expenses of $0.8 million.
For the nine months ended September 30, 2024, our general and administrative expenses, totaling $25.1 million, were primarily comprised of shared-based compensation expenses of $5.9 million, salary and bonus expenses of $3.8 million, professional and consulting expenses of $9.6 million, directors and officers insurance expenses of $0.6 million, marketing expenses of $1.3 million, and travel expenses of $0.7 million.
Gains on digital assets
For the nine months ended September 30, 2025, a gain of $146 million was recognized, primarily attributable to the increase in the prices of bitcoin and ETH as of September 30, 2025.
For the nine months ended September 30, 2024, a gain of $12.3 million was recognized, primarily attributable to the increases in the prices of bitcoin and ETH as of September 30, 2024.
Income tax provisions
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the nine months ended September 30, 2025 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company’s deferred tax assets in the United States, Singapore and Hong Kong. We continue to maintain a valuation allowance against the deferred tax assets in United States, Singapore and Hong Kong as the Company does not expect those deferred tax assets are “more likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomics, politics and profitability of the business.
Our income tax provision was $3.0 million and $2.7 million for the nine months ended September 30, 2025 and 2024, respectively. The income tax provision did not change materially during the nine months ended September 30, 2025 compared to the same period in 2024.
Net income (loss) and earnings (loss) per share
For the nine months ended September 30, 2025, our net income was $103.9 million, representing a change of $104.6 million from a net loss of $0.7 million for the nine months ended September 30, 2024.
Basic and diluted earnings per share was $0.46 and $0.46 for the nine months ended September 30, 2025, respectively. Basic and diluted loss per share was $0.01 and $0.01 for the nine months ended September 30, 2024, respectively.
Basic and diluted weighted average number of shares was and 235,907,855 and 236,336,822, respectively, for the nine months ended September 30, 2025, respectively. Basic and diluted weighted average number of shares was 130,917,218 and 130,917,218 for the nine months ended September 30, 2024, respectively.
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Discussion of Certain Balance Sheet Items
The following table sets forth selected information from our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report.
| September 30, | December 31, | Variance in | ||||||||||
| 2025 | 2024 | Amount | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 179,118,182 | $ | 95,201,335 | $ | 83,916,847 | ||||||
| Restricted cash | 3,732,792 | 3,732,792 | - | |||||||||
| Accounts receivable, net | 17,441,029 | 5,267,863 | 12,173,166 | |||||||||
| USDC | 1,027,458 | 411,413 | 616,045 | |||||||||
| Digital assets | 423,682,364 | 161,377,344 | 262,305,020 | |||||||||
| Digital intangible assets | 17,257,172 | - | 17,257,172 | |||||||||
| Net investment in lease – current, net | 4,126,623 | 2,546,519 | 1,580,104 | |||||||||
| Loans receivable | 400,000 | 400,000 | - | |||||||||
| Other current assets, net | 25,865,020 | 28,319,669 | (2,454,649 | ) | ||||||||
| Total Current Assets | 672,650,640 | 297,256,935 | 375,393,705 | |||||||||
| Non-Current Assets | ||||||||||||
| Deposits for property, plant, and equipment | 9,979,576 | 39,059,707 | (29,080,131 | ) | ||||||||
| Property, plant, and equipment, net | 271,305,168 | 107,302,458 | 164,002,710 | |||||||||
| Goodwill | 19,848,419 | 19,383,291 | 465,128 | |||||||||
| Intangible Assets, net | 12,808,901 | 13,028,730 | (219,829 | ) | ||||||||
| Operating lease right-of-use assets | 42,773,580 | 14,967,569 | 27,806,011 | |||||||||
| Net investment in lease - non-current, net | 10,798,088 | 6,782,479 | 4,015,609 | |||||||||
| Investment securities | 86,676,878 | 30,797,365 | 55,879,513 | |||||||||
| Deferred tax asset | 91,389 | 89,246 | 2,143 | |||||||||
| Other non-current assets, net | 6,151,971 | 9,579,884 | (3,427,913 | ) | ||||||||
| Total Non-Current Assets | 460,433,970 | 240,990,729 | 219,443,241 | |||||||||
| Total Assets | $ | 1,133,084,610 | $ | 538,247,664 | $ | 594,836,946 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable | $ | 6,301,907 | $ | 3,418,172 | $ | 2,883,735 | ||||||
| Current portion of deferred revenue | 7,774,675 | 30,698,458 | (22,923,783 | ) | ||||||||
| Current portion of operating lease liability | 5,622,000 | 4,529,291 | 1,092,709 | |||||||||
| Income tax payable | 1,394,825 | 1,595,308 | (200,483 | ) | ||||||||
| Dividend payable | - | 800,000 | (800,000 | ) | ||||||||
| Other payables and accrued liabilities | 17,274,634 | 13,985,375 | 3,289,259 | |||||||||
| Total Current Liabilities | 38,368,041 | 55,026,604 | (16,658,563 | ) | ||||||||
| Non-Current Liabilities | ||||||||||||
| Other long-term liabilities | 196,345 | 785,372 | (589,029 | ) | ||||||||
| Non-current portion of deferred revenue | 13,671 | 73,494 | (59,823 | ) | ||||||||
| Non-current portion of operating lease liability | 36,294,655 | 9,276,926 | 27,017,729 | |||||||||
| Long-term income tax payable | 3,196,204 | 3,196,204 | - | |||||||||
| Deferred tax liability | 9,434,308 | 6,409,915 | 3,024,393 | |||||||||
| Total Non-Current Liabilities | 49,135,183 | 19,741,911 | 29,393,270 | |||||||||
| Total Liabilities | $ | 87,503,224 | $ | 74,768,515 | $ | 12,734,709 | ||||||
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Cash and cash equivalents
Cash and cash equivalents primarily consist of funds deposited with banks, which are highly liquid and are unrestricted to withdrawal or use. The total balance of cash and cash equivalents were $179.1 million and $95.2 million as of September 30, 2025 and December 31, 2024, respectively. The increase in the balance of cash and cash equivalents was a result of net cash of $452.7 million provided by financing activities, partially offset by net cash of $189.5 million used in operating activities and net cash of $179.4 million used in investing activities.
Accounts receivable, net
Accounts receivable consists of amounts due from our customers. The total balance of accounts receivable was $17.4 million and $5.3 million as of September 30, 2025 and December 31, 2024, respectively. The increase in the balance of accounts receivable is attributable to unpaid invoices from our customers.
USDC
USD Coin (“USDC”) is accounted for as a financial instrument; one USDC can be redeemed for one U.S. dollar on demand from the issuer. The balance of USDC was $1.0 million and $0.4 million as of September 30, 2025 and December 31, 2024, respectively. The increase in the balance of USDC was primarily due to the receipt of USDC from sales of other digital assets of $2.3 million and receipt of USDC from other income of $40,100, partially offset by the payment of other expenses of $1.7 million.
Digital assets
Digital assets primarily consist of BTC and ETH. For the three months ended September 30, 2025, we earned digital assets from mining services and ETH staking services. We exchanged BTC into ETH or USDC, exchanged BTC and ETH into cash, or used BTC and ETH to pay certain operating costs and other expenses. Digital assets held are accounted for as intangible assets measured at fair value, with changes in fair value recorded in net income in each reporting period.
As compared with the balance as of December 31, 2024, the balance of digital assets as of September 30, 2025 increased by $262.3 million, which was primarily attributable to exchange of cash of $148.7 million into ETH, generation of bitcoins of $21.8 million from our mining business, generation of ETH of $3.6 million from our native staking business, gain from exchange of BTC to ETH of $69.7 million and change in fair value of $143.5 million, partially offset by the exchange of bitcoins of $55.0 million into cash, the exchange of ETH of $19.0 million into LsETH, and payment of ETH to investment fund of $47.6 million.
