RIOT Riot Platforms, Inc. - 10-K

ITEM 1A. RISK FACTORS

Our business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described below. When any one or more of these risks materialize from time to time, our business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties not presently known to us or that we currently do not consider to present significant risks to our operations. This section should be read in conjunction with Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes included in this Annual Report.

Risk Factor Summary

Below is a summary of the principal factors that make an investment in our securities speculative or risky.

Risks Related to Our Business

Our industry is evolving and our business model is shifting toward data center development alongside bitcoin mining.

Our data center business strategy may not perform as planned.

We may be unable to compete effectively and our business and results of operations may be adversely affected.

Our success depends on external factors affecting the bitcoin industry.

There is a finite supply of bitcoin, and the declining block reward over time presents a risk to our business.

If we fail to grow our hash rate in a cost-effective manner we may be unable to compete.

We may be unable to access sufficient additional capital needed to grow our business.

Our expansion into data centers may divert resources from our existing operations and introduce operational complexity.

Our success in the data center sector depends on our ability to attract qualified third-party partners and customers.

Incorrectly estimating our data center lease capacity requirements and capital expenditures could adversely affect our results of operations.

We face potential reputational, operational, and financial risks from development of a scalable data center platform.

Financial institutions may discontinue banking services to businesses engaged in crypto-related activities.

We may be unable to timely complete our strategic growth initiatives within our anticipated costs estimates.

Global instability may adversely affect our business, financial condition and results of operations.

Failure to successfully integrate acquired businesses could negatively impact our balance sheet and results of operations.

We may experience increased compliance costs as a result of strategic acquisitions.

We have financed growth through issuances of stock and debt and our future inability to do so on favorable terms could adversely affect us.

We have a history of operating losses, and may report additional operating losses in the future.

Limited regulation of digital asset exchanges may expose us to negative publicity which could adversely affect an investment in us.

We depend on attracting and retaining officers, managers, and skilled professionals.

Global macroeconomic, geopolitical, and public health events and resulting supply chain issues could adversely affect our business, financial condition, and operations.

Changes in U.S. trade policy may have a material adverse impact on our business, financial condition and operations.

Risks Related to the Price of Bitcoin

Our ability to achieve profitability is largely dependent on the price of bitcoin, which has historically been volatile.

Changes to laws, regulations, or enforcement priorities may adversely impact our Bitcoin Mining and related activities.

Exposure to financially troubled cryptocurrency companies may impact our reputation and operational profitability.

Our Bitcoin Mining operations may generate less revenue as a result of “halving”.

High bitcoin transaction fees may reduce demand for bitcoin and adversely affect our operations and growth.

Bitcoin faces scaling obstacles which may adversely affect demand for bitcoin and our Bitcoin Mining operations.

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Risks Related to our Operations

We must grow our hash rate relative to the global network hash rate and increasing network difficulty to effectively compete.

Our bitcoin miners may not be adaptable to other uses which could adversely affect our business and results of operations.

Our reliance on third-party miners may expose our operations to increased risk of design flaws.

Our reliance primarily on immersion-cooling exposes us to additional operational and performance risks.

Our revenue generation is subject to risks applicable to our mining pool, including risks outside of our control.

Our use of third-party mining pools exposes us to certain risks.

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

We may be exposed to potential liability from claims relating to intellectual property rights.

We are subject to counterparty risks, including risks and uncertainties relating to our Custodians.

Our limited rights of legal recourse and lack of insurance over bitcoin expose us to the risk of loss for which there may be no adequate remedy.

Cyber-attacks, data breaches, or malware may disrupt our operations and expose us to liability, which could harm us.

Incorrect or fraudulent bitcoin transactions may be irreversible, and we could lose access to our bitcoin.

Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.

We are subject to risks associated with our need for significant electrical power.

Our access to power is dependent on third-party providers and regulators and any adverse action by such entity may have a material adverse effect on us.

Certain natural disasters, mechanical failures, cyber incidents, evolving climate and ESG requirements, and other events outside of our control could adversely affect us.

Risks Related to Governmental Regulation and Enforcement

Changing environmental regulation and public energy policy may expose our business to new risks.

Compliance costs of responding to new and changing regulations could adversely affect our operations.

Regulatory changes may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business.

Our expanding data center operations may be subject to new or evolving regulatory frameworks.

Our interactions with a blockchain may expose us to SDN or blocked persons and new legislation or regulation could adversely impact our business.

Bitcoin and bitcoin mining may be made illegal in certain jurisdictions, which could adversely affect our business prospects and operations.

Risks Related to Ownership of Our Common Stock

The trading price of shares of our common stock has been subject to volatility.

We have issued, and may continue to issue, new shares of our common stock, which has a dilutive effect on existing stockholders.

We have a classified Board, which could limit stockholders’ ability to influence our directors’ decision-making.

Our Bylaws designate the courts of the State of Nevada as the exclusive forum for certain types of actions which may limit our stockholders’ ability to choose a forum for disputes with us or our directors officers, employees, or agents.

Nevada law may discourage, delay or prevent a change in control of our Company, prevent attempts to replace current management and reduce the market price of our stock.

Because we do not currently intend to pay any cash dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

If we are unable to maintain an effective system of internal control over financial reporting and disclosure controls, we may fail to produce timely and accurate financial statements.

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Risks Related to Our Business

We operate in a rapidly evolving industry and have an evolving business model and strategy, including our increasing focus on constructing and operating data centers, in addition to bitcoin mining.

The digital assets industry is rapidly evolving, and we expect the services, technologies and market dynamics associated with it to continue to change. As a result, aspects of our business model and strategy may need to evolve in order for us to remain competitive and responsive to industry developments. From time to time, we may modify elements of our business model or pursue strategic initiatives that complement our power portfolio and current operations. We are exploring opportunities to expand our revenue sources, including a business transition to constructing and operating data centers which may be used for AI/HPC applications. We cannot assure you that these or any other modifications to our strategy will be successful, that they will achieve their intended objectives, or that they will not adversely affect our business. Strategic changes may also increase the complexity of our operations and place significant demands on our management team, personnel, systems, infrastructure, financial resources, and internal controls.

Additionally, our ability to manage growth effectively is uncertain. Failure to do so could harm our reputation, limit our ability to grow, and negatively affect our operating results. We also may not successfully identify or capitalize on emerging trends or new market opportunities within the digital assets industry, the data center market, or other markets we may pursue, which could result in missed opportunities and competitive disadvantages. Changes to our business model or entry into new markets may further subject us to additional regulatory scrutiny and new or expanded compliance obligations, including licensing, permitting, and other regulatory requirements. Any of the foregoing risks could have a material adverse effect on our business, prospects, financial condition, and results of operations.

Our data center business strategy may not perform as planned.

We believe that transitioning to a data center business has the potential to complement our existing business model by providing more stable, long-term, and higher-margin revenue than our Bitcoin Mining operations. We also believe that leveraging our existing infrastructure to serve data center customers may offer more consistent revenue and lower risk than our traditional Bitcoin Mining business. However, this initiative is in its early stages, and the success of our data center strategy is uncertain and may not develop as anticipated. The performance of our data center business may be affected by various factors, including the availability, reliability, and timing of power supply; increased community scrutiny of data center resource use, including land, water, and power, resulting in stricter requirements from permitting authorities; supply chain disruptions, including constraints in local labor availability; changes in tariff policies or the adoption of more restrictive trade regulations; and our ability to retain or develop the specialized expertise required to operate and scale a data center business. If any of these challenges arise, or if we are otherwise unable to successfully implement or execute our data center strategy, our business, prospects, financial condition, and results of operations could be materially and adversely affected.

We may not be able to compete effectively against our current and future competitors, and if we are unable to effectively innovate or compete, our business and results of operations may be adversely affected.

The industries in which we operate are highly competitive and continuously evolving. We expect competition to further intensify as existing and new competitors introduce new offerings or enhance existing offerings and as the industries that we operate in continue to grow. As we continue to expand in our existing markets and enter new markets, we compete against an increasing number of companies operating both within North America and abroad, that may be more established or have greater financial and other resources and/or expertise. Driven by the proliferation of energy-intensive applications such as bitcoin mining and HPC, demand for energy capacity continues to outpace supply. Our competitors may have greater financial, technical, and operational resources, longer operating histories, and stronger brand recognition than we do. To compete effectively, we must accurately anticipate technological developments, supply chain disruptions and regulatory constraints, our need for additional power and continue to innovate in the design, management, and operation of data centers, including those used to support AI/HPC applications. We may face difficulties expanding and improving our data centers at the pace necessary to remain competitive. Competitors with greater resources, experience, or industry relationships may be better positioned to secure strategic acquisitions, partnerships, or customer relationships that are critical to scaling data center operations. If we are unable to innovate effectively, maintain or grow our data center operations, or compete successfully against current and future competitors, our business, financial condition, and results of operations could be materially and adversely affected. Any such developments could also negatively impact the trading price of our securities.

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Our success depends on external factors affecting the bitcoin industry.

The bitcoin industry has historically been subject to various asset-related risks that have negatively affected bitcoin’s market price. Ownership of bitcoin has traditionally been concentrated among a limited number of holders, whose large positions give them the ability to influence market prices (referred to as “whales”). Although ownership has diversified in recent years, whales remain active in the market, and their trading behavior, such as selling substantial quantities of bitcoin, could adversely affect demand for, and the market price of, bitcoin. Any material decline in the price of bitcoin could adversely affect our business, financial condition, and results of operations. Although larger and increasingly regulated digital asset trading platforms have emerged, the bitcoin market remains nascent and relatively opaque compared to traditional financial markets. Trading venues for bitcoin may experience heightened operational issues and may be more susceptible to unethical, fraudulent, or illicit activities, including “wash trading,” than regulated securities exchanges. Digital asset trading platforms may also be vulnerable to “front-running,” in which market participants exploit technological or informational advantages to trade ahead of known or anticipated transactions for economic gain. Such practices are reported to be relatively common on both centralized and decentralized digital asset platforms. In addition, many bitcoin trading venues do not publicly disclose comprehensive information regarding their ownership structure, governance, corporate practices, or compliance with regulatory requirements. This lack of transparency limits the ability of market participants to assess the integrity or impartiality of these venues. The presence of whales, combined with the bitcoin market’s limited transparency, susceptibility to manipulative trading practices, and comparatively low levels of regulatory oversight, may undermine public confidence in the integrity of bitcoin transactions and the reliability of bitcoin pricing. A resulting loss of confidence or decline in the market price of bitcoin, potentially significant, could adversely affect our business, financial condition, and results of operations.

There is a finite supply of bitcoin, and the declining block reward over time presents a risk to our business.

We generate revenue from Bitcoin Mining operations primarily through the receipt of block rewards for successfully validating transactions and adding new blocks to the Bitcoin blockchain. The total supply of bitcoin is finite, permanently capped at 21.0 million coins, and the number of new bitcoin issued per block decreases approximately every four years pursuant to the bitcoin protocol, in an event commonly referred to as a “halving.” The final bitcoin is expected to be mined around the year 2140. As of December 31, 2025, approximately 20.0 million bitcoin had been mined and were in circulation. As the bitcoin supply approaches its maximum limit, the block reward will continue to decline. Once the final new bitcoin has been issued, miners will no longer receive block rewards and will instead rely solely on transaction fees associated with the blocks they validate. Historically, transaction fees have represented a relatively small portion of total mining revenue. Although transaction fees have increased at various times due to network usage and reduced new-bitcoin issuance, we cannot predict whether such fees will increase, or remain at levels, sufficient to offset the decline in block rewards over time. If transaction fees do not rise to levels that support profitable mining operations, or if the economic incentives to mine otherwise diminish, our ability to generate revenue from Bitcoin Mining could be materially and adversely affected. In such circumstances, our business, financial condition, and results of operations could suffer, and the market price of our securities could be adversely affected.

Bitcoin mining is a highly competitive market, and if we fail to grow our hash rate in a cost-effective manner we may be unable to compete.