Loans Receivable
Loans receivable consist of a loan issued by the Company to a third party. The total balance of loans receivable was $0.4 million and $0.4 million as of September 30, 2025 and December 31, 2024, respectively.
Net investment in lease
Net investment in lease represents the present value of the lease payments not yet received from lessee. The current and non-current balance of net investment in lease was $4.1 million and $10.8 million, respectively as of September 30, 2025. The current and non-current balance of net investment in lease was $2.5 million and $6.8 million, respectively as of December 31, 2024.
Deposits for property, plant, and equipment
The deposits for property, plant, and equipment consists of advance payments for property, plant, and equipment. The balance was derecognized once the control of the property, plant, and equipment was transferred to and obtained by us.
Compared with December 31, 2024, the balance as of September 30, 2025 decreased $29.1 million, mainly due to the receipt of property and equipment of $121.1 million, offset by prepayment of $92.0 million for property, plant and equipment.
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Property, plant, and equipment, net
Property, plant, and equipment primarily consisted of equipment used in our HPC business and digital asset business as well as construction in progress representing assets received but not yet put into service.
As of September 30, 2025, we had 21,357 bitcoin miners with net book value of $27.1 million, cloud service computing equipment with a net book value of $114.8 million, property, plant, and equipment for colocation service with a net book value of $83.0 million, and construction in progress of $43.1 million.
As of December 31, 2024, we had 24,239 bitcoin miners with net book value of $17.9 million, cloud service computing equipment with a net book value of $47.2 million, property, plant, and equipment acquired as part of the acquisition of Enovum with a net book value of $36.4 million for colocation service, and construction in progress of $5.1 million.
Operating lease right-of-use assets and operating lease liability
As of September 30, 2025, the Company’s operating lease right-of-use assets and total operating lease liability were $42.8 million and $41.9 million respectively. As of December 31, 2024, the Company’s operating lease right-of-use assets and total operating lease liability were $15.0 million and $13.8 million respectively
The increase in operating lease right-of-use assets and total operating lease liability of $27.8 million and $28.1 million respectively, were due to one additional data center lease entered in 2025, one additional capacity lease entered in 2025, one additional office lease entered in 2025, and one additional lease entered in 2025 for general and administrative purposes totaling $32.1 million, partially offset by the amortization of the operating lease right-of-use assets totaling $3.9 million for the nine months ended September 30, 2025.
Investment Securities
As of September 30, 2025, our portfolio consists of investments in three funds, a privately held company via a simple agreement for future equity (“SAFE”), and four privately held companies over which the Company neither has control nor significant influence. The total balance of investment securities was $86.7 million and $30.8 million as of September 30, 2025, and December 31, 2024, respectively. The increase of $55.9 million in the value of our investment securities was mainly driven by an additional investment of $47.6 million in Innovation Fund I and an additional investment of $2.0 million in AI Innovation Fund I and an upward fair value adjustments of $6.2 million.
Accounts payable
Accounts payable primarily consists of amounts due for costs related to our digital asset mining, cloud services, colocation services and ETH staking. Compared with December 31, 2024, the balance of accounts payable increased by $2.9 million in the nine months ended September 30, 2025, largely due to the unpaid bills for our digital asset mining, ETH staking and cloud services in the nine months ended September 30, 2025.
Deferred revenue
Deferred revenue pertains to prepayments received from customers for HPC business.
As of September 30, 2025, the Company’s current and non-current portion of deferred revenue was $7.8 million and $14,000, respectively, compared to $30.7 million and $0.1 million, respectively, as of December 31, 2024. The decrease in deferred revenue of $23.0 million reflects the recognition of $26.3 million in revenue related to the successful fulfilment of performance obligations from our HPC services, partially offset by $3.3 million prepayments from customers for HPC services to be rendered in the future.
Long-term income tax payable
Compared with December 31, 2024, the balance as of September 30, 2025 did not change as no incremental penalty was accrued on the existing unrecognized tax benefits for the three months ended September 30, 2024. Refer to Note 15. Income Taxes , for more information.
Non-GAAP Financial Measures
In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, such as “Adjusted EBITDA”.
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EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as our EBITDA adjusted to eliminate the effects of certain non-cash and / or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of the Company’s core business operations. The adjustments currently include fair value adjustments such as investment securities value changes and non-cash share-based compensation expenses, in addition to other income and expense items.
We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.
Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for historical periods are presented in the table below:
|
For the Three Months Ended
September 30, |
For the Nine Months Ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Reconciliation of non-GAAP income (loss) from operations: | ||||||||||||||||
| Net income (loss) | $ | 146,724,810 | $ | (38,795,486 | ) | $ | 103,887,367 | $ | (666,729 | ) | ||||||
| Depreciation and amortization expenses | 9,636,039 | 8,383,055 | 25,101,566 | 23,575,637 | ||||||||||||
| Income tax expenses | 697,668 | 628,230 | 2,960,941 | 2,747,361 | ||||||||||||
| EBITDA | 157,058,517 | (29,784,201 | ) | 131,949,874 | 25,656,269 | |||||||||||
| Adjustments: | ||||||||||||||||
| Net loss from disposal of property, plant and equipment | 539,378 | - | 872,998 | - | ||||||||||||
| Share based compensation expenses | 16,292,948 | 7,095,017 | 25,802,664 | 10,076,352 | ||||||||||||
| Changes in fair value of long-term investments | (7,121,391 | ) | 2,040,185 | (6,245,819 | ) | (1,173,549 | ) | |||||||||
| Loss from divesture of a subsidiary | - | 978,938 | - | 978,938 | ||||||||||||
| Adjusted EBITDA | $ | 166,769,452 | $ | (19,670,061 | ) | $ | 152,379,717 | $ | 35,538,010 | |||||||
Liquidity and capital resources
As of September 30, 2025, we had working capital of $634.3 million which includes USDC of $1.0 million, digital assets of $423.7 million and digital intangible assets of $17.3 million as compared with working capital of $242.2 million as of December 31, 2024. Working capital is the difference between the Company’s current assets and current liabilities.
To date, we have financed our operations primarily through cash flows from operations, sales of our equity securities and the issuance of convertible notes. We plan to support our future operations primarily from cash generated from our operations and equity financings. We may also consider debt, preferred and convertible financing on favorable terms.
We believe our existing cash will be sufficient to fund our anticipated operating cash requirements for at least 12 months following the date of this filing.
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Between May and August 2023, the Company issued an aggregate of 6,747,663 ordinary shares to Ionic Ventures LLC for gross proceeds of $22.0 million. The Company received net proceeds of approximately $21.0 million after deducting commissions payable to the placement agent.
In 2023, the Company sold an aggregate of 14,744,026 ordinary shares in connection with its at-the-market offering pursuant to a registration statement on Form F-3 declared effective by the SEC on May 4, 2022, which registered up to $500 million of the Company’s ordinary shares, preference shares, debt securities, warrants, units and subscription rights (the “F-3 Registration Statement”). The Company received net proceeds of $45.3 million, net of offering costs.
In 2024, the Company sold an aggregate of 67,246,628 ordinary shares in connection with its at-the-market offering pursuant to the F-3 Registration Statement. The Company received net proceeds of $242.9 million, net of offering costs.
On October 11, 2024, the Company acquired all of the issued and outstanding capital stock of Enovum Data Centers Corp. in a transaction valued at approximately CAD 62.8 million (approximately $46.0 million).
In the first quarter of 2025, the Company sold an aggregate of 3,149,887 ordinary shares in connection with the at-the-market offering. The Company received net proceeds of $10.2 million, net of offering costs.
On April 29, 2025, the Company filed a registration statement on Form S-3 (No. 333-286841) with the SEC to register up to $500 million of its ordinary shares, preference shares, debt securities, warrants, units and subscription rights (the “Registration Statement”), which included a sales agreement prospectus covering the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $500 million of the Company’s ordinary shares that may be issued and sold under an At The Market Offering Agreement we entered into with H.C. Wainwright & Co., LLC, as sales agent (as amended from time to time, the “Sales Agreement”).