A bitcoin miner’s likelihood of successfully validating a block and earning the associated block reward is directly correlated to the miner’s hash rate relative to the global network hash rate. As adoption of bitcoin has increased, demand for bitcoin has drawn additional mining participants into the industry, resulting in sustained growth of the global network hash rate. As more miners enter the market and more efficient mining equipment is deployed, the global network hash rate is expected to continue increasing. Consequently, unless we are able to grow our hash rate at a pace consistent with industry growth, our probability of earning block rewards will decline. To remain competitive, we believe we must continue to obtain and deploy more efficient and energy-effective miners, both to replace units that are lost to ordinary wear-and-tear and to expand our hash rate to keep pace with increases in the global network hash rate. These miners are highly specialized servers that are difficult to manufacture at scale. As a result, only a limited number of suppliers are capable of providing miners in the quantities and performance specifications required by large-scale operators. Demand for new miners typically increases in periods of elevated bitcoin prices, and we have observed corresponding increases in miner pricing during such periods. If we are unable to procure an adequate number of new miners on acceptable terms, or if we are unable to access sufficient capital to fund the acquisition and deployment of such miners, we may be unable to grow our hash rate or maintain our competitive position. Any inability to expand or maintain our hash rate could adversely affect our business, financial condition, and results of operations, and could negatively impact the market price of our securities.

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We may be unable to access sufficient additional capital needed to grow our business.

We expect to require substantial additional capital to support the expansion of our operations, pursue our growth strategies, and respond to competitive pressures or unanticipated working-capital needs. The construction and development of our facilities, and continuation of our miner fleet, are capital-intensive undertakings and we anticipate that our current and future strategic growth initiatives will likewise require significant investment. Although we expect to raise additional capital to fund these initiatives, we may be unable to do so in a timely manner, in the amounts required, or on favorable terms, if at all. If we raise capital through equity financing, our stockholders may experience dilution of their ownership interests, and the market price of our common stock may decline. If we incur additional indebtedness, lenders may have priority over holders of our common stock with respect to repayment and liquidation preferences, and debt financing may be accompanied by restrictive covenants that limit our operational flexibility, including restrictions on incurring additional indebtedness or engaging in certain other corporate activities. We may also be required to comply with financial maintenance covenants, such as minimum liquidity or leverage ratios, which may not align with the interests of our stockholders. If we are unable to raise the additional capital needed to fund our strategic growth initiatives, we may be less competitive in our industry, and our business, financial condition, and results of operations could be materially and adversely affected.

Our expansion into data centers may divert resources from our core Bitcoin Mining operations, limit our power capacity for mining, and introduce operational complexity.

Although we intend to continue certain of our Bitcoin Mining operations, our strategic expansion into data center development may divert capital, personnel, infrastructure and other resources away from our mining business. In particular, allocating power capacity to data center workloads may reduce the power available for bitcoin mining, which is a highly competitive and capital-intensive industry. Reduced power availability for mining could limit our ability to deploy additional hash rate at the pace of our competitors, potentially diminishing our market position and profitability. Operating multiple distinct business lines may also increase operational complexity and place additional demands on our management, technical teams, and support personnel. Managing these competing priorities may strain our resources, increase the risk of operational inefficiencies, and negatively affect our overall performance, strategic execution, and financial results. Any such developments could materially and adversely affect our business, prospects, financial condition, and results of operations.

Our success in the data center sector depends on our ability to attract and retain qualified third-party partners and customers.

We are relying on third-party consultants, vendors, and potential customers to support the development and commercialization of the data center infrastructure. Our ability to generate revenue from this initiative depends on securing long-term, creditworthy customers and partners. If we are unable to do so, or if these parties fail to perform as expected, our investment may not yield the anticipated returns.

If we incorrectly estimate our data center lease capacity requirements and related capital expenditures, our results of operations could be adversely affected.

We are continuously evaluating our data center lease capacity requirements in order to effectively manage our capital expenditures and operating results. However, we may be unable to accurately project our future capacity needs or sufficiently allocate resources to address such needs. If we underestimate these requirements, we may not be able to provide sufficient service to tenants or may be required to limit new tenants, both of which may materially and adversely impair our results of operations.

We face potential reputational, operational, and financial risks arising from our development of a scalable data center platform for data center operations.

The demand for power to support data centers, including AI/HPC workloads, has increased significantly, and we believe that by allocating a portion of our available power capacity to AI/HPC customers, while continuing to operate our bitcoin mining business, may create long-term value for our stockholders. We are in the process of developing scalable data center platforms at our Corsicana Facility and Rockdale Facility. As we pursue this expansion, we may face reputational harm, liability exposure, and adverse financial impacts arising from perceptions that we are shifting away from our core bitcoin-mining business, challenges associated with execution or integration, or increased scrutiny from investors and participants in the broader digital asset industry. Any perception that we are deprioritizing bitcoin mining could adversely affect our relationships with certain stakeholders, including investors, employees, and members of the crypto community. Data center customers also generally have heightened expectations regarding uptime, data integrity, cybersecurity, sustainability, and operational reliability. Any failure to meet these expectations, or any adverse incident involving our data center operations, could damage our reputation and credibility and negatively affect customer relationships. If we are unable to maintain or enhance our reputation, successfully execute our data-center strategy, or adapt to

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changes in the competitive or regulatory landscape, our business, financial condition, and the market price of our securities could be materially and adversely affected.

Banks and financial institutions may not provide, or may discontinue, banking services to businesses engaged in crypto-related activities.

A number of companies that engage in bitcoin or other cryptocurrency-related activities have experienced difficulty obtaining or maintaining banking and other financial services. Financial institutions have, in some cases, closed existing accounts or discontinued services for companies, individuals, and businesses associated with digital assets. Regulatory scrutiny of the digital asset industry, evolving compliance expectations, and de-risking initiatives by banks may further restrict access to banking and payment services for companies operating in this sector. If banks or other financial institutions decline to provide services to us, limit the services available to us, or discontinue services that we rely on, we may experience operational disruptions, increased costs, or delays in accessing funds. If we are unable to secure alternative banking or financial services on commercially reasonable terms, or at all, our business, prospects, financial condition, and results of operations could be materially and adversely affected. Such developments could also negatively impact the value of any bitcoin or other digital assets that we mine, acquire, or hold for our own account.

We may not be able to timely complete our future strategic growth initiatives or within our anticipated costs estimates, if at all.

Our strategic growth initiatives may require the construction, expansion or conversion of associated power facilities. These activities expose us to risks that include, among others: construction delays; shortages of parts or labor; increased equipment and materials costs, including those driven by inflation; delays in receiving data center components; labor disputes or work stoppages, including those arising from pandemics or other public health emergencies; unanticipated environmental conditions or geological issues; delays in obtaining necessary permits, licenses, and approvals from governmental agencies or utility providers; delays in site readiness that could prevent us from meeting contractual commitments; and delays or suspensions related to evaluations of prospective growth projects. Construction projects also depend heavily on the skill, reliability, and financial stability of designers, general contractors, subcontractors, and key suppliers. If any such party encounters financial difficulties, operational issues, or performance problems during the design or construction process, we could experience significant delays, cost overruns, and other adverse impacts on expected project returns. If we are unable to mitigate these risks and complete our growth initiatives on schedule and within our anticipated budget, if at all, such delays or failures could prevent us from realizing expected benefits from these initiatives and could materially and adversely affect our business, financial condition, and results of operations.

Global economic and geopolitical events, policies and conflicts may adversely affect our business, financial condition and results of operations.

We may be exposed to price volatility and uncertainty in our supply chain due to geopolitical crises and economic downturns such as recessions, rising inflation, tariffs, social, political and economic risks, conflicts and acts of war, sanctions and other restrictive actions by the United States and/or other countries. Changes in policy positions and priorities from the U.S. government administration could increase this price volatility and uncertainty. Such crises will likely continue to have an effect on our ability to do business in a cost-effective manner. Inflationary pressures, as well as disruptions in our supply chain, have increased the costs of goods, services and personnel, which have in turn caused our capital expenditures and operating costs to rise. Additionally, these crises may discourage investment in bitcoin and investors may shift their investments to less volatile assets. The effects of such global economic shifts, worsening inflationary issues, changes in policy, and geopolitical events could adversely affect our ability to access the capital and other financial markets, as such, we may be required to consider alternative sources of funding for our growth and operations which may increase our cost of capital. Such events and conditions could have a materially adverse effect on our business, operations, or financial results and the value of the bitcoin we mine.

Failure to successfully integrate acquired businesses could negatively impact our balance sheet and results of operations.

Strategic acquisitions, such as the Block Mining Acquisition and the E4A Solutions Acquisition, both in 2024, and the acquisition of Whinstone US, Inc. (“Whinstone”) and ESS Metron in 2021, are important components of our growth strategy. The success of any acquisition depends, in part, on our ability to effectively integrate the acquired business and realize anticipated synergies. Integration efforts may involve unforeseen difficulties, require significant attention from management, and necessitate reallocating financial and operational resources. We may encounter challenges in the integration process, including difficulties associated with managing a larger and more complex organization ; aligning administrative, operational, and corporate structures; integrating internal controls, processes, and policies; reconciling differing business cultures; hiring and retaining key employees; harmonizing compensation and benefits programs; coordinating geographically dispersed operations; and executing our business strategy across the combined organization.

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Acquisitions may also expose us to additional liabilities and risks, some of which may be unknown at the time of acquisition. Although we conduct extensive due diligence, we cannot guarantee that we will identify all material issues, liabilities, or risks associated with an acquired business. Any such unknown or unanticipated liabilities, whether financial, legal, regulatory, operational, or otherwise, could materially and adversely affect our business, financial condition, and results of operations.

We can give no assurance that we will be able to successfully integrate and manage acquired businesses, achieve expected synergies, or realize the benefits we anticipate. Failure to do so could have a material adverse effect on our financial condition, results of operations, and ability to execute our growth strategy.

We may experience increased compliance costs as a result of our strategic acquisitions.

Future strategic acquisitions may impose substantial compliance obligations, including additional reporting, regulatory, operational, and internal-control requirements. These obligations may increase our costs and require significant attention from management and other personnel, diverting resources from existing operations and other strategic priorities. Increased compliance burdens may also limit our ability to achieve the anticipated benefits of such acquisitions. If we are unable to effectively manage these compliance requirements, our ability to realize expected advantages from acquired businesses may be reduced, and our business, financial condition, and results of operations could be materially and adversely affected.

We have financed our strategic growth through issuances of common stock and debt and expect to continue raising additional capital in the future, and our inability to do so on favorable terms could adversely affect our operations and the market price of our securities.

We have historically financed the strategic growth of our business through public offerings of our common stock and the issuance of debt, and expect to raise additional capital through similar financing activities to support our current and future expansion initiatives. We may not be able to obtain additional equity or debt financing on favorable terms, or at all. Any inability to secure necessary financing could hinder our growth and adversely impact our operations. Market disruptions in the digital asset industry may also affect our access to capital. In 2022 and 2023, several digital asset platforms and exchanges filed for bankruptcy or became subject to government investigations relating to, among other things, alleged fraud. These events contributed to volatility and reduced confidence in the digital asset ecosystem and may negatively impact our ability to obtain financing on acceptable terms. If we raise additional equity capital, our stockholders may experience dilution of their ownership interests, and the market price of our common stock may decline. If we are unable to generate sufficient cash flows to support our strategic initiatives, we may be required to implement alternative measures, including reducing or delaying capital expenditures, selling assets, or pursuing additional equity financing on terms that may be onerous or highly dilutive. If we incur additional indebtedness, lenders may have priority over holders of our common stock with respect to repayment and liquidation preferences in the event of bankruptcy or liquidation. Debt financing may also include restrictive covenants that limit our ability to incur additional indebtedness or take other actions, and may require us to maintain certain liquidity or financial ratios that may not align with the interests of our stockholders. Any of these events could adversely affect our business, financial condition, results of operations, and the market price of our securities.

We have a history of operating losses, and we may report additional operating losses in the future.

We have recorded historical operating losses and negative cash flows from operations, particularly during periods in which the value of the bitcoin we mined did not exceed the associated operating, energy, personnel, and capital costs of our Bitcoin Mining activities. As part of our strategic growth plans, we have made, and expect to continue making, significant capital investments into data center operations, increase our workforce, and support the ownership and operation of our Facilities. These investments increase our cost base and may contribute to future losses if we are unable to generate sufficient revenue to offset these expenses. We cannot assure you that our revenue will exceed our associated costs or that we will achieve or maintain profitability. Continued operating losses could materially and adversely affect our business, financial condition, and results of operations.

The limited regulation of digital asset exchanges on which bitcoin and other cryptocurrencies are traded may expose us to the effects of negative publicity associated with fraudulent or unstable market participants, which could adversely affect an investment in us.

The digital asset exchanges on which bitcoin is traded are relatively new and, in many jurisdictions, remain unregulated. Many such exchanges do not provide the public with comprehensive information regarding their ownership, management, corporate governance, business practices, or regulatory compliance. As a result, the marketplace may lose confidence in these exchanges or experience disruptions associated with their operations, including with respect to exchanges that handle a significant volume of digital asset trading. In 2022 and 2023, several digital asset exchanges filed for bankruptcy protection and/or became subject to investigations by governmental authorities regarding alleged fraud and other misconduct. These events generated significant negative publicity for the

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broader digital asset ecosystem and contributed to increased price volatility across many digital asset markets, including the market for bitcoin. A continued loss of public confidence in digital asset exchanges may negatively impact the bitcoin ecosystem as a whole and may result in sustained or increased volatility.

These developments remain ongoing, and it is not possible to predict all of the risks that may arise for us, our counterparties, our service providers, or the digital asset industry generally. A perceived lack of stability in the digital asset exchange market as well as the failure, temporary shutdown, or restriction of exchanges due to operational issues, cybersecurity breaches, fraud, insolvency, or government-mandated regulation—may erode confidence in digital asset networks and contribute to further volatility in cryptocurrency prices. Any such consequences could materially and adversely affect the market price of our securities.

We depend on attracting and retaining officers, managers, and skilled professionals.

Our success depends on our ability to attract, retain and motivate qualified officers, managers, and skilled professionals. Competition for experienced personnel, particularly those with technical, operational, or industry-specific expertise, is intense, and we may be unable to retain existing employees or hire additional personnel on acceptable terms. The loss of key employees or our inability to effectively recruit and develop talent could impair our management capabilities, strategic execution, and other critical functions. Human capital constraints may also limit our ability to support ongoing operations or achieve our growth objectives. As our business grows and evolves, we must continue expanding and developing our leadership team and skilled workforce. If we fail to attract or retain the personnel necessary to meet these demands, our business, growth prospects, financial condition, and results of operations could be materially and adversely affected.

Macroeconomic, geopolitical, and public health events, and the resulting supply chain disruptions and inflationary pressures, could adversely affect our business, financial condition, and results of operations.

Our business may be adversely affected by global economic conditions, geopolitical developments and conflicts, shifts in governmental policy, trade restrictions, and public health events, including pandemics, epidemics, or other disease outbreaks. These events can contribute to port congestion, supplier shutdowns, logistics delays, and increased freight and transportation costs, all of which may result in higher expenses to procure and deploy new miners and acquire other critical materials needed for our expansion initiatives. We may also experience volatility and uncertainty in our supply chain resulting from recessions, inflation, tariffs, sanctions, and other restrictive actions by the United States or foreign governments, as well as broader social, political, and economic risks, including acts of war or regional instability. Changes in domestic or foreign policy priorities may further heighten such volatility.

Miner manufacturers have been affected by constrained semiconductor supply—particularly shortages involving the highly specialized ASIC chips used in bitcoin miners—as well as increased labor costs and broader disruptions to global supply chains. These factors have contributed to higher prices for new miners and may continue to do so. Inflationary pressures, combined with supply chain challenges, have increased the cost of goods, services, and personnel, raising both our capital expenditures and operating costs. Until these global pressures ease, we expect to continue incurring elevated costs to obtain and deploy miners, and we may face difficulties securing the materials or pricing necessary to support our growth plans. Adverse macroeconomic, public health, or geopolitical developments may also reduce market confidence in Bitcoin, shift investor preferences toward less volatile assets, and impair our access to capital or other financial markets, potentially increasing our cost of capital. Any of these events could have a material adverse effect on our business, operations, financial results, and the value of the bitcoin we mine.

Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business, financial condition and results of operations.

To maintain and further develop our Bitcoin Mining operations, we must procure mining hardware and other specialized technology. Additionally, the development and potential expansion of our Facilities requires large quantities of construction materials, specialized electricity distribution equipment and other critical components, all of which are in high demand and may be difficult to source. While we proactively procure products and materials from our suppliers in sufficient quantities to facilitate deployment at scale, we cannot predict the effect of the existing or future U.S. tariffs on imports, or the extent to which other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of products and materials we require for our operations, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business, financial condition, and results of operations.

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Risks Related to the Price of Bitcoin

Our ability to achieve profitability is largely dependent on the price of bitcoin, which has historically been volatile.

Our ability to achieve and maintain profitability depends significantly on the market price of bitcoin . The price of bitcoin has experienced substantial historical volatility, including its recent decline beginning in October 2025, and may continue to fluctuate widely due to a variety of factors, including the actions of malicious or manipulative actors, perceived or actual scarcity, political or economic developments, regulatory changes , and market speculation that may contribute to “bubble ”- type price dynamics . Unlike traditional securities exchanges, which impose rigorous listing standards and maintain extensive oversight of trading activity, many cryptocurrency trading platforms are lightly regulated or unregulated. Markets with less stringent oversight may pose increased risks of fraud , manipulation , and other abusive practices. Any such real or perceived lack of transparency , stability, or oversight could undermine confidence in the integrity of bitcoin markets and adversely affect the price of bitcoin .

As disclosed in Part I, Item 1. “Business” - “Regulatory” of this Annual Report, bitcoin and other crypto asset markets may be subject to increased scrutiny and regulation by the U.S. Congress and governmental agencies. Changes to laws, regulations, or enforcement priorities—whether directed at digital assets, mining operations, trading platforms, or participants—may adversely impact our Bitcoin Mining and related activities.

These regulatory factors and changes to laws, regulations, or enforcement priorities make it difficult to accurately predict the future price of bitcoin and may reduce consumer trust or market acceptance of cryptocurrencies as a means of exchange or store of value. If our assumptions regarding bitcoin’s future price prove incorrect and bitcoin prices are not sufficiently high, revenue from our Bitcoin Mining operations may not exceed our costs, and we may be unable to achieve or sustain profitability. Any such developments could materially and adversely affect our business, financial condition, and results of operations .

Bitcoin market exposure to financially troubled cryptocurrency-related companies may impact our reputation, the price of bitcoin and the profitability of our Bitcoin Mining operations.

The failures of several cryptocurrency platforms and related businesses have had, and may continue to have, adverse effects on the broader digital asset ecosystem. The full extent of these impacts may not yet be known. Bitcoin prices have historically been affected by financial instability, poor business practices, and fraudulent activities involving participants in the wider cryptocurrency market. When investors in cryptocurrency or cryptocurrency-related companies experience financial distress due to price volatility, operational failures, or fraud, such events have resulted in loss of confidence in the digital asset sector, reputational harm to cryptocurrency assets, heightened regulatory and legislative scrutiny, and significant declines in the market value of bitcoin. These adverse effects have previously impacted, and may in the future impact, the profitability of our Bitcoin Mining operations. If bitcoin prices decline materially or if reputational or regulatory pressures intensify within the cryptocurrency market, our business, financial condition, and results of operations could be materially and adversely affected.

Bitcoin and the broader digital asset ecosystem have also been negatively impacted by bankruptcies, restructurings, and forced liquidations of certain cryptocurrency exchanges, lenders, funds, and other market participants, and additional failures or distress events could further depress bitcoin prices or reduce liquidity. Any sustained reduction in the price of bitcoin or market liquidity, or any associated deterioration in sentiment toward the digital asset sector, could adversely affect our reputation, increase our cost of capital, and negatively impact the profitability of our Bitcoin Mining operations.

Bitcoin is subject to “halving” and our Bitcoin Mining operations may generate less revenue as a result.

As disclosed in Part I, Item 1. “Business” of this Annual Report, under the subheading “Halving,” the number of new bitcoin awarded to miners for solving a block is reduced by 50%—a process known as “halving”—at mathematically predetermined intervals. The next halving event is currently expected to occur in mid-2028. Although bitcoin prices have, at times, increased around prior halving events, there is no assurance that future halving events will result in favorable price movements or that any such price increases would be sufficient to offset the reduction in block rewards. If a corresponding and proportionate increase in the market price of bitcoin does not occur following future halving events, the revenue we earn from our Bitcoin Mining operations will decrease. Any such decline in mining revenue could have a material adverse effect on our business, financial condition, and results of operations.

High bitcoin transaction fees may reduce demand for bitcoin and adversely affect our Bitcoin Mining operations and growth prospects .

As block rewards on the Bitcoin blockchain decline over time, transaction fees have become an increasingly important incentive for miners to continue supporting the network. However, elevated transaction fees may limit the adoption of bitcoin as a means of

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payment by making bitcoin transactions less practical or cost-effective for users. Reduced adoption could decrease demand for bitcoin, negatively impact future bitcoin prices, and increase price volatility. If bitcoin prices do not remain sufficiently high, the revenue we generate from our Bitcoin Mining operations may not exceed our associated costs, which could adversely affect our results of operations and financial condition. In addition, because the market price of our common stock may be linked to the price of bitcoin, any decline in bitcoin demand or market value could materially and adversely affect the trading price of our securities and could impair our ability to raise additional capital to fund our strategic growth initiatives.

Bitcoin faces significant scaling obstacles that can lead to high fees or slow transaction settlement times, which may adversely affect demand for bitcoin and our Bitcoin Mining operations.

Bitcoin, like many other cryptocurrencies, faces significant scaling challenges that may lead to high transaction fees or slow transaction settlement times. The bitcoin network is limited in the number of transactions it can process per second, and efforts to increase throughput—such as increasing block size, implementing alternative scaling mechanisms, or researching techniques like sharding—may not prove effective or may introduce new risks or technical trade-offs. There is no assurance that any proposed or existing scaling solutions will successfully increase transaction capacity or be adopted by network participants. Widespread adoption of bitcoin as a means of payment depends, in part, on the ability of the network to efficiently handle growth in transaction volume. If scaling limitations persist or if technological improvements do not occur on the schedule or scale we anticipate, Bitcoin’s adoption as a payment method may stagnate or decline. Reduced adoption could decrease demand for bitcoin and negatively impact its market price. A decline in bitcoin prices could adversely affect the revenue we generate from our Bitcoin Mining operations and could materially and adversely impact our business, financial condition, results of operations, and the market price of our securities.

Risks Related to our Operations

To remain competitive in the bitcoin sector, we must grow our hash rate at a pace consistent with increases in the global network hash rate and network difficulty, and if we fail to do so, our ability to earn bitcoin rewards will decline.

As adoption of bitcoin has increased, the price of bitcoin has generally appreciated, encouraging additional miners to participate in bitcoin mining, thereby increasing the global network hash rate.

Because a miner’s relative chance of successfully solving a block and earning a new bitcoin reward is generally a function of the ratio the miner’s individual hash rate bears to the global network hash rate, as the global network hash rate increases, a miner must increase its individual hash rate to maintain its chances of earning new bitcoin rewards. In addition, the bitcoin protocol periodically adjusts network difficulty to ensure that blocks continue to be added approximately every ten minutes. As more hash rate is deployed to the network, difficulty increases, requiring miners to deploy even greater computational power to solve blocks. These dynamics create a competitive cycle in which miners must continually add new, increasingly powerful and energy-efficient miners to maintain their competitiveness—often referred to as an “arms race” within the bitcoin mining industry. The supply of high-quality mining machines is limited, as only a small number of manufacturers produce miners capable of meeting industry requirements. As demand for new miners increases, scarcity may drive up prices. In addition, some manufacturers have historically raised miner prices during periods of increased bitcoin market prices, further increasing acquisition costs.

To remain competitive and preserve our ability to earn bitcoin rewards, we must continue to grow our deployed hash rate by acquiring and deploying new miners at a pace consistent with growth in the global network hash rate. If bitcoin prices are not sufficiently high to support ongoing capital investment in miners, or if we are unable to obtain miners in the quantities, quality, or pricing necessary to increase our hash rate, our hash rate may stagnate. Falling behind competitors in hash rate would reduce our chances of earning future bitcoin rewards, which could materially and adversely affect our business, financial condition, and results of operations.

Because our miners are designed specifically to mine bitcoin and may not be readily adaptable to other uses, a sustained decline in bitcoin’s value could adversely affect our business and results of operations.