In the second quarter of 2025, the Company sold an aggregate of 25,504,699 ordinary shares in connection with the at-the-market offering pursuant to the Registration Statement. The Company received net proceeds of $48.3 million, net of offering costs.
In June 2025, the Company completed an underwritten public offering of its ordinary shares registered under the Registration Statement. In accordance with the terms of the underwriting agreement entered into with B. Riley Securities, Inc., as representative of the several underwriters, the Company sold 75,000,000 ordinary shares at a price to the underwriters of $1.90 per share. The Company received net proceeds of approximately $141.6 million, after deducting the underwriting discount and offering expenses. On July 1, 2025, the underwriters related to this public offering fully exercised their option to purchase an additional 11,250,000 ordinary shares, resulting in additional net proceeds to the Company of $21.3 million, after deducting the underwriting discount and offering expenses.
On July 15, 2025, the Company entered into a registered direct offering with B. Riley Securities, Inc. relating to its ordinary shares. In accordance with the terms of the sales agreement, the Company agreed to issue and sell 22,000,000 ordinary shares having an aggregate purchase price of $63.6 million, net of offering costs. The registered direct offering closed on July 15, 2025. The Company intends to use the net proceeds from the registered direct offering to purchase Ethereum.
On September 29, 2025, the Company entered into an underwriting agreement with certain financial institutions (collectively the “Underwriters”), pursuant to which the Company agreed to sell $135 million aggregate principal amount of its 4.00% Convertible Notes due 2030. Subsequently, the greenshoe option was exercised under which additional $15 million was sold to the Underwriters, making a total of $150 million aggregate principal amount of the Convertible Notes. The Convertible Notes closed on October 1, 2025 and will mature on October 1, 2030, unless earlier converted, redeemed or repurchased in accordance with their terms as stipulated in the Agreement.
On October 31, 2025, the Company filed an automatically effective shelf registration statement on Form S-3 (File No. 333-291205) with the SEC to register an indeterminate amount of its ordinary shares, which included a sales agreement prospectus supplement covering the offering, issuance and sale by the Company of up to a maximum aggregate offering price of up to $2.5 billion of the Company’s ordinary shares that may be issued and sold from time to time pursuant to the Sales Agreement.
Revenue from Operations
Funding our operations on a going-forward basis will rely significantly on the revenue earned from our high performance computing business, as well as our ability to earn ETH rewards from ETH staking business and the spot or market price of ETH.
On October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support the customer’s GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.
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In the second quarter of 2024, we finalized an agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer’s request, we agreed with the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.
In January 2025, the Company entered into a new agreement to supply its Initial Customer with an additional 464 GPUs for a period of eighteen months. This new agreement replaces the prior agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. The customer has elected to defer the commencement date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced on August 20, 2025, using the Company’s inventory of B200 GPUs.
On October 9, 2024, we executed a Master Service Agreement (the “MSA”) with Boosteroid Inc. (“Boosteroid”), a global cloud gaming provider. Following execution of a binding term sheet with Boosteroid on August 19, 2024, we finalized initial orders of 489 GPUs, projected to generate approximately $7.9 million in contracted value in the aggregate through November 2029. The GPUs have been delivered to respective data centers across the U.S. and Europe and began earning fees in November 2024. The MSA provides Boosteroid with the option to expand in increments of 100 servers, up to 50,000 servers, representing a potential contract value of approximately $700 million over the five-year term assuming Boosteroid utilizes the GPUs and services at full capacity for the duration of the contract. Expansion depends upon the internal development roadmap of Boosteroid, Boosteroid has full discretion to decide when and the quantity to pursue separate source orders (for GPU servers) under the MSA. In the third quarter of 2025, the Company finalized additional purchase orders for 302, 120, and 279 GPUs, totaling approximately $10.4 million in contracted value over a five-year term.
On December 30, 2024, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer, an AI Compute Fund managed by DNA Holdings Venture Inc. (“DNA Fund”). The purchase order provides for services utilizing a total of 576 H200 GPUs over a 25 month period, terminable by either party upon at least 90 days’ written notice prior to any renewal date. It represents an aggregate revenue opportunity of approximately $20.2 million. Concurrently, we placed a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in February 2025. In April 2025, the Company signed two additional cloud services agreements with DNA Fund. The first agreement, commencing in early May, includes 104 NVIDIA H200 GPUs under a 23-month term. The second, commencing mid-May, includes 512 H200 GPUs under a 24-month term. With these additions, DNA Fund’s total contracted deployment increased to 1,192 GPUs. Combined, the agreements represent approximately $41.6 million of annualized revenue.
In October 2025, we entered into a service order with a new customer to provide services utilizing a total of 48 H200 GPUs. The service order has an initial term of 36 months, representing total contracted value of approximately $2.2 million, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment commenced and revenue generation began on October 21, 2025.
Regardless of our ability to generate revenue from our high performance computing business, or our Ethereum staking business, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy. The ability to raise funds such as equity, debt or conversion of digital assets to maintain our operations is subject to many risks and uncertainties and, even if we are successful, future equity issuances would result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through conversion of digital assets into cash or fund overhead with digital assets is subject to a number of risks, including regulatory, financial and business risks, many of which are beyond our control. Additionally, the value of digital asset rewards has historically been extremely volatile, and future prices cannot be predicted.
If we are unable to generate sufficient revenue when needed or secure additional funding, it may become necessary to significantly reduce our current rate of expansion or to explore other strategic alternatives.
Cash flows
|
For the Nine Months Ended
September 30, |
||||||||
| 2025 | 2024 | |||||||
| Net Cash Used in Operating Activities | $ | (204,864,851 | ) | $ | (20,311,102 | ) | ||
| Net Cash Used in Investing Activities | (164,060,617 | ) | (23,992,679 | ) | ||||
| Net Cash Provided by Financing Activities | 452,695,272 | 131,709,364 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 83,769,804 | 87,405,583 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 147,043 | - | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | 98,934,127 | 18,180,934 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 182,850,974 | $ | 105,586,517 | ||||
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Operating Activities
Net cash used in operating activities was $204.9 million for the nine months ended September 30, 2025, derived mainly from (i) a net income of $103.9 million for the nine months ended September 30, 2025 adjusted for digital assets mined of $21.8 million from our mining services, depreciation expenses and amortization expense of $25.1 million, loss from disposal of property, plant and equipment of $0.9 million, gain on digital assets of $146.0 million, share based compensation expenses of $22.4 million, impairment of digital intangible asset of $1.8 million, changes in fair value of investment security of $6.2 million, current expected credit losses of $0.1 million, digital assets earned from staking of $3.8 million and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in digital assets and stable coins of $141.9 million, a decrease in digital intangible assets of $19.1, decrease in deferred revenue of $23.0 million, a decrease in accounts receivable of $12.2 million, a decrease in other payable and accrued liabilities of $0.8 million, an increase in other current assets of $3.4 million, an increase in other non-current assets of $3.4 million, an increase in net investment in lease of $2.3 million, an increase in account payable of $4.2 million, an increase in operating lease right-of-use assets of $3.9 million, a decrease in lease liability of $3.5 million.
Net cash used in operating activities was $20.3 million for the nine months ended September 30, 2024, derived mainly from (i) a net loss of $0.7 million for the nine months ended September 30, 2024 adjusted for digital assets of $48.1 million from our mining services, depreciation expenses of property and equipment of $23.6 million, and gains on digital assets of $12.3 million, and (ii) net changes in our operating assets and liabilities, principally comprising of an increase in deferred revenue of $16.9 million, increase in accounts receivable of $3.9 million, increase in other payable and accrued liabilities of $0.3 million, an increase in net investment in lease of $3.7 million, an increase in accounts payable of $5.1 million, an increase in other current assets of $6.2 million, and an decrease in other non-current assets of $1.0 million.