We have invested substantial capital in acquiring miners that use ASICs designed exclusively to mine bitcoin and other cryptocurrencies that utilize the 256-bit secure hashing algorithm (“SHA-256”). Our Bitcoin Mining operations therefore depend primarily on our ability to use these miners to mine bitcoin and generate revenue based on the market value of the bitcoin we earn. If the value of bitcoin declines and does not recover, the revenue generated from our Bitcoin Mining operations would decline accordingly. Because our miners are highly specialized, we may be unable to successfully repurpose them for alternative uses in a timely or cost-effective manner, if at all. Similarly, if the bitcoin protocol were to discontinue use of the SHA-256 algorithm, our existing miners could become obsolete. Any sustained decline in the value of bitcoin, or any inability to repurpose or redeploy our miners, could materially and adversely affect our business, financial condition, and results of operations, and could raise substantial doubt about our ability to continue as a going concern.

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Our reliance on third-party miners may expose us to operations to increased risk of design flaws.

The performance and reliability of the miners and related technology we use are critical to our operations and reputation. We currently deploy Bitmain Technologies Limited (“Bitmain”) Antminer, and MicroBT WhatsMiner type miners. Any defect, design flaw, or performance issue in these miners—such as flaws in the ASIC chips they employ—could materially disrupt our mining activities. Because a substantial portion of our fleet relies on machines produced by a limited number of manufacturers, any exploitable weakness, firmware vulnerability, or systemic flaw affecting a particular model or manufacturer could impair a significant percentage, or potentially all, of our deployed miners. We have experienced, and may continue to experience, software and firmware complications associated with adapting these miners for use in our immersion-cooled infrastructure. Such issues may delay or limit the anticipated efficiency benefits of immersion-cooled mining and may result in operational disruptions or reduced mining output. Any significant system error, operational failure, or interruption in our mining activities could result in lower bitcoin yields, increased downtime, financial losses, and reputational harm. If defects, vulnerabilities, or failures in miners supplied by Bitmain, MicroBT, or other third-party manufacturers adversely affect our mining fleet, our business, financial condition, results of operations, and the market price of our securities could be materially and adversely impacted.

Our reliance primarily on immersion-cooling exposes us to additional operational and performance risks.

We are increasingly dependent on immersion-cooling technology for our Bitcoin Mining operations, to a large extent at the Rockdale Facility, and exclusively at the Corsicana Facility. Immersion-cooling is an emerging technology within the bitcoin mining industry and has not yet been widely deployed at the scale at which we are implementing it. As a result, there is uncertainty regarding the long-term performance, reliability, and efficiency of immersion-cooling systems at large scale. If immersion-cooling does not perform as expected, we may be unable to achieve anticipated improvements in miner performance or overall hash rate efficiency. Cooling infrastructure for bitcoin mining—whether immersion-cooled or air-cooled—continues to evolve. Effective cooling is essential to achieving optimal hash rate performance, particularly in high-temperature environments such as the State of Texas. Any underperformance or failure in our cooling systems could reduce miner efficiency, limit hash rate output, and adversely affect our Bitcoin Mining operations.

Both our immersion-cooling and air-cooling systems require substantial volumes of water to support the thermal management of our miners. If we are unable to secure adequate water supplies or lose access to required water due to regulatory, environmental, operational, or third-party constraints, our ability to operate our facilities efficiently could be significantly impaired. Any inability to maintain effective cooling performance or ensure reliable water access could materially and adversely affect our business, financial condition, results of operations, and the market price of our securities.

Our revenue generation is subject to risks applicable to our mining pool, including risks outside of our control.

We participate in a “Full-Pay-Per-Share” mining pool, which calculates bitcoin payouts primarily based on the proportion of hash rate we contribute to the mining pool as a percentage of total network hash rate, along with other inputs. A significant portion of our revenue is derived from participation in this mining pool, representing approximately 89.0% and 85.2% of our total revenue for the years ended December 31, 2025 and 2024, respectively. We own all of our miners and accompanying infrastructure, and the only connection between our assets and our mining pool is that the total hash rate capacity of our miners is currently allocated to our mining pool, which we are free to change at any time, in our discretion. Further, the mining pool in which we participate, like most mining pools, is decentralized and has protections in place to prevent malicious actors or technical errors from affecting the pool’s ability to operate; however, these protections are not foolproof, and we may lose access to the mining pool, perhaps permanently. Because of the monitoring systems we have in place, we would become aware within minutes if our mining pool were to suffer downtime or cease to exist altogether, and we would expect to be able to resume mining without a mining pool within minutes, or redirect our hash rate to another mining pool, within an hour of the downtime event. Historically, self-mining without a pool has resulted in greater revenue volatility and may produce lower overall bitcoin rewards than pooled mining. If we are required to self-mine or transition to another mining pool under unfavorable conditions, our Bitcoin Mining revenue may decline—possibly materially—and become less predictable. Any unanticipated disruption or loss of access to our mining pool, or any inability to promptly and effectively diversify our mining methods, could adversely affect our business, financial condition, and results of operations.

Our use of third-party mining pools exposes us to certain risks.

We receive bitcoin rewards from our mining activities through participation in third-party mining pools. Mining pools allow participants to combine their processing power, and provide payouts to participants based on their contributed hash rate under the mining pool’s payout methodology. After deducting any applicable pool fees, the pool operator distributes bitcoin proportionally based on our contribution to the pool’s overall mining power, which may occur regardless of whether the mining pool successfully

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solves a block during a given period. Our ability to generate Bitcoin Mining revenue therefore depends in part on the continued stability and accuracy of the mining pools we utilize. If the pool operator’s system suffer downtime due to a cyber-attack, software malfunction, operational failure, or other disruption, our ability to mine and receive rewards may be negatively affected, particularly if we are unable to transition promptly to another pool or to self-mining without a pool. Additionally, there is a risk that the mining pool operator could fail to accurately record the total processing power provided to the pool for a given bitcoin mining application, which would inhibit our ability to verify our proportion of the pool’s total processing power. While we monitor our hash rate and the pool’s total hash rate internally, mining pool operators maintain their own systems to track contributions and calculate payouts. If a pool operator inaccurately records our hash rate contribution or otherwise fails to allocate rewards proportionately, our receipt of accurate and complete rewards may be impaired. Our ability to dispute or recover losses from inaccurate payouts may be limited. If we are unable to consistently obtain accurate and timely rewards from third-party mining pool operators, we may reconsider participation in a particular pool or mining pools generally. Any such change could increase the volatility of our mining returns and adversely affect our business, financial condition, and results of operations.

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

The Bitcoin blockchain is subject to modification based on a consensus of the users on its network. When a significant minority of users on the network agree to a modification that is not compatible with the prior network protocol, a “fork” of the network results, with one prong running the pre-modified protocol and the other running the modified protocol. The effect of such a fork would be the existence of two “versions” of the blockchain running in parallel that are not interchangeable, which requires exchange-type transactions to convert between the two forks. Additionally, it may be unclear following a fork which of the two protocols represents the original and which is the new protocol. Different metrics adopted by industry participants to determine which is the original asset following a fork in the Bitcoin blockchain may include: referring to the blockchain with the greatest network hash rate, or to the “length” of blockchain ( i.e. , the time between the first transaction recorded in the blockchain’s distributed ledger and the date of the most recent transaction). Accordingly, it is possible that a fork may occur on the Bitcoin blockchain that results in an asset different from our current bitcoin holdings, or a protocol different from SHA-256 (which our miners are specifically designed to operate), gaining predominance, and the value of our bitcoin assets may suffer, or we may not be able to adapt our miners to the new protocol. As a result, we may not realize any economic benefit from a fork in the Bitcoin blockchain, either immediately or at all, and any such fork could adversely affect the value of our bitcoin holdings, the effectiveness of our mining fleet, and investment in our securities.

We may be exposed to potential liability from claims relating to intellectual property rights.

We may become the subject of third-party intellectual property right infringement claims relating to our own systems and/or the use of third-party equipment and systems. For example, as further described in Note 17. Commitments and Contingencies to our Consolidated Financial Statements, Green Revolution Cooling, Inc. (“GRC”) has alleged that the immersion cooling systems we use, which were purchased from Midas Immersion Cooling, LLC and Hash House Tech, Inc., infringe on certain of GRC’s patents. While we rely on the representations and warranties of third-party vendors, such as Midas Immersion Cooling, LLC, it is not possible to avoid all potential claims of infringement of third-party intellectual property rights. If such claims are successful, we may be required to pay royalties or be ordered to cease using technologies found to be infringing on such third-party rights altogether. Additionally, such legal action could cause the diversion of time, energy, and resources away from our operations and toward defending against such actions. Adverse outcomes in these matters could require us to redesign or replace affected systems, obtain licenses on unfavorable terms, or write off certain assets, and could result in significant damage, settlements, or injunctive relief, any of which could have a material adverse effect on our business, results of operations, and financial condition.

We are subject to counterparty risks, including risks and uncertainties relating to our Custodians.

We rely on our Custodians, NYDIG and Coinbase, to safeguard our bitcoin using cold storage. Each Custodian receives and holds our custodied assets, which include both our digital assets and any cash we may choose to custody with the applicable Custodian. Pursuant to the NYDIG Custodial Agreement and the Coinbase Prime Broker Agreement, each Custodian has covenanted that they hold our digital assets in segregated accounts for the Company’s benefit; that the Custodian has no rights, interest or title in our digital assets; and that our digital assets do not constitute an asset on the balance sheet of such Custodian. To the extent a Custodian holds any cash on our behalf, it may hold our cash in one or more omnibus "for benefit of customers" accounts at one or more U.S. insured depository institutions. However, currently, the Company has no cash custodied and has no immediate or future plans to custody any cash with either Custodian. Under the terms of the NYDIG Custodial Agreement and the Coinbase Prime Broker Agreement, each Custodian has covenanted that our digital assets will not be commingled with other digital assets held by the Custodian, except that in the NYDIG Custodial Agreement, assets may be temporarily commingled (typically for no longer than 12 hours, but in no case longer than 72 hours) as an operational matter, if required, to effect a transfer into or out of our digital asset account. In the NYDIG Custodial Agreement, NYDIG further represents and warrants that beneficial and legal ownership of all our

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digital assets is, and will remain, freely transferable without the payment of money or value and that NYDIG has no ownership interest in our account.

While we believe that each of the NYDIG Custodial Agreement and Coinbase Prime Broker Agreement provide our business with reasonable protections for our operations and the safe storage of our digital assets, we make no assurances that storing our digital assets with either Custodian is free from risk. To the best of our knowledge, each Custodian safely stores our digital assets in segregated accounts as represented in the NYDIG Custodial Agreement and Coinbase Prime Broker Agreement; however, if a Custodian were to be in breach of its agreement, our digital assets could be compromised. Similarly, if a Custodian were to cease operations, declare insolvency or file for bankruptcy, there is a reasonable risk that recovery of our assets, though kept in segregated accounts, would be delayed or unrecoverable. Applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodied bitcoin were considered to be the property of a Custodian’s estate in the event that such Custodian were to enter bankruptcy, receivership or similar insolvency proceedings, there is a risk that we could be treated as a general unsecured creditor of such custodian, inhibiting our ability to access our bitcoin. Even if we are able to prevent our bitcoin from being considered the property of a Custodian’s bankruptcy estate as part of an insolvency proceeding, it is possible that we would still be delayed or may otherwise experience difficulty in accessing our bitcoin held by the Custodian during the pendency of the insolvency proceedings. A delay in our ability to access our bitcoin could result in the loss of the value related to some or all of our bitcoin and could have a material adverse effect on our financial condition and the market price of our common stock. We also do not have a readily available additional backup custodian at this time, so if NYDIG or Coinbase were to cease operations, declare insolvency or file for bankruptcy, we would need to self-custody the applicable digital assets using cold storage until we could contract with another adequate custodian for the safe storage of our assets which may have a disruptive effect on our business. In the meantime, our mined bitcoin would continue to aggregate in our proprietary wallet until we found another suitable cold storage custodian.

Our limited rights of legal recourse and our lack of insurance protection over our bitcoin expose us and our stockholders to the risk of loss of our bitcoin for which there may be no adequate remedy.

While we rely on well-known U.S.-based third-party digital asset-focused custodians to safeguard our bitcoin, our bitcoin is not insured by us, including not being subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protection. Accordingly, if our bitcoin is lost, stolen or destroyed under circumstances rendering a party liable to us, our loss could be significant and the party responsible may not have the financial resources sufficient to satisfy our claim. For example, as to a particular event of loss, the only source of recovery for us might be limited, to the extent identifiable, to responsible third parties , such as a Custodian, or in other instances, a thief, terrorist or others, any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim. We believe each Custodian maintains limited insurance policies covering the pool of digital assets it custodies against certain events of loss, such as theft. NYDIG and Coinbase custody the digital assets of hundreds of parties, worth billions of U.S. dollars, and any insurance coverage held by any of these Custodians is likely significantly less than the total value of the custodied digital assets of their customers. Any insurance proceeds received by a Custodian in response to a loss would likely be shared by the Custodian with us and other affected parties, rendering any amount we would receive significantly less than the value of our lost custodied assets. Furthermore, any insurance held by the Custodians may be terminated without notice to us. Any loss of insurance coverage would impede our ability to be compensated for our losses. Therefore, a loss may be suffered with respect to our bitcoin for which there may be no recourse or adequate remedy, which could have a material adverse effect on our results of operations and financial condition and, consequently, an investment in our securities.

Cyber - attacks, data breaches , or malware may disrupt our operations and expose us to significant liability, which could harm our operating results , financial condition, and reputation .

As a publicly traded company, we are regularly subject to cyber-attacks, including phishing attempts and other efforts to gain unauthorized access to our systems. We expect these attempts to continue, and their volume and sophistication may increase as malicious actors deploy enhanced capabilities, including AI-driven tools. Cybersecurity incidents could result in loss or theft of our bitcoin or other sensitive data, disrupt our operations, or otherwise adversely affect our business. As we grow in size and visibility, we may become a more attractive target for hackers, malware, cyber-attacks, or other security threats. Although we implement strict security measures, conduct frequent security audits, and provide cybersecurity training to our employees, no system or process can eliminate all vulnerabilities. For instance, we may not be able to ensure the adequacy of the security measures employed by third parties, such as our service providers. We also rely on the security measures of third-party service providers, including our digital-asset custodians, and we may have limited ability to ensure their effectiveness. If a third-party custodian experiences a security breach or cyber-attack that results in unauthorized access to or loss of our bitcoin, we could lose some or all of our digital assets, which would materially and adversely affect our financial condition and results of operations.

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Cyber-attacks or other security incidents, whether arising from vulnerabilities in our systems or those of third parties, could result in operational disruption, loss of assets, theft or misuse of sensitive information, significant remediation costs, and diversion of management attention. They could also subject us to liability to customers, suppliers, business partners, or other stakeholders; lead to regulatory inquiries or legal proceedings; and damage our reputation. To date, we have not experienced a material cyber-incident. However, we continue to encounter ongoing cyber-attacks and cannot guarantee that future incidents will not occur. Any such event could materially and adversely affect our business, operating results, financial condition, and the market price of our securities.

Incorrect or fraudulent bitcoin transactions may be irreversible, and we could lose access to our bitcoin.

Bitcoin transactions generally cannot be reversed without the consent and active participation of the recipient. Because the Bitcoin blockchain is decentralized, once a transaction has been verified and included in a block, any erroneous transfer or theft is typically permanent, and we may have limited or no recourse to recover the transferred bitcoin. It is possible that, through error, theft, or criminal activity, our bitcoin rewards could be transferred in incorrect amounts or sent to unauthorized or inaccessible accounts. Although law-enforcement agencies have, in some cases, successfully pursued individuals involved in laundering stolen bitcoin, the stolen assets themselves are often not recoverable. Furthermore, we utilize a third-party custodian for our bitcoin and therefore do not maintain our own private keys. If our custodian experiences a security breach, operational failure, or loss of access to our digital wallet, or if a malicious actor prevents our custodian from accessing the wallet, we may be permanently denied access to the bitcoin held in that wallet. Though we have taken and continue to take reasonable steps to secure our data and to store our bitcoin, any data loss, corruption, or system failure affecting our custodian, or affecting us directly, could similarly result in irreversible loss of our bitcoin. In addition, we have historically been unable to obtain insurance coverage for our bitcoin assets. As a result, any loss arising from error, theft, fraud, or loss of access to private keys may not be recoverable. Any such event could have a material adverse effect on our business, financial condition, and results of operations.

Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.

Our Bitcoin Mining and data center operations require significant and continuous access to reliable electrical power and high-speed internet connectivity. Any prolonged interruption, shortage, curtailment, or capacity constraint affecting our power supply or internet access, whether due to equipment failure, weather events, grid instability, utility curtailments, regulatory actions, or other causes, could require us to reduce or suspend our operations. Any such disruption could materially and adversely affect our ability to mine bitcoin, provide data center services, generate revenue, and achieve expected returns on our infrastructure investments. If this occurs, our business and results of operations and financial condition may be materially and adversely affected.

We are subject to risks associated with our need for significant electrical power.

Our operations require significant amounts of electrical power, and we expect our power needs to continue to grow as we develop our Facilities. Fluctuations in the price of electricity, or increases in the cost of securing additional capacity to support our expansion, may reduce our profitability. If we are unable to obtain sufficient electrical power on a cost-effective basis, we may be unable to realize the anticipated benefits of our capital investments or achieve our operational objectives.

Our operations are also vulnerable to prolonged power outages or other disruptions in the supply of electricity. Although certain critical functions of the Rockdale Facility can be supported temporarily by backup generators, it is neither feasible nor cost-effective to operate our miners on backup power for extended periods. As a result, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. Any such interruption in power availability or increase in power costs could materially and adversely affect our business, financial condition, and results of operations.

Our access to power is dependent on our electrical distribution provider, grid operator and regulator, which collectively manage whether our operations are performing in accordance with market rules, requirements and regulations, and any adverse determination or action by any such entity may have a material adverse effect on our financial condition, results of operations and cash flows.

The Public Utility Commission of Texas (“PUCT”), ERCOT, and Oncor Electric Delivery Company (“Oncor”) collectively oversee the regulatory, administrative, and delivery aspects of our power supply in Texas; MISO oversees our power supply in Kentucky. In recent years, regulatory scrutiny on bitcoin mining facilities and their energy consumption has intensified as the industry has grown. In April 2022, ERCOT established a task force to review the participation of large flexible loads, including bitcoin mining facilities and data centers, in the ERCOT market. This task force is tasked with developing policy recommendations for ERCOT concerning network planning, market operations, and the interconnection processes for large flexible loads.

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As the grid operator, ERCOT is responsible for monitoring and testing market participants, including the Rockdale Facility and the Corsicana Facility, to assess their impact on grid reliability. We are periodically tested and monitored and have experienced curtailment of power through this testing process based on instructions we receive from Oncor and ERCOT. During this process, ERCOT may determine that our data centers’ substantial power usage negatively affects grid reliability. If so, ERCOT could issue a curtailment order, requiring us to reduce or cease our power use immediately. Consequently, our power supply in Texas could be partially or fully curtailed. If we cannot secure adequate electrical power, we may be forced to reduce or shut down our operations, which would have a material adverse effect on our business, prospects, financial condition, and operating results and, consequently, an investment in our securities.

Certain natural disasters, external events, mechanical failures, cyber incidents, and evolving climate, energy and Environmental, Social and Governance (“ESG”) requirements could adversely affect our business, financial condition, results of operations, cash flows, and prospects.

We may be impacted by natural disasters, wars, terrorism, pandemics/epidemics, health epidemics, weather conditions, the long-term effects of climate change, mechanical failure, human error, physical or electronic security breaches, power outages and telecommunications failures, cyber incidents (including computer viruses, ransomware, denial-of-service attacks, and phishing schemes), sabotage, vandalism, or other events outside of our control. For example, we voluntarily halted operations at the Rockdale Facility during the severe winter storms in the first quarter of 2022 and 2021 that had a widespread impact on utilities and transportation. Additionally, as previously disclosed, we sustained damage to the Rockdale Facility’s infrastructure during the severe winter storms affecting Texas in December 2022, which caused miners to be offline and impacted approximately 2.5 EH/s of our hash rate capacity. In the future, regulators or power providers may, under new or revised rules, require us to power down our Facilities during such events. Our systems and facilities may also be susceptible to damage, interference, or interruption from modifications or upgrades, power loss, and other operational issues. If major disasters such as earthquakes, floods, hurricanes, or other climate-related events occur, the Rockdale Facility, the Corsicana Facility, the Kentucky Facility, or our other offices and data or network infrastructure are severely damaged, or our information system or communications break down or operate improperly, our operations may be interrupted. We may incur expenses or delays relating to such events outside of our control, which may not be covered by insurance, and such events could have a material adverse impact on our business, operating results and financial condition.

In addition, evolving climate-related legislation and regulation, energy disclosure and use mandates, and increasing stakeholder expectations regarding ESG practices may impose significant costs or constraints on us and our suppliers. These may include increased energy and capital expenditures, environmental monitoring and reporting, assurance and internal controls over climate data, and other compliance costs. Investor advocacy groups, certain institutional investors, investment funds, and other influential stakeholders are increasingly focused on ESG practices and may place greater emphasis on non-financial impacts of their investments. Heightened public awareness and scrutiny of environmental risks, including global climate change, may also divert management time and resources toward responding to such scrutiny and engaging with stakeholders.

Additionally, the physical risks of climate change may affect the availability and cost of materials and natural resources, sources and supply of energy, and demand for bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including costs to repair extreme-weather damage or to retrofit facilities. Changes in environmental laws, regulations, or industry standards, or disruption from the physical impacts of climate change, could negatively impact our business, capital expenditures, results of operations, financial condition, and competitive position. Even absent new regulations, adverse publicity or increased scrutiny regarding climate or energy impacts of our industry could harm our reputation. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations, cash flows, and prospects.

Risks Related to Governmental Regulation and Enforcement

Changing environmental regulation and public energy policy may expose our business to new risks.

Our Bitcoin Mining operations require substantial electrical power and can only be successful if the costs of that power, together with our operations costs, remain lower than the revenue generated by our operations. Our expansion plans for the Rockdale Facility and the Corsicana Facility depend, in part, on our understanding of current federal, state, and local environmental and energy policies, including those applicable in the States of Texas and Kentucky. If new regulations are enacted, or if existing regulations are modified, the assumptions underlying our strategic initiatives may prove inaccurate, and we may incur additional costs to adapt our operations, if we are able to adapt at all.

There is ongoing regulatory uncertainty in the United States regarding climate and energy policy. Because Bitcoin Mining and data centers require substantial energy, the industries may become the target of future climate-related or energy-use regulations. New or

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revised legislation or regulation could impose significant costs on us or our suppliers, including increased energy-efficiency requirements, capital investment in alternative technologies, enhanced environmental monitoring and reporting obligations, or changes in the availability or cost of electrical power. Any such regulations could also impair our ability to compete with companies operating in jurisdictions with less restrictive environmental or energy policies.

In Texas, we participate in energy demand-response programs that allow us to curtail operations and return capacity to the electrical grid during certain conditions, including extreme weather events. By curtailing, we then receive funds to offset foregone operational revenue when necessary. These programs can reduce our operational output and may increase our exposure to regulatory oversight of our energy usage. Additionally, bitcoin miners operating in Texas, including us, received a mandatory survey from the EIA requesting detailed information regarding electricity consumption and operations for January 2024. It is possible that information collected through such surveys could be used to produce reports critical of the industry’s energy usage, potentially prompting negative public sentiment or additional legislative or regulatory action directed at our operations. Any such actions could increase our operating costs or make it more difficult to operate at our current locations.

Given the political significance of climate-change policy and the uncertainty surrounding environmental and energy-use regulation, we cannot predict how future legislation or regulatory developments at the federal level or in the States of Texas or Kentucky may affect our operations, financial condition, or results of operations. Moreover, even in the absence of new regulations, increased public scrutiny or negative publicity regarding the environmental impact of Bitcoin Mining could harm our reputation. Any of these factors could have a material adverse effect on our business and financial condition.

The compliance costs of responding to new and changing regulations could adversely affect our operations at the Facilities.

We, as well as the providers from whom we purchase electricity, are subject to extensive federal, state, local, and international environmental laws and regulations, including those governing the generation, storage, handling, and disposal of hazardous substances and waste. Certain of those laws impose joint and several liability, without regard to fault, for investigation and cleanup costs on current and former owners and operators of real property and persons who have disposed of or released hazardous substances into the environment. Our operations involve the use of materials such as petroleum fuel for emergency generators, batteries, cleaning solutions, and other substances that may be classified as hazardous, which could increase our exposure to regulatory risk.