Investing Activities
Net cash used in investing activities was $164.1 million for the nine months ended September 30, 2025, primarily attributable to purchases of and deposits made for property, plant, and equipment of $164.0 million, investment in equity securities of $2.0 million, and partially offset by proceeds from disposal of property, plant and equipment of $2.0 million.
Net cash used in investing activities was $24.0 million for the nine months ended September 30, 2024, primarily attributable to purchases of and deposits made for property and equipment of $7.2 million, investment in a SAFE of $1.0 million and investment in two equity investees of $16.0 million.
Financing Activities
Net cash provided by financing activities was $452.7 million for the nine months ended September 30, 2025, attributable to net proceeds of $58.5 million from the at-the-market offering, net proceeds of $162.6 million from the public offering, net proceeds of $62.8 from registered direct offering, net proceeds of $147.4 million from changes in ownership interests in subsidiary via IPO, net proceeds of $22.2 million from changes in ownership interests in subsidiary via over-allotment option and offset by the payment of dividends of $0.8 million.
Net cash provided by financing activities was $131.7 million for the nine months ended September 30, 2024, attributable to net proceeds of $131.7 million from the at-the-market offering.
Royal Bank of Canada Credit Facility
On June 18, 2025, the Company entered into a definitive credit agreement with the Royal Bank of Canada (“RBC”), the largest bank in Canada, to finance its data centers business. The facility provides up to CAD $60 million (approximately USD $43.8) in aggregate financing. Proceeds will be used to support the continued buildout of the Company’s HPC data center portfolio. As of the reporting date, the facility had not yet been authorized for use, as the Company and RBC are negotiating amendments to the existing agreement, including a potential additional non-revolving term loan of up to CAD $55 million (approximately USD $39.5 million). Refer to Colocation/Data Centers Services section above for further details.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements.
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues, and expenses, to disclose contingent assets and liabilities on the dates of the unaudited condensed consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting periods. The most significant estimates and assumptions include, but are not limited to, the valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our unaudited condensed consolidated financial statements. For a summary of significant accounting policies, refer to Note 2. Summary of Significant Accounting Policies in our Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere herein.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable. A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.
Based on this evaluation, our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in conducting a cost-benefit analysis of possible controls and procedures.
Changes in Internal Control over Financial Reporting
In October 2024, we acquired 100% of the equity interests of Enovum Data Centers Corp (“Enovum”). We are currently in the process of integrating Enovum’s operations, control processes, and information systems into our systems and control environment and expect to include them in scope of design and operation of our internal control over financial reporting for the year ending December 31, 2025. We believe that we have taken the necessary steps to monitor and maintain appropriate internal control over financial reporting during this integration. Other than changes made in connection with the acquisitions, there were no changes in our internal control over financial reporting during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Except as set forth herein, there have been no changes since the filing of the Company’s Form 10-K for the year ended December 31, 2024 and the Company’s Form 10-Q for the period ended March 31, 2025.
On June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion, Inc. (“Blockfusion”) alleging claims for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to Blockfusion, the return of which is owed to Bit Digital. Bit Digital is seeking in excess of $4.3 million. On October 22, 2024, Blockfusion denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Following limited discovery on June 18, 2025, the Court entered a stipulation and order amending the Case Management Order to extend multiple discovery deadlines and vacate the previously scheduled trial date. On August 1, 2025, the Company moved for leave to file a Second Amended Complaint, which adds claims for fraud and related causes of action arising out of Blockfusion’s conduct both at the inception of and during the parties’ relationship. The Second Amended Complaint also names Blockfusion’s CEO, Alexander Martini-Lomanto, as an additional defendant. The Company continues to seek the recovery of its original investment, invoice payments, and unpaid late development fees, and now seeks additional damages for the tort and equitable claims contained in the Second Amended Complaint, including punitive damages. The total amount of damages sought exceeds $5 million. Blockfusion has filed a motion to dismiss the Second Amended Complaint and a hearing on the motion has been scheduled for January 6, 2026.
Item 1A. Risk Factors
You should refer to the other information set forth in this report, including the information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our condensed consolidated financial statements and the related notes. Our business prospects, financial condition or results of operations could be adversely affected by any of these risks.
Except as described below, our risk factors as of the date of this report have not changed materially from those described in “Part I, Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, 2024 (the “Annual Report”).
Unless the context indicates otherwise, references under the headings “Risks Related to WhiteFiber’s Cloud Services and Data Center Operations,” “Risks Related to the Geopolitical Uncertainty” and “Risks Involving Intellectual Property” in this Item 1A to the “Company,” “WhiteFiber” “we,” “us,” “our” and similar terms refer to WhiteFiber, Inc. and its consolidated subsidiaries.
Please note in considering the “Risk Factors” in Item 1A of our Annual Report that, notwithstanding the fact that Bit Digital, Inc. has not conducted operations in the PRC since September 30, 2021, we have previously disclosed under Risk Factors in our Annual Report, “We may be subject to fines and penalties for any noncompliance with or any liabilities in our former business in China in a certain period from now on.” Although the statute of limitations for non-compliance by our former business in the PRC is generally two years and the Company has been out of the PRC, for more than two years, the Authority may still find its prior bitcoin mining operations involved a threat to financial security. In such event, the two-year period would be extended to five years.
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Speculative and Volatile Nature of ETH .
To date, the Company has deployed a portion of the capital it has raised into ETH and its ability to achieve the objectives of its ETH strategy depends, in part, on our ability to purchase ETH. Successfully implementing this strategy may present organizational and infrastructure challenges, and the Company may not be able to fully implement or realize the intended benefits of its strategy. Moreover, the price of ETH is subject to significant volatility. In addition, if it chooses to do so, there is no guarantee that the Company will be able to sell its ETH at prices quoted on various cryptocurrency trading platforms or at all if it determines to do so. The supply of ETH is currently controlled by the source code of the Ethereum platform, and there is a risk that the developers of the code and the participants in the Ethereum network could develop and/or adopt new versions of the Ethereum software that significantly increase the supply of ETH in circulation, negatively impacting the trading price of ETH. Given our ETH holdings, any significant decrease in the price of ETH may materially and adversely affect the value of the Company’s securities and, in turn, the Company’s business, results of operation and financial condition.
The ETH markets are sensitive to new developments, and since volumes are still maturing, any significant changes in market sentiment (by way of sensationalism in the media or otherwise) can induce large swings in volume and subsequent price changes. Such volatility can adversely affect the business and financial condition of the Company.
Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the public, accounts for anticipated future appreciation in value. The Company believes that momentum pricing of ETH has resulted, and may continue to result, in speculation regarding future appreciation in the value of ETH, inflating and making more volatile the value of ETH. As a result, ETH may be more likely to fluctuate in value due to changing investor confidence in future appreciation, which could adversely affect the business and financial condition of the Company.
Risks Related to WhiteFiber’s Cloud Services and Data Center Operations
We are at an early stage of development of our business, currently have limited sources of revenue, and may not become profitable in the future.
We are subject to the risks and uncertainties of a new business, with limited sources of revenue. The Company began generating revenue from cloud services in Iceland in January 2024. Accordingly, we have only a limited history upon which an evaluation of our prospects and future performance can be made.
As we grow and develop as a business, we are attempting to reduce the impact of variability on our revenue and colocation costs by entering into long-term contracts at each site. In our data center services, as of September 30, 2025, our contracts with our 14 customers range from 12 to 60 months. In our cloud services business, we provide cloud infrastructure for highly scalable Graphic Processing Units (“GPUs”) accelerated applications, or GPU clusters, to our customers under contracts spanning from month to month to 36 months. As these are new services in the industry, the value and longevity of the GPUs remain uncertain in this rapidly evolving market. Given that we have only a limited history of operating a colocation data center, the long-term profitability of these contracts cannot be presently determined. If we are unable to successfully implement our development plan or to increase our generation of revenue, we will not remain profitable in the future.
We intend to continue scaling our Company to increase our customer base and implement initiatives, including new business lines and global expansion. These efforts may prove more expensive than we currently anticipate. We may be unable to secure the required financing which may not result in increased revenue or profitability in the short term or at all. We will also incur increased compliance costs associated with growth, expanding our customer base, and being a public company. Our efforts to grow our business may be costlier than we expect, or the revenue growth rate may be slower than we expect. As we pivot towards new markets such as cloud services and colocation data center operations, we realize that our limited experience in these areas may impact our ability to accurately assess our prospects. The likelihood of our success must be considered in light of the expenses, difficulties, complications, problems and delays frequently encountered in connection with the expansion of a business, operating a business in a competitive industry, and the continued development of expanding our customer base. There can be no assurance that we will operate profitably in the future.
We face intense competition in the data centers operations and may not be able to compete with other companies. If we do not continue to innovate in the design and management of data centers in order to offer innovative solutions to store, process and manage digital information, including artificial intelligence (“AI”) and machine learning (“ML”) applications, to our customers and partners, we may not remain competitive, which could harm our business, financial condition, data centers and operating results.
We may not be able to compete successfully against present or future competitors. We do not have the capital resources to compete with larger providers of similar data centers at this time. Our data centers business environment is rapidly evolving and intensely competitive, and it faces frequent introductions of rival solutions and new technologies. To compete successfully, we must, among other things, accurately anticipate data center technology developments and innovate data centers’ design, management and technologies in a timely manner. As our data centers business evolves, the competitive pressure to innovate will encompass a wider range of technologies and solutions. We must continue to invest significant resources in personnel, technical infrastructure and R&D, including through acquisitions, in order to advance/innovate our data centers. With the limited resources we have available, we may experience difficulties in expanding and improving our data centers. Competition from existing and future competitors, particularly those better capitalized, could result in our inability to secure acquisitions and partnerships that we may need to expand our data centers business in the future. This competition from other entities with greater resources, experience and reputation may result in our failure to maintain or expand our data center business, as we may never be able to successfully execute our business plan. If we are unable to expand and remain competitive, our business could be negatively affected, which would have an adverse effect on the trading price of our Ordinary Shares, which would harm our investors.
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Our purchase orders with hardware manufacturers include extended delivery schedules.
We rely on third parties to timely obtain an adequate delivery of hardware. Our purchase orders with hardware manufacturers include extended delivery schedules spanning several months before the hardware is delivered to our facilities. These fluctuations in delivery timelines necessitate careful planning and advanced purchasing strategies to ensure we can acquire hardware well before their anticipated deployment. Failure to adequately plan for such fluctuations could have a material adverse effect on the Company’s business, prospects, results of operations and financial condition.
A curtailment or disruption in energy supply in Iceland, Canada or the U.S. due to regulations and policies implemented by their respective governments, which prioritize energy supply, may cause a substantial disruption or discontinuance of WhiteFiber’s data center operations based in Iceland, Canada or prospectively in the U.S., and therefore impair WhiteFiber’s financial condition or results of operations.
Through WhiteFiber Iceland ehf, the Company established and has been providing cloud services since November 2023, developing a fleet of 554 servers at a third-party data center located in Northern Iceland. Through WhiteFiber’s subsidiary, Enovum, which was acquired in October 2024, we have been operating our data center located in Montreal Canada (MTL-1), and commenced operations in the in the fourth quarter of 2025 at MTL-3. In May 2025, we purchased a former industrial manufacturing building and land outside of Greensboro, North Carolina which we expect to be operational in the first quarter of 2026.
In order to maintain its data center operations, WhiteFiber and its landlord in Iceland and in Montreal will need to acquire sufficient supplies of electricity generated by hydroelectric, geothermal energy and electricity. In addition, WhiteFiber’s data centers need to also maintain reliable and adequate infrastructure and cooling systems to ensure optimal performance.
Currently, Icelandic and Canadian-based data centers and similar facilities, including the ones contracted with the Company, may face significant risks of energy disruption, curtailment or discontinuance due to low water levels. Water reservoirs are utilized by hydropower plants, which provide hydro-generated energy in the country. In the event of a water shortage, and therefore a shortage of hydro-generated energy, the prioritization framework for Icelandic energy favors residential and certain business uses over data centers and similar facilities. In addition, volcanic eruptions might interrupt the generation of electricity from geothermal energy, as occurred several times in 2023.
In addition, we may be subject to risks and unanticipated costs associated with obtaining power from various utility companies. Utilities that serve our data centers may be dependent on, and sensitive to price increases for, a particular type of fuel, including hydroelectric. In addition, the total cost of delivered electricity could increase as a result of: regulations intended to regulate carbon emissions and other pollutants, ratepayer surcharges related to recovering the cost of extreme weather events and natural disasters (including volcanoes in Iceland and floods in North Carolina), geopolitical conflicts, military conflicts, grid modernization charges, as well as other charges borne by ratepayers. Increases in the cost of power at any of our data centers could put those locations at a competitive disadvantage relative to data centers that are supplied power at a lower price.
Accordingly, the energy supply for WhiteFiber’s data centers may be subject to disruption and could become insufficient to support our operations. WhiteFiber’s financial condition or results of operations may be adversely affected if its WhiteFiber data centers are disrupted or discontinued due to a curtailment or interruption of the energy supply.
Establishing data centers in remote areas may adversely affect our ability to retain staff and increase our compensation costs.
If we establish data centers in areas with lower populations such as Iceland or remote parts of Canada, recruiting and retaining the necessary staff to operate our locations may pose a challenge. When we encounter a relatively low population, the pool of available employees is limited. In addition, some employers have offered significantly higher wages in order to fill vacant positions. This may adversely affect our ability to attract and retain qualified personnel and may increase our employee costs if we have to increase the compensation we pay in response to the market.
WhiteFiber’s data centers could be adversely impacted by climate change.
Severe weather events, such as tornadoes, hurricanes, rain, drought, fire, ice and snowstorms, and high-and low-temperature extremes, occur in regions in which WhiteFiber operates and maintains infrastructure. WhiteFiber’s principal data centers in Iceland and Canada are designed to provide year-round cool weather conditions. Nevertheless climate change could change the frequency and severity of weather events, which may create physical and financial risks to WhiteFiber. Such risks could have an adverse effect on WhiteFiber’s financial condition, results of operations and cash flows. Increases in severe weather conditions or extreme temperatures may cause infrastructure construction projects to be delayed or canceled and limit resources available for such projects resulting in decreased revenue or increased project costs. In addition, drought conditions could restrict the availability of water supplies or limit the ability to obtain water use permits, inhibiting the ability to conduct operations. To date, neither of the Company’s WhiteFiber data centers in Iceland or Canada have experienced any material impacts to its financial condition, results of operations or cash flows due to the physical effects of climate change.
Our failure to accurately predict our facilities’ and data centers’ requirements could have a material adverse effect on our business, financial condition and results of operations.
The costs of building out, leasing and maintaining our facilities and data centers constitute a significant portion of our capital and operating expenses. In order to manage growth and ensure adequate capacity for our new and existing customers while minimizing unnecessary excess capacity costs, we continuously evaluate our short- and long-term data center capacity requirements. If we overestimate our business’ capacity requirements or the demand for our services and therefore secure excess data center capacity, our operating margins could be materially reduced. If we underestimate our data center capacity requirements, we may not be able to service the required or expanding needs of our existing customers and may be required to limit new customer acquisition, which could have a material adverse effect on our business, financial condition and results of operations.
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The broader adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain. Failure by our customers to use our cloud services to support AI use cases in their systems, or our ability to keep up with evolving AI technology requirements and regulatory frameworks, could have a material adverse effect on our business, operating results, financial condition, and future prospects.