Electricity costs may also be affected by existing or new regulations relating to greenhouse gas emissions, whether such regulations apply broadly to all electricity consumers or specifically target energy-intensive industries such as bitcoin mining and data centers. These regulatory developments could arise at the federal level or in the states where we operate, including Texas and Kentucky. There has been interest in the U.S. federal government and in the state governments of Texas and Kentucky in addressing climate change, including through regulation of bitcoin mining. Recent policy discussions at both the federal and state levels have included proposals such as carbon taxes, energy-consumption disclosure requirements, greenhouse-gas emissions limits, and energy-use restrictions specific to bitcoin mining. While Texas has historically maintained some degree of energy policy independence from the federal government, the direction and impact of future legislation and regulation on our Rockdale and Corsicana Facilities remain uncertain. Changes in environmental or energy regulations could impose significant compliance costs on us or our electricity providers, alter the availability or price of power, or otherwise adversely affect our operations. Any increase in compliance obligations or operational restrictions resulting from new or amended regulations could materially and adversely affect our business, financial condition, and results of operations.

Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.

As cryptocurrencies have grown in popularity and market capitalization, governments around the world have taken widely differing approaches to their regulation. Some jurisdictions have prohibited the use or exchange of cryptocurrencies entirely, while others permit their use or trading with minimal or no restrictions. In the United States, the mining, ownership, and exchange of cryptocurrencies are subject to extensive, and in some cases overlapping, unclear, and evolving, regulatory requirements at the federal and state levels.

In January 2025, the U.S. President issued an executive order forming a presidential working group to establish a clear regulatory framework for digital assets, and leaders in both houses of the U.S. Congress have announced a bicameral working group with the objective of passing legislation to provide regulatory clarity for the industry. Committees in both houses of the U.S. Congress have conducted hearings to ensure fair access to financial services, including for companies operating in the digital asset space. Additionally, in March 2025, the U.S. established the U.S. Bitcoin Strategic Reserve, which is reported to hold the largest bitcoin reserve in the world, and at least twelve states have introduced legislation to create strategic bitcoin reserves. Notably, in June 2025, the Governor of the State of Texas signed into law the Texas Strategic Bitcoin Reserve and Investment Act, making Texas the first

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state to formally establish such a reserve. In January 2026, new legislation was filed in Texas to expand the reserve’s scope to include other major digital assets.

Although these developments may appear favorable and may suggest a trend toward regulatory clarity, the ultimate direction, scope, and impact of digital-asset-related legislation and regulation remain uncertain. Future regulatory actions could materially affect the use, transfer, custody, mining, or classification of bitcoin and other digital assets. Such changes could, among other things, impose new licensing, reporting, or compliance obligations; restrict or prohibit certain activities; or otherwise adversely affect our business model.

Our expanding data center operations, including those supporting AI and HPC applications, may also be subject to new or evolving regulatory frameworks.

Data centers are increasingly scrutinized by federal, state, and local authorities due to concerns regarding energy consumption, land use, carbon emissions, water usage, environmental impacts, data-sovereignty considerations, and national-security-related issues. Regulators may impose new permitting requirements, energy-efficiency standards, carbon-reduction mandates, sustainability reporting rules, or operational restrictions specific to data centers, AI infrastructure, or high-density compute environments. Such regulations, particularly at the federal level or in the States of Texas and Kentucky, where our facilities operate, could increase our capital expenditures, delay development timelines, limit expansion opportunities, or require costly modifications to existing infrastructure. Any restrictions or new policy initiatives targeting large-scale compute operations, including those supporting AI/HPC workloads, could adversely affect our data center business or limit the economic viability of our strategic diversification initiatives. Given the evolving nature of digital asset and data-center regulation, and the difficulty of predicting the outcomes of ongoing or future governmental actions, we cannot assure you that future regulatory or legislative developments will not have a material adverse effect on our business, prospects, financial condition, or operations.

Our interactions with a blockchain may expose us to SDN or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.

OFAC requires us to comply with its sanction program and not conduct business with persons named on its SDN list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. Our Company’s policy prohibits any transactions with such SDN individuals, and we take all commercially reasonable steps to avoid such transactions, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling bitcoin assets. Moreover, there is a risk that some bad actors will continue to attempt to use cryptocurrencies, including bitcoin, as a potential means of avoiding federally imposed sanctions, such as those imposed in connection with the Russian invasion of Ukraine.

We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the bitcoin industry, or the potential impact of the use of bitcoin by SDN or other blocked or sanctioned persons, which could have material adverse effects on our business and our industry more broadly. Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock.

Bitcoin and bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.

Bitcoin, bitcoin mining, and cryptocurrencies generally are permitted or tolerated in some jurisdictions, restricted in others, and outright banned in several countries. It is possible that federal, state, or local regulators in the United States could adopt laws, regulations, or policy actions that impose significant restrictions on, or fully prohibit, bitcoin mining or related activities. Any such action could make it impossible or impractical for us to continue operating our mining facilities without relocating our operations, which would be costly, time-consuming, and uncertain. Although bitcoin activities in the United States are currently subject to a patchwork of evolving and sometimes overlapping regulatory requirements, regulators could take new or intensified actions that severely limit or prohibit the ability to mine, acquire, own, hold, sell, transfer, or use bitcoin or other cryptocurrencies, or to exchange them for fiat currencies such as the U.S. dollar. Restrictions of this nature could materially reduce the utility, acceptance, and market value of bitcoin. Because the widespread use of bitcoin as a means of exchange remains limited globally, restrictive regulatory actions in key jurisdictions could have an outsized impact on its price and adoption. Any prohibition or material restriction on bitcoin mining, ownership, or use could result in a significant decline in the value of the bitcoin we mine or hold and could materially and adversely affect our business, prospects, financial condition, and results of operations. Such developments could also negatively impact the market price of our securities and harm investors.

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Risks Related to Ownership of Our Common Stock

The trading price of shares of our common stock has been subject to volatility.

The trading price of our common stock has been, and is likely to continue to be, volatile, and may be influenced by various factors including the risks, uncertainties and factors described in this Annual Report and our other filings with the SEC, as well as factors beyond our control or of which we may be unaware. If these risks come to pass and our business and results of operation suffer as a result, the market price of our securities may decline, which could have a material adverse effect on an investment in our securities.

Bitcoin is subject to price volatility resulting from financial instability, poor business practices, fraudulent activities of players in the market, and other factors outside of our control. Such factors may cause a decline in the price of bitcoin, which may also affect the trading price of our shares of common stock.

We have issued, and may continue to issue, new shares of our common stock, which has a dilutive effect on existing stockholders .

We have primarily financed our strategic growth through at-the-market (“ATM”) offerings and other issuances of our common stock. Our ATM programs allow us to raise capital as needed by selling newly issued shares into the existing trading market at prevailing market prices. We expect to continue using ATM offerings and other equity issuances to fund development plans, support capital-intensive expansion initiatives, and pursue strategic growth opportunities. However, the issuance of additional shares of our common stock dilutes the ownership interests of existing stockholders, and future equity sales could further dilute existing holdings and reduce the market price of our common stock. Any such dilution may adversely affect the value of an investment in our securities.

We have a classified Board, which could limit stockholders’ ability to influence our directors’ decision - making .

Our Bylaws provide for a classified Board of Directors divided into three classes, with each class serving staggered three-year terms. As a result, approximately one-third of the Board stands for election at each annual meeting of stockholders. We believe this structure promoted continuity and stability in leadership and corporate strategy by ensuring that, at any given time, a majority of our directors had prior experience with our Company and familiarity with our operations, thereby supporting long-term planning and stockholder value creation. However, the classified board structure may also reduce stockholders’ ability to influence the composition of our Board. For example, a stockholder or group seeking to obtain control of our Board would generally be unable to replace a majority of directors until at least the second annual meeting following the acquisition of a majority of our outstanding voting stock. This structure may also discourage proxy contests, tender offers, or other attempts to effect a change in control, as it makes it more difficult and time-consuming for stockholders to replace a majority of our directors. Accordingly, the classified board structure may have the effect of delaying, deterring, or preventing a change in control that some stockholders may view as beneficial, and could limit the ability of stockholders to influence our strategic direction.

At our 2025 annual meeting of stockholders, our stockholders approved a proposal to declassify our Board. In response to this vote, the Board expects to implement a declassification of the Board prior to the 2026 annual meeting of the stockholders.

Article X of our Bylaws designates the courts of the State of Nevada as the exclusive forum for certain types of actions and proceedings initiated by our stockholders, which may limit our stockholders’ ability to choose a forum for disputes with us or our directors, officers, employees, or agents.

Article X of our Bylaws, as amended, provides that, to the fullest extent permitted by law, and unless we consent to the selection of an alternative forum, the state and federal courts in and for the State of Nevada shall be the sole and exclusive forum for the resolution of certain actions and proceedings that may be initiated by our stockholders, and that, by purchasing our securities, our stockholders are deemed to have notice of and consented to this forum selection clause. Under Article X of our Bylaws, the following claims are subject to this forum selection clause: (a) any derivative action or proceeding brought on behalf of the Company; (b) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer of the Company to the Company or the Company’s stockholders; (c) any action or proceeding asserting a claim against the Company arising pursuant to any provision of the Nevada Revised Statutes or the Company’s Articles of Incorporation or Bylaws (as either might be amended from time to time); or (d) any action or proceeding asserting a claim against the Company governed by the internal affairs doctrine.

By its terms, the forum selection clause in our Bylaws applies to the fullest extent permitted by law, and, as such, should not be interpreted as precluding our stockholders from bringing claims under the Exchange Act in the appropriate federal court with jurisdiction over such claims, or any other claim for which the federal courts of the United States have exclusive jurisdiction.

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We believe this provision promotes the orderly, efficient, and cost-effective resolution of disputes by concentrating certain types of litigation in courts familiar with Nevada corporate law. However, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers, employees, or agents, and may discourage such actions altogether.

Although the Nevada Revised Statutes permit us to include this clause in our Bylaws, a court could determine that the provision is inapplicable or unenforceable with respect to one or more types of claims. If this occurs, we could incur additional costs associated with litigating claims in multiple jurisdictions or in forums we did not select, which could adversely affect our business, financial condition, or results of operations.

Nevada law contains provisions that could discourage, delay or prevent a change in control of our Company, prevent attempts to replace or remove current management and reduce the market price of our stock.

Certain provisions of Nevada law may have the effect of discouraging, delaying, or preventing a change in control of our Company that stockholders may consider favorable. These provisions could also prevent or impede attempts by stockholders to replace or remove members of our management or Board of Directors. We have not opted out of these statutory provisions in our Bylaws, as permitted under the Nevada Revised Statutes, and therefore remain fully subject to them.

Nevada Revised Statutes Sections 78.411 through 78.444 (the “Nevada Combinations Statute”) generally prohibit “combinations” including mergers, consolidations, sales and leases of assets, issuances of securities and similar transactions by a Nevada corporation having a requisite number of stockholders of record (of which we are one) with any person who beneficially owns (or any affiliate or associate of the corporation who within the previous two years owned), directly or indirectly, 10% or more of the voting power of the outstanding voting shares of the corporation (an “interested stockholder”), within two years after such person first became an interested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) the board of directors of the corporation has approved the combination in question and, at or after that time, such combination is approved at an annual or special meeting of the stockholders of the target corporation, and not by written consent, by the affirmative vote of holders of stock representing at least 60% of the outstanding voting power of the target corporation not beneficially owned by the interested stockholder or the affiliates or associates of the interested stockholder.

Two years after the date the person first became an interested stockholder, the Nevada Combinations Statute prohibits any combination with that interested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) such combination is approved by a majority of the outstanding voting power of the corporation not beneficially owned by the interested stockholder or any affiliate or associate of the interested stockholder. The Nevada Combinations Statute does not apply to combinations with an interested stockholder after the expiration of four years from when the person first became an interested stockholder.

Because we do not currently intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.

We currently intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired or at a price equal to or greater than the price at which they purchased their shares.

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If we are unable to maintain an effective system of internal control over financial reporting and disclosure controls, we may fail to produce timely and accurate financial statements.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While we have identified material weaknesses in our internal control over financial reporting in the past, as of December 31, 2025, we concluded that our internal control over financial reporting contained no material weaknesses, and our management continues to implement measures designed to ensure controls are designed, implemented, and operating effectively.

While our management frequently reviews the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our disclosure controls and procedures and internal control over financial reporting will be effective in accomplishing all control objectives at all times. Ineffective internal control over financial reporting and disclosure controls could cause us to fail to meet our periodic reporting obligations and cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information intended to assist in the understanding of our results of operations and financial condition. This MD&A should be read in conjunction with our Consolidated Financial Statements and the related notes (the “Notes”) included in Part II, Item 8. “Financial Statements and Supplementary Data” of this Annual Report.

This MD&A generally discusses 2025 and 2024 items and a year-to-year comparison between 2025 and 2024. Discussion of 2023 items and a year-to-year comparison between 2023 and 2024 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.

Our MD&A is organized as follows:

Business Overview and Trends.  Highlights of events in 2025 that impacted our financial position.

Results of Operations.  Analysis of our financial results comparing years 2025 and 2024.

Liquidity and Capital Resources.  Analysis of changes in our balance sheets and cash flows and discussion of our financial condition, including potential sources of liquidity, material cash requirements and their general purpose.

Critical Accounting Policies and Estimates.  Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

For a discussion of our business, see Part I, Item 1. “Business” of this Annual Report.

Forward Looking Statements

This MD&A includes forward-looking statements based on our current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A. “Risk Factors” of this Annual Report for a discussion of factors that could cause actual results to differ materially – and potentially adversely – from the results described in or implied by the forward-looking statements contained in this MD&A and elsewhere in this Annual Report.

BUSINESS OVERVIEW AND TRENDS

General

We are a vertically integrated digital infrastructure company principally engaged in developing and optimizing our large-scale power assets. Our business strategy centers on enhancing our electrical infrastructure and deploying it across two complementary platforms: (i) Bitcoin Mining and (ii) scalable data center solutions designed to support non-mining workloads. By leveraging our energy portfolio, engineering capabilities, and operational footprint, we aim to capitalize on both the long-term potential of bitcoin and the accelerating demand for power-intensive compute.

We operate in two reportable business segments: Bitcoin Mining and Engineering.

We own and manage multiple large-scale data center facilities in Texas and Kentucky that currently provide mission-critical power and infrastructure for our Bitcoin Mining operations and, over time, are expected to support diversified data center tenants. Our Rockdale Facility in Texas, with 700 MW of developed capacity, is among the largest digital infrastructure campuses in North America, as measured by developed capacity. In 2024, we completed construction of 400 MW of developed capacity at our second large-scale Texas development, the Corsicana Facility. We expect the Corsicana Facility to reach approximately 1 GW of developed capacity upon full buildout and it is being designed to support high-density compute workloads.

Our industry remains highly competitive and continues to evolve alongside broader growth in digital assets and high-performance compute. With our scale, integrated power strategy, and engineering foundation, we believe we are well positioned to participate in the rapidly converging markets for Bitcoin Mining, AI, HPC, and modern data center infrastructure.

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Data Center Development

In 2025, we began leveraging our core competencies in power optimization, strategic land acquisition, engineering design, and construction execution to pursue opportunities to develop and monetize portions of our existing facilities and power pipeline through data center leasing services. We strengthened our execution capacity by recruiting critical talent and launching a scalable data center platform to support Data Center Phase I of development at the Corsicana Facility. We have completed our basis of design for our standard data center build and are assessing the procurement of long-lead equipment, in alignment with our disciplined capital allocation strategy focused on delivering superior risk-adjusted returns.

In January 2026, we announced the acquisition in fee simple of the approximately 200-acre parcel of land underlying the Rockdale Facility, which was previously occupied pursuant to a long-term ground lease. This strategic acquisition enhances our operational stability by securing direct ownership of the site’s critical infrastructure, including its 700 MW grid interconnection, dedicated water supply, and redundant fiber connectivity. By consolidating ownership of the underlying real estate, we have eliminated leasehold contingencies, facilitating the further development and expansion of the Rockdale Facility for large-scale data center operations.

Additionally, in January 2026, we announced the execution of the AMD Lease to provide 25 MW of critical IT load capacity at the Rockdale Facility. The AMD Lease has an initial term of ten years and provides for expansion options for up to an additional 75 MW of critical IT load capacity, and a right of first refusal for up to an additional 100 MW. Furthermore, the AMD Lease includes provisions for three successive five-year renewal terms at the option of the lessee.

Bitcoin Mining

During the year ended December 31, 2025, we continued development activities at the Corsicana Facility and deployed miners at all our Facilities, with the objective of increasing our operational efficiency and performance in the future. As of December 31, 2025, we had a total deployed hash rate capacity of 38.5 EH/s, as compared to 31.5 EH/s as of December 31, 2024, an increase of 22.1%.

During the year ended December 31, 2025, we mined 5,686 bitcoin, as compared to 4,828 bitcoin mined during the year ended December 31, 2024. The increase of 858 bitcoin was primarily due to our increase in deployed hash rate as a result of the development of the Corsicana Facility, the acquisition of Block Mining and our significantly improved operational efficiency, partially offset by the increase in the global network hash rate and the halving that occurred in April 2024.

Custodians

As bitcoin is a decentralized cryptocurrency, it is not required that bitcoin be held by a custodian, and we may elect to self-custody. However, we believe our private keys relating to our bitcoin are better safeguarded by the secure environment provided by custodians. Self-custody poses an increased risk to our private keys and we may not have the same level of protection as custody providers who are well versed in industry best practices to protect digital assets from potential theft, loss, or destruction.

Pursuant to the Digital Asset Custodial Agreement, dated as of November 1, 2023, between us and NYDIG (as may be amended, modified or supplemented from time to time, the “NYDIG Custodial Agreement”), NYDIG, a well-known U.S.-based third-party digital asset-focused custodian, holds our bitcoin in cold storage wallets in a digital asset account in our name. In exchange for its custodial services, NYDIG charges an annual fee equal to a percentage of our custodied bitcoin based on the daily average value in U.S. dollars of the bitcoin we custody with NYDIG. Our bitcoin held in such digital asset accounts does not constitute “deposits” within the meaning of U.S. federal or state banking law and the digital asset accounts are not subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protections. The cold storage wallets in which our bitcoin is held with NYDIG are all located in the United States. The NYDIG Custodial Agreement is for a term of one-year, and automatically renews for successive one-year periods, unless either the Company or NYDIG provides thirty days’ notice of termination, in writing, except that either the Company or NYDIG may terminate the NYDIG Custodial Agreement in writing, effective immediately, in the event that either NYDIG or the Company are adjudged bankrupt or insolvent or files an application for an arrangement with its creditors, or there is a material misstatement or failure of a party to perform its obligations under the NYDIG Custodial Agreement, a change in applicable law that has a material adverse effect on the services provided for in the NYDIG Custodial Agreement, or a substantial change in ownership or control or material adverse change in the financial condition of NYDIG or the Company.

The NYDIG Custodial Agreement contains certain mutual indemnification provisions, including that NYDIG will indemnify us against direct claims for loss of custodied assets that arise directly from NYDIG’s or NYDIG’s nominees’ grossly negligent action, grossly negligent failure to act, bad faith or willful misconduct. Additionally, the Company shall indemnify NYDIG against all claims and liabilities incurred or assessed against NYDIG in connection with the NYDIG Custodial Agreement, except as may arise from certain of NYDIG or its nominees’ own actions or conduct.

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For more information on the NYDIG Custodial Agreement, see the full text of the NYDIG Custodial Agreement filed herewith as Exhibit 10.29, which qualifies the forgoing descriptions of the NYDIG Custodial Agreement in its entirety.

We are also a party to a Digital Asset Execution Agreement with NYDIG Execution LLC (“NYDIG Execution”), pursuant to which NYDIG Execution executes or arranges transactions of our bitcoin (“Orders”) as our agent. NYDIG Execution earns a commission on each trade determined by the net trade proceeds in U.S. dollars. NYDIG Execution does not charge us additional fees for principal trades. We deliver our Orders to NYDIG Execution via a designated security procedure, and each Order is affirmatively accepted by NYDIG Execution. While our bitcoin may temporarily be processed through a NYDIG Execution customer account, NYDIG has covenanted that our assets will not be commingled with the assets of NYDIG Execution. NYDIG Execution is required to deposit any cash from the sale of our bitcoin into our bank account at a U.S. depositary institution, less any applicable commissions. NYDIG Execution does not guarantee the value of our bitcoin and is not responsible for any delay or failure to complete any Order caused by a digital asset network. If NYDIG Execution fails to (1) execute a properly executable Order and (2) give us notice of such failure, NYDIG Execution will only be liable for our actual damages.

The Company also engaged Coinbase, a well-known U.S.-based third-party digital asset-focused custodian through the Coinbase Prime Broker Agreement, which includes the Coinbase Custody Services Agreement, and the Coinbase Master Trading Agreement (together, the “Coinbase Prime Broker Agreement”) for custodial and prime broker services, including, but not limited to, the storing of digital assets, trade execution, lending, post-trade credit, and other services. In exchange for its custodial services, Coinbase charges an initial storage fee and an annualized custodial service fee based on the total value of the digital assets the Company custodies with Coinbase. Our bitcoin held in such digital asset accounts does not constitute “deposits” within the meaning of U.S. federal or state banking law and the digital asset accounts are not subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protections. The cold storage wallets in which our bitcoin is held with Coinbase are located in the United States.

The Coinbase Prime Broker Agreement shall remain in effect until terminated by Coinbase or the Company for any reason upon providing thirty days written notice to the other party. However, Coinbase may, in its sole discretion, suspend, restrict or terminate the Coinbase Prime Broker Agreement, including by suspending, restricting or closing the Company’s accounts or any provision of credit (as applicable), immediately upon the occurrence of an Event of Default (as defined in the Coinbase Prime Broker Agreement), without prior notice to the Company.

The Coinbase Prime Broker Agreement contains certain mutual indemnification provisions, including that Coinbase will indemnify the Company from and against direct claims and losses arising out of or relating to any (i) violation, misappropriation, or infringement upon any United States patent, copyright, trademark, trade secret or other intellectual property right of a third-party or (ii) violation of applicable law, unless such claims or losses arise out of or relate to the Company’s gross negligence, fraud, willful misconduct, or breach of the Coinbase Prime Broker Agreement. The Company will indemnify Coinbase from and against any and all third-party claims and losses arising out of or relating to the Company’s breach of the Coinbase Prime Broker Agreement, the Company’s violation of any law, rule, or regulation, or rights of any third-party, or the Company’s gross negligence, fraud, or willful misconduct, except to the extent such third-party claims and losses resulted from the gross negligence, fraud or willful misconduct of Coinbase.

Additionally, under the Coinbase Prime Broker Agreement, Coinbase may execute or arrange transactions of our bitcoin as our agent. The Company will pay a fixed rate as commission and transaction fees associated with the Order executed. The Company delivers Orders to Coinbase, and Coinbase executes Orders by using automated trade routing services or by filling Orders on Coinbase’s over-the-counter trading service. Coinbase may accept or reject any Order, at its sole discretion. Coinbase does not guarantee the value of our bitcoin and is not responsible for any delay or failure to complete any Order caused by a digital asset network.

For more information on the Coinbase Prime Broker Agreement, see the full text of the Coinbase Prime Broker Agreement included herein as Exhibit 10.30, which qualifies the forgoing description s of the Coinbase Prime Broker Agreement in its entirety.

Our custodian and brokerage services relationships are non-exclusive, and we may change our bitcoin custodian and brokerage relationships at any time. We continually monitor our bitcoin assets held by our Custodians, and in the case of NYDIG we have unlimited audit rights with respect to such custodial accounts. The Company performs monthly reconciliations of our bitcoin assets held by our custodian(s) and the records of our mining pool, and our independent auditors verify the location and quantity of our bitcoin assets annually, as part of the year-end audit process of our financial statements and internal controls over financial reporting. The Company’s insurance providers do not have inspection rights associated with our bitcoin assets held in cold storage.

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Bitcoin Mining Metrics

The following table presents our key Bitcoin Mining metrics:

Years Ended December 31,

Hash rate, average operating (EH/s) (1)

Rockdale Facility

Corsicana Facility

Kentucky Facility

Combined hash rate, average operating

All-in power cost (cents/kilowatt-hour) (2)

Rockdale Facility

Corsicana Facility

Kentucky Facility

Combined all-in power cost

As of December 31,

Hash rate, deployed (EH/s) (1)

Rockdale Facility

Corsicana Facility

Kentucky Facility

Combined hash rate, deployed

Developed power capacity (MW) (3)

Rockdale Facility

Corsicana Facility

Kentucky Facility

Total power capacity

Hash rate, deployed, represents the total potential hash rate of all our deployed miners as of the end of the period, whereas hash rate, average operating, represents the average total hash rate our deployed miners provided throughout the period. The difference between deployed hash rate and operating hash rate is attributable to down time of all or some of our miners for power curtailments, or repairs and maintenance of bitcoin miners or supporting infrastructure. The difference between deployed and operating hash rate is a key measure in determining the efficiency of our Bitcoin Mining operations.