As part of our growth strategy, we seek to attract and acquire customers requiring high-performance computing, such as AI, machine learning, and automated decision-making technologies, including proprietary AI algorithms and models (collectively, “AI Technologies”).
AI has been developing at a rapid pace, and continues to evolve and change. As demand continues for AI services, AI providers, including our customers, have sought increased compute capacity to enable advancements in their AI models and service the demands of end users. We cannot predict whether additional computing power will continue to be required to develop larger, more powerful AI models, or if the practical limits of AI technology will plateau in the future regardless of available compute capacity. Further, there have been recent advancements in AI technology, including open-source AI models, that may lead to compute and other efficiencies that may impact the demand for AI services, including our platform, solutions, and services, which may adversely impact our revenue and profitability. In the event that existing scaling laws do not continue to apply as they have in the past, demand by our customers for compute resources, including our solutions and services, may not continue to increase over time, or may decrease if overall demand for AI is impacted by a lack of further technological development. If we are unable to keep up with the changing AI landscape or in developing services to meet our customers’ evolving AI needs, or if the AI landscape does not develop to the extent we or our customers expect, our business, operating results, financial condition, and future prospects may be adversely impacted.
Additionally, we may incur significant costs and experience significant delays in developing new solutions and services or enhancing our current platform to adapt to the changing AI landscape, and may not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain. Further, market acceptance, understanding, and valuation of solutions and services that incorporate AI technologies are uncertain and the perceived value of AI Technologies used and/or provided by our customers could be inaccurate. If AI is not broadly adopted by enterprises to the extent we expect, or if new use cases do not arise, then our opportunity may be smaller than we expect. Further, if the consumer perception and perceived value of AI Technologies is inaccurate this could have a material adverse effect on our customers, which in turn could have a material adverse effect on our business, operating results, financial condition, and future prospects.
Concerns relating to the responsible use by our customers of new and evolving technologies, such as AI, which are supported by our platform, may result in collateral reputational harm to us. AI may pose emerging ethical issues and if our platform enables customer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm, or legal liability.
Furthermore, the rapid pace of innovation in the field of AI has led to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex as AI continues to evolve. Regulators and lawmakers around the world have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. Regulations related to AI Technologies have been introduced in the United States at the federal level and are also enacted and advancing at the state level. Additional regulations may impact our customers’ ability to develop, use and commercialize AI Technologies, which would impact demand for our platform, solutions, and services and may affect our business, operating results, financial condition, and future prospects.
AI and related industries, including cloud services, are under increasing scrutiny from regulators due to their concerns about market concentration, anti-competitive practices, and the pace of partnerships and acquisitions involving generative AI startups. As the industry continues to grow, transactions and business conduct will likely continue to draw scrutiny from regulators. Our customers may become subject to further AI regulations, including any restrictions on the total consumption of compute technology, which could cause a delay or impediment to the commercialization of AI technology and could lead to a decrease in demand for our customers’ AI infrastructure, and may adversely affect our business, operating results, financial condition, and future prospects.
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WhiteFiber operates in a capital-intensive industry and is subject to capital market and interest rate risks.
WhiteFiber’s operations require significant capital investment to purchase and maintain the property and equipment required to provide specialized infrastructures to support generative AI work streams. In addition, WhiteFiber’s operations include a significant level of fixed and semi-fixed costs. Consequently, WhiteFiber will rely on capital markets, as sources of liquidity for capital requirements for growth. If WhiteFiber is unable to access capital at competitive rates, the ability to implement business plans, make capital expenditures or pursue acquisitions it would otherwise rely on for future, growth may be adversely affected. For example, without obtaining additional debt financing, WhiteFiber will not have sufficient funds to retrofit NC-1 into a HPC data center or achieve its estimated 99 MW (gross) of total HPC data center capacity by May 2029 and other growth strategies. Market disruptions may increase the cost of borrowing or adversely affect WhiteFiber’s ability to access one or more financial markets. Such market disruptions could include:
| ● | a significant economic downturn; | |
| ● | the financial distress of unrelated industry leaders in the same line of business; | |
| ● | deterioration in capital market conditions; | |
| ● | turmoil in the financial services industry; | |
| ● | volatility in GPU prices; | |
| ● | terrorist attacks; | |
| ● | war; or | |
| ● | cyberattacks. |
If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests, and the per share value of our ordinary shares could decline. Furthermore, if we engage in debt financing, the holders of debt will have priority over the holders of our ordinary shares on order of payment preference. We may be required to accept terms that restrict or limit our ability to, among other things:
| ● | pay cash dividends to our shareholders, subject to certain limited exceptions; | |
| ● | redeem or repurchase our ordinary shares or other equity; | |
| ● | incur additional indebtedness; | |
| ● | permit liens on assets; | |
| ● | make certain investments (including through the acquisition of stock, shares, partnership or limited liability company interests, any loan, advance or capital contribution); | |
| ● | sell, lease, license, lend or otherwise convey an interest in a material portion of our assets; and | |
| ● | sell or otherwise issue ordinary shares or other share capital subject to certain limited exceptions. |
These restrictions may limit our ability to obtain additional financing, withstand downturns in our business or take advantage of business opportunities.
If one of our customers were to obtain exclusive rights to open source technologies that we employ across our businesses, our ability to realize significant operating efficiencies could be jeopardized.
Our business model leverages our ability to share significant open source technological innovations across cloud services, our data centers and customers. If one of our customers were to obtain exclusive rights to what are now open source technologies we employ across our businesses, we could be limited in obtaining essential supplies at competitive costs and sharing research and development costs across our businesses. As a result, our ability to realize significant operating efficiencies by modifying our existing or new data centers utilizing these technologies and our ability to serve all our customers could be jeopardized, which could materially adversely affect our business, results of operations and future prospects.
We may be vulnerable to physical security breaches, which could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations.
A party who is able to compromise the physical security measures protecting our facilities could cause interruptions or malfunctions in our operations and misappropriate our property or the property of our customers. As we provide assurances to our customers that we provide the highest level of security, such a compromise could be particularly harmful to our brand and reputation. We may be required to expend significant capital and resources to protect against such threats or to alleviate problems caused by breaches in security. As techniques used to breach security change frequently and are often not recognized until launched against a target, we may not be able to implement new security measures in a timely manner or, if and when implemented, we may not be certain whether these measures could be circumvented. Any breaches that may occur could expose us to increased risk of lawsuits, regulatory penalties, loss of existing or potential customers, harm to our reputation and increases in our security costs, which could have a material adverse effect on our business, financial condition and results of operations.
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Supply chain disruptions may adversely affect WhiteFiber’s new project development.
WhiteFiber is a provider of GPUs compute and purchases NVIDA H100, H200, B200, GB200 servers, as well as other servers, through OEMS, for example, Super Micro Computer Inc®, Dell, and Hewlett Packard Enterprise. Disruptions, shortages or delays in WhiteFiber’s ability to source GPUs and price increases from suppliers may occur, and adversely affect WhiteFiber’s planned expansions and new project timelines. Any material disruption at WhiteFiber’s facilities or those of its customers or suppliers or otherwise within its supply chain, whether as a result of downtime, work stoppages or facility damage could prevent WhiteFiber from meeting future customer demands or expected timelines, require it to incur unplanned capital expenditures, or cause other material disruptions to its operations, any of which could have a material adverse effect on WhiteFiber’s future operations, financial position and cash flows. Further, supply chain disruptions can occur from events out of WhiteFiber’s control, such as environmental incidents or other catastrophes.
We have an evolving business model which is subject to various uncertainties.