All-in power cost is the price we paid throughout the period for our power, net of power curtailments received. Power is overwhelmingly the largest marginal input cost in mining bitcoin and a significant contributor to profitability. Miners with a low cost of power are also able to profitably mine in a wider range of bitcoin prices.

Developed power is the total amount of electricity our Facilities can utilize for Bitcoin Mining as of the end of the period.

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The following table presents our cost to mine one bitcoin ( amounts in thousands, except value of one bitcoin amounts ):

Years Ended December 31,

Cost of power for self-mining operations

Other direct cost of revenue for self-mining operations (1)(2) , excluding bitcoin miner depreciation

Cost of revenue for self-mining operations, excluding bitcoin miner depreciation

Less: power curtailment credits (3)

Cost of revenue for self-mining operations, net of power curtailment credits, excluding bitcoin miner depreciation

Bitcoin miner depreciation (4)(5)

Cost of revenue for self-mining operations, net of power curtailment credits, including bitcoin miner depreciation

Quantity of bitcoin mined

Production value of one bitcoin mined (6)

Cost to mine one bitcoin, excluding bitcoin miner depreciation

Cost to mine one bitcoin, excluding bitcoin miner depreciation, as a % of production value of one bitcoin mined

Cost to mine one bitcoin, including bitcoin miner depreciation

Cost to mine one bitcoin, including bitcoin miner depreciation, as a % of production value of one bitcoin mined

Other direct cost of revenue includes compensation, insurance, repairs, and ground lease rent and related property taxes.

During the years ended December 31, 2025 and 2024, we paid cash of approximately $228.4 million and $342.4 million, respectively, in total deposits and payments for the purchase of miners. Costs to finance the purchase of miners were zero as the miners were paid for with cash from our cash balance. The seller did not provide any financing, nor did we borrow from a third-party to purchase the miners.

Power curtailment credits are credited against our power invoices as a result of temporarily pausing our operations to participate in ERCOT’s Demand Response Service Programs. Our fixed-price power purchase contracts enable us to strategically curtail our mining operations and participate in these programs, which significantly lower our cost to mine bitcoin. These credits are recognized in  Power curtailment credits  on our Consolidated Statements of Operations, outside of cost of revenue, but significantly reduce our overall cost to mine bitcoin.

We capitalize the acquisition cost of our miners and include these costs in Property and equipment, net on our Consolidated Balance Sheets. The miners are depreciated over an estimated useful life of three years, during which time, they are expected to contribute to the generation of bitcoin revenue. We do not consider depreciation expense in determining whether it is economical to operate our miners because depreciation is a non-cash expense and is not a variable operating cost that can be avoided even if we curtail operations temporarily. Depreciation expense incurred is disclosed for each respective period in the table above.

The following table presents the future depreciation expense of all our bitcoin miners:

Total

Computed as revenue recognized from bitcoin mined divided by the quantity of bitcoin mined during the same period.

During 2023, 2024, and 2025, we entered into purchase orders under the Master Agreement to acquire new miners from MicroBT. These purchase orders represented a total hash rate of 49.2 EH/s, with a total purchase price of approximately $779.5 million, subject

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to downward price adjustments as provided by the Master Agreement. Delivery of these miners began in 2023, and all miners under these purchase orders are expected to be received by the second quarter of 2026, with deployment following on an ongoing basis. The Master Agreement provides us with four additional annual options to purchase miners, on the same or more favorable terms as the second purchase order executed under the Master Agreement.

For the year ended December 31, 2025, Bitcoin Mining revenue was approximately $576.3 million.

Summary of Bitcoin Activity

The following tables present additional information about our own Bitcoin Mining activities, including bitcoin production, purchases, and sales:

Quantity

Amounts

Balance as of December 31, 2023

Revenue recognized from bitcoin mined

Bitcoin receivable

Acquisitions of bitcoin

Proceeds from sale of bitcoin

Exchange of bitcoin for employee compensation

Change in fair value of bitcoin

Balance as of December 31, 2024

Revenue recognized from bitcoin mined

Bitcoin receivable

Proceeds from sale of bitcoin

Exchange of bitcoin for employee compensation

Change in fair value of bitcoin

Balance as of December 31, 2025

The following reconciles Bitcoin and Restricted bitcoin as of December 31, 2025 to the amounts above:

Bitcoin

Restricted bitcoin (a)

Total

Restricted bitcoin is the Company’s bitcoin pledged as collateral for the Company’s $200 million credit facility. See Note 12. Debt for more information.

Engineering

Our Engineering business designs and manufactures power-distribution equipment and engineered-to-order electrical products. These products support our vertical integration strategy by enabling the internal development of critical electrical equipment and engineering services necessary for developments at our Facilities. This integration helps mitigate execution and counterparty risk in ongoing and future expansion projects. The specialized talent employed in our Engineering business allows us to explore new methods to optimize and develop best-in-class Bitcoin Mining operations and has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin Mining hardware. The vertical integration of our Engineering division gives us additional strength and security in developing and deploying our Data Center buildouts. Our Data Center business is able to leverage Engineering’s market specific expertise for best-in-class design as well as speed to market.

Our Engineering business also provides electrical distribution product design, manufacturing, and installation services primarily focused on large-scale industrial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power generation, utility, water, industrial, and alternative energy.

Engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation. Engineering revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract.

In December 2024, we acquired E4A Solutions, a leading provider of electrical engineering services to a diverse customer base of energy developers and data center operators (the “E4A Solutions Acquisition”). This acquisition strengthens our vertically integrated

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strategy by adding engineering expertise to service its own existing and future electrical infrastructure as well as provide solutions and services to the rapidly growing market for electrical infrastructure.

For the year ended December 31, 2025, Engineering revenue was approximately $64.7 million.

Former Data Center Hosting Segment

In 2023, we made the decision to stop pursuing new bitcoin mining hosting contracts and end our legacy contracts, to focus on our self-mining efforts. During the year ended December 31, 2024, all agreements with legacy Data Center Hosting bitcoin mining customers were terminated, and we have no plans to offer bitcoin mining data center hosting services to new customers. Beginning for the year ended December 31, 2024, we no longer report Data Center Hosting as a separate reportable segment.

Strategic Goals and Initiatives

Bitcoin Treasury Strategy

Our investment strategy with respect to our bitcoin (“Bitcoin Treasury Strategy”) is designed to balance long-term value appreciation with operational flexibility and liquidity management. We selectively sell or leverage portions of our bitcoin holdings, and may continue to do so in the future, to fund operational needs, capital expenditures, and strategic initiatives, particularly when market conditions present opportunistic pricing above predetermined thresholds that we believe maximize shareholder value.

This approach enables us to realize value from our bitcoin holdings at favorable market conditions to support our liquidity profile and fund business growth, while maintaining meaningful exposure to the potential long-term appreciation of bitcoin as a strategic asset. We believe this strategy enhances our operational stability, supports our liquidity profile, and provides the financial flexibility necessary to execute on our business plan and meet our capital allocation objectives, while positioning us to benefit from Bitcoin’s role as an emerging store of value.

Power Strategy

Long-term power contracts form the basis of our power strategy. We utilize our Power Purchase Agreements (together, the “PPAs”) in place at the Rockdale Facility (the “Rockdale PPA”), Corsicana Facility (the “Corsicana PPA”) and Kentucky Facility (the “Kentucky PPA”) in the following ways:

Manual Curtailment

We power down operations and return power to the utility when prevailing market electricity prices offer the potential for us to realize power curtailment credits in excess of the Bitcoin Mining revenues we would have otherwise generated. We receive power credits for the difference in the market power price and our fixed power price. By capturing the spread between market power prices and our fixed-rate power contracts, we are able to maximize our overall profitability while supporting grid stability by reducing demand for power during periods of peak scarcity.

Ancillary Services

We competitively bid to sell ERCOT and MISO the option to control our electrical load during certain hours. ERCOT and MISO compensate us in the form of Demand Response Service Programs’ Credits, which are received whether or not we are called on to power down.

ERCOT’s 4CP Program

At the Rockdale Facility and the Corsicana Facility, we voluntarily power down operations during times of peak demand in summer months. Participation provides us with substantial savings on transmission costs in the subsequent year’s power bills, reducing our overall power costs.

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The following table presents our power curtailment credits:

Years Ended December 31,

Manual curtailment power credits

Demand response power credits

Total power curtailment credits

The following graph presents the primary decision points that guide our decision to curtail power usage or power down our mining operations at the Rockdale Facility, and when we might resume mining operations:

Challenges, Risks, and Industry Trends

Increased Competition and Global Network Hash Rate

The price of bitcoin reached new all-time highs in 2025, supported by continued institutional investment in the Bitcoin spot ETFs, global adoption, and increased interest from both retail and sovereign investors. Bitcoin spot ETFs remained a primary driver of institutional demand, with total assets under management exceeding $100 billion as of December 31, 2025. These ETFs, as investment vehicles, provide investors with a broader way to gain exposure to bitcoin through more traditional financial markets.

During 2023 and 2024, the bitcoin mining industry experienced record growth as the price of bitcoin increased from the lows experienced in early 2023. In 2025, the industry continued to grow, though at a slower pace due to increased network difficulty and more aggressive competition for efficient energy sources globally. The rising bitcoin price renewed opportunities to access capital markets to fund growth, leading to unprecedented expansion in mining operations, which resulted in a doubling of the size of provisioned hash calculation services on the network, as measured by total hash rate. In advance of the April 2024 bitcoin network halving, many bitcoin mining companies heavily invested in implementing vertically integrated business models, infrastructure, and upgrading and expanding mining fleets. Competition among mining companies continued to intensify in 2025, with top operators focusing on mergers, acquisitions, and direct power procurement contracts to secure stable energy pricing in the face of volatile market conditions.

We have observed that when the market price for bitcoin experiences sustained increases, new miners are introduced onto the bitcoin network, contributing to an increase in the global network hash rate. Our hash rate grew by approximately 22.1% from December

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31, 2024 to December 31, 2025, resulting in an increase of approximately 17.8% in the number of bitcoin we mined during the same period.

Accordingly, as the global network hash rate continues to rise, miners must scale their operations to maintain or improve their share of mining rewards. In response, we have expanded our Bitcoin Mining capacity through the development of new facilities, such as the Corsicana Facility, and strategic acquisitions, including the Block Mining Acquisition. These efforts are supported by investments in electricity supply and distribution infrastructure. We are also focused on other strategic growth opportunities that enhance our long-term competitiveness. Further, we have adopted new and improved technology to increase both our mining power and efficiency, including our industrial-scale adoption of immersion cooling and our strategic acquisitions of large quantities of the latest powerful and efficient miners available.

Bitcoin Mining Industry Consolidation and Emergence of Data Center Alternative

The price of bitcoin continued its upward trajectory in 2025, reaching a new all-time high, driven in part by institutional demand. This demand has been fueled by the growth of bitcoin spot ETFs, as well as increased adoption by public companies and national governments, each of which has purchased and retained a meaningful portion of the available bitcoin supply. Following their introduction, the bitcoin ETFs experienced significant capital inflows, underscoring the expanding institutional acceptance of bitcoin. In March 2025, the United States established the United States Bitcoin Strategic Reserve, which currently holds the largest bitcoin reserve in the world, solidifying bitcoin as a mainstream financial asset and alternative source of value to fiat currency.

The bitcoin mining industry is undergoing significant structural transformation. A combination of factors, including the 2024 halving event, record high network hash rates in 2025, rising mining difficulties, and constrained access to large-scale power resources, has led to increased consolidation across the industry. These dynamics have made efficient, large-scale mining operations increasingly capital intensive and have prompted miners to seek new avenues for maximizing the value of their existing infrastructure. A notable emerging trend is the convergence of bitcoin mining operations with large scale data center services, including those supporting AI/HPC workloads. As demand for data center infrastructure accelerates, driven by advances in machine learning, generative AI, and compute-intensive enterprise applications, access to reliable, low-cost power has become a critical constraint on the development of new data centers. Bitcoin