As cloud services and WhiteFiber data centers become more widely available, we expect the services and products associated with them to evolve. In order to stay current with the industry, our business model requires us to evolve as well. From time to time, we have modified and will continue to modify aspects of our business model relating to our strategy. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to our business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. Further, as the markets in which we operate continue to evolve, new market participants have emerged and may continue to emerge and this may require us to further evaluate our business model and products and services. We cannot provide any assurance that we will successfully identify all emerging trends and growth opportunities in this business sector, and we may lose out on those opportunities. Such circumstances could have a material adverse effect on our business, prospects or operations.
We do not have any business interruption or disruption insurance coverage.
Currently, we do not have any business liability or disruption insurance to cover our operations, other than director’s and officer’s liability insurance. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured business disruptions may result in our incurring substantial costs and the diversion of resources, which could have an adverse effect on our results of operations and financial condition.
Risks Related to the Geopolitical Uncertainty
Changes in tariffs or import restrictions could have a material adverse effect on our business, financial condition and results of operations.
The U.S. government has adopted new approaches to trade policy and in some cases, may renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. The U.S. government has also imposed tariffs on certain foreign goods and has raised the possibility of imposing significant, additional tariff increases or expanding the tariffs to capture other countries and types of foreign goods. Because WhiteFiber is developing data centers in Canada and the United States, the imposition of tariffs on imports between these countries or from other countries, such as a 50% tariff on copper imports announced in July 2025 by the U.S. government, could materially impact the cost, timeline, and feasibility of our projects. Tariffs imposed by the U.S. on imports from Mexico and Canada or from other countries, as well as reciprocal tariffs imposed by such countries on U.S. goods, could increase WhiteFiber’s costs for key construction materials, specialized equipment, and labor, potentially delaying deployments and reducing profitability.
Data center construction relies heavily on steel, aluminum, copper, electrical components and HVAC systems, some of which the Company is sourcing from Mexico and Canada. The tariffs the U.S. has imposed, or has considered imposing, on Canadian steel, aluminum and copper imports, are expected to increase the cost of WhiteFiber’s potential projects in the U.S. Similarly, if Canada imposes reciprocal tariffs on U.S. exports, WhiteFiber’s projects in Canada could see cost increases for imported power infrastructure, networking hardware, and construction equipment.
Additionally, several transformers, battery storage systems, and cooling systems used in our North American data centers are manufactured in or pass through Mexico. If the U.S. imposes new or additional tariffs on Mexican-manufactured electrical equipment, this could create supply chain bottlenecks and increase capital expenditures for both U.S. and Canadian facilities. Likewise, trade restrictions on Canadian-manufactured networking equipment or semiconductors would disrupt supply availability for our potential projects in the U.S.
Tariffs and trade tensions between the U.S., Mexico, and Canada could also indirectly impact the availability and cost of skilled labor. Many specialized contractors for data center construction, electrical work, and mechanical systems operate across borders. Increased trade friction could reduce labor mobility, increase wages, or limit access to essential expertise, slowing project execution.
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Such higher costs for critical data center components, potential disruptions to equipment supply chains and labor and cross-border workforce challenges could have material adverse effects on our business, financial condition and results of operations.
Additionally, if tariffs increase the cost of building and operating data centers in the U.S. and Canada, our customers, hyperscalers and cloud providers, may shift expansion plans to more cost-effective regions, such as Europe or Asia. This could negatively impact short-term and long-term demand for WhiteFiber’s colocation and infrastructure services.
Finally, in response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could in turn have a material adverse impact on our business, financial condition and results of operations.
Uncertainty in the global economy and instability within international relations, including changes in governmental policies relating to technology, and any potential downturn in the semiconductor and electronics industries, may negatively impact our business .
There is inherent risk, based on the complex relationships between certain countries and within regions, that political, diplomatic or military events could result in trade disruptions and other disruptions in the markets and industries we serve and our supply chain. For example, the ongoing geopolitical and economic uncertainty between the U.S. and China, the unknown impact of current and future U.S. and Chinese trade regulations, and geopolitical risks between the U.S, Canada, where our data centers are located, between the U.S. and Mexico, where certain components are supplied, or between China and Taiwan where chips are manufactured, could, directly or indirectly, materially harm our business, financial condition and results of operations.
While overall semiconductor supply conditions have improved, we continue to monitor potential availability constraints for high-performance GPUs and related hardware, which may affect the timing of future deployments in our cloud services business.
Furthermore, political or economic conflicts between various global actors, and responsive measures that have been taken and could be taken in the future, have created and can further create significant global economic uncertainty that could prolong or expand such conflicts, which could have a lasting impact on regional and global economies and harm our business and operating results.
WhiteFiber has a very limited history of operating as an independent, public company, and its historical financial information is not necessarily representative of the results that it would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results.
The historical information of WhiteFiber in its public filings refers to its businesses as operated by and integrated with Bit Digital, Inc. (“Bit Digital”) prior to WhiteFiber’s October 2024 acquisition of Enovum. The historical financial information of WhiteFiber included in such filings are derived from the combined financial statements and accounting records of Bit Digital and WhiteFiber AI, Inc. and its combined subsidiaries. Accordingly, the historical financial information included in such filings does not necessarily reflect the financial condition, results of operations and cash flows that WhiteFiber would have achieved as a separate, publicly traded company during the periods presented nor those that WhiteFiber will achieve in the future, primarily as a result of the factors described below:
| ● | Prior to its initial public offering, WhiteFiber’s business had been operated by Bit Digital as part of its broader corporate organization, rather than as an independent company, and Bit Digital or one of its affiliates performed certain corporate functions for WhiteFiber. WhiteFiber’s historical financial results reflect allocations of corporate expenses from Bit Digital for such functions and are likely to be less than the expenses WhiteFiber would have incurred had it operated as a separate publicly traded company. | |
| ● | Historically, WhiteFiber shared economies of scope and scale in costs, employees and vendor relationships. Although WhiteFiber has entered into a transition services agreement (the “Transition Services Agreement”) with Bit Digital, these arrangements may not retain or fully capture the benefits that WhiteFiber has enjoyed as a result of being integrated with Bit Digital and may result in it paying higher charges than in the past for these services. This could have a material adverse effect on WhiteFiber’s business, financial position, results of operations and cash flows following the completion of the distribution. | |
| ● | Generally, WhiteFiber’s working capital requirements and capital for its general corporate purposes, including acquisitions and capital expenditures, have in the past been satisfied as part of the corporate wide cash management policies of Bit Digital. Following the completion of its initial public offering, WhiteFiber’s results of operations and cash flows are likely to be more volatile, and it may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, or a combination of both, strategic relationships or other arrangements, which may or may not be available and may be more costly. | |
| ● | WhiteFiber’s historical financial information does not reflect any debt that it may incur in the future. | |
| ● | As a public company, WhiteFiber is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act and the Dodd-Frank Act and is required to prepare its financial statements according to the rules and regulations required by the SEC. Complying with these requirements could result in significant costs and require WhiteFiber to divert substantial resources, including management time, from other activities. |
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Other significant changes may occur in WhiteFiber’s cost structure, management, financing and business operations as a result of operating as a company separate from Bit Digital.
WhiteFiber or Bit Digital may fail to perform under the Transition Services Agreement or WhiteFiber may fail to have necessary systems and services in place when the transition services agreement expires.
On July 30, 2025, prior to the consummation of its initial public offering, WhiteFiber and Bit Digital entered into the Transition Services Agreement pursuant to which Bit Digital will provide certain services to WhiteFiber, on a transitional basis. The Transition Services Agreement provides for the performance of certain services by Bit Digital for the benefit of WhiteFiber, or in some cases certain services provided by WhiteFiber for the benefit of Bit Digital, for a limited period of time after its initial public offering. WhiteFiber will rely on Bit Digital to satisfy its obligations under this agreement. If Bit Digital is unable to satisfy its obligations under this agreement, WhiteFiber could incur operational difficulties or losses. If WhiteFiber does not have agreements with other providers of these services once certain transaction agreements expire or terminate, WhiteFiber may not be able to operate its business effectively, which may have a material adverse effect on its financial position, results of operations and cash flows.
WhiteFiber’s inability to resolve favorably any disputes that arise between WhiteFiber and Bit Digital with respect to their past and ongoing relationships including potential conflicts of interests among management may adversely affect WhiteFiber’s operating results.
Certain key management and directors of both Bit Digital and WhiteFiber hold the same or similar positions in both companies. Those positions and their ownership of Bit Digital securities could create, or appear to create, potential conflicts of interest when WhiteFiber’s management and directors and Bit Digital’s management and directors face decisions that could have different implications for Bit Digital and WhiteFiber. Disputes may arise between WhiteFiber and Bit Digital in a number of areas relating to the various transaction agreements, including:
| ● | labor, tax, employee benefit, indemnification and other matters arising from WhiteFiber’s separation from Bit Digital; | |
| ● | employee retention and recruiting; | |
| ● | business combinations involving WhiteFiber; and | |
| ● | the nature, quality and pricing of services that WhiteFiber and Bit Digital have agreed to provide each other. |
WhiteFiber may not be able to resolve potential conflicts, and even if it does, the resolution may be less favorable than if it were dealing with an unaffiliated party.
The agreements WhiteFiber enters into with Bit Digital may be amended upon agreement between the parties. While WhiteFiber is controlled by Bit Digital, it may not have the leverage to negotiate amendments to these agreements if required on terms as favorable to it as those it would negotiate with an unaffiliated third party.
As an independent, publicly traded company, WhiteFiber may not enjoy the same benefits that its subsidiaries did as subsidiaries of Bit Digital.
Historically, WhiteFiber’s business has been operated through subsidiaries of Bit Digital, and Bit Digital performed substantially all the corporate functions for their operations, including managing financial and human resources systems, internal auditing, investor relations, treasury services, financial reporting, finance and tax administration, benefits administration, legal, and regulatory functions.
Bit Digital provides support to WhiteFiber with respect to certain of these functions on a transitional basis. WhiteFiber will then need to replicate certain facilities, systems, infrastructure and personnel to which it will no longer have access after the distribution and will likely incur capital and other costs associated with developing and implementing its own support functions in these areas. Such costs could be material.
As an independent, publicly traded company, WhiteFiber may be more susceptible to market fluctuations and other adverse events than it would have been, were it still a part of Bit Digital. As part of Bit Digital, WhiteFiber has been able to enjoy certain benefits from Bit Digital’s operating diversity and available capital for investments.
As an independent, publicly traded company, WhiteFiber does not have similar operating diversity and may not have similar access to capital markets, which could have a material adverse effect on its financial position, results of operations and cash flows.
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WhiteFiber could experience temporary interruptions in business operations and incur additional costs as it further develops information technology infrastructure and transitions its data to its stand-alone systems.
WhiteFiber is in the process of preparing information technology infrastructure and systems to support its critical business functions, including accounting and reporting, in order to replace many of the systems and functions Bit Digital has provided. WhiteFiber may experience temporary interruptions in business operations if it cannot transition effectively to its own stand-alone systems and functions, which could disrupt its business operations and have a material adverse effect on profitability. In addition, WhiteFiber’s costs for the operation of these systems may be higher than the amounts reflected in the combined financial statements.
Risks Involving Intellectual Property
We use certain open source technology in our business. We may face claims from third parties claiming ownership of, or demanding the release of, the technology and any other intellectual property that we developed using or derived from such open-source technology.
We utilize a combination of open-source and licensed third-party technologies in the development and operation of our cloud services. While open-source technologies enable rapid development and cost efficiencies, they also pose potential risks, such as security vulnerabilities, lack of long-term support, and legal risks related to licensing terms. Similarly, reliance on licensed third-party technologies may expose us to risks associated with changes in licensing terms, costs, or discontinuation of the licensed products.
We intend to continue to use open source technology in the future. There is a risk that open source technology licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to offer our products. By the terms of certain open source licenses, if we combine our proprietary software with open source software in a certain manner, we could be required to release the source code of our proprietary software and make our proprietary software available under open source licenses. Open source licensors may also decide to change the conditions on which they make their open-source technology available for our use. Additionally, we may face claims from third parties claiming ownership of, or demanding the public release or free license of, the technology and any other intellectual property that it developed using or derived from such open source technology. The terms of many open source licenses have not been interpreted by United States courts. There is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our services. These claims could result in litigation and could require that we make our technology freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant technology and product development resources, and we may not be able to complete the process successfully. Failure to adequately manage these risks could result in operational disruptions, legal liabilities, and adverse impacts on our business, results of operations, and financial condition.
We rely upon licenses of third-party intellectual property rights and may be unable to protect our software code.
We actively use specific hardware and software for our cloud services and colocation data center operations. In certain cases, source code and other software assets may be subject to an open source license, as much technology development underway in this sector is open source. For these works, the Company intends to adhere to the terms of any license agreements that may be in place.
We do not currently own, and do not have any current plans to seek, any patents in connection with our existing and planned operations. We rely upon trade secrets, trademarks, service marks, trade names, copyrights and other intellectual property rights and expect to license the use of intellectual property rights owned and controlled by others. In addition, we have developed and may further develop certain software applications for purposes of our operations. Our open source licenses may not afford us the protection we need to protect our intellectual property.
Our internal systems rely on software that is highly technical, and, if it contains undetected errors, our business could be adversely affected.
Our internal systems rely on software that is highly technical and complex. In addition, our internal systems depend on the ability of such software to store, retrieve, process and manage immense amounts of data. The software on which we rely has contained, and may now or in the future contain, undetected errors or bugs. Some errors may only be discovered after the code has been released for external or internal use. Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation, or liability for damages, any of which could adversely affect our business, results of operations and financial conditions.
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We do not have any patents protecting our intellectual property and may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.
We regard trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our directors, officers and executive employees, to protect our proprietary rights. However, we do not have any non-compete agreements with our non-executive employees, nor do we have any patents protecting our intellectual property. Thus, we cannot assure you that any of our intellectual property rights would not be challenged, invalidated, circumvented or misappropriated, or such intellectual property will be sufficient to provide us with competitive advantages. In addition, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all.
Preventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. To the extent that our employees or consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.
We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may be, from time to time in the future, subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or other intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such intellectual property rights against us in China, the United States or other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, regardless of their merits. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. Moreover, the intellectual property ownership and license rights, including copyright, surrounding AI technologies has not been fully addressed by courts or laws or regulations, and the use or adoption of AI technologies into our offerings may result in exposure to claims of copyright infringement or other intellectual property misappropriation. As a result, our business and results of operations may be materially and adversely affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the three months ended September 30, 2025, no director or officer of the Company
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Item 6. Exhibits.
(a) Exhibits.
| (1) | Incorporated by reference to the Registrant’s Form F-3 Registration Statement filed on August 30, 2021. |
| (2) | Incorporated by reference to the Registrant’s Proxy Statement on Form 6-K filed with the SEC on June 30, 2022. |
| (3) | Incorporated by reference to the Registrant’s Form 6-K filed on October 30, 2024. |
| (4) | Incorporated by reference to the Registrant’s Form 6-K filed on May 18, 2021. |
| (5) | Incorporated by reference to the Registrant’s Form 8-K filed on September 25, 2025. |
| * | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. |
| ** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Bit Digital, Inc. | ||
| Date: November 14, 2025 | By: | /s/ Sam Tabar |
| Sam Tabar | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 14, 2025 | By: | /s/ Erke Huang |
| Erke Huang | ||
| Chief Financial Officer | ||
| (Principal Accounting Officer) |
| Date: November 14, 2025 | By: | /s/ Justin Zhu |
| Justin Zhu | ||
|
Chief Accounting Officer and Senior Vice President of Finance |
||
| (Principal Financial Officer) |
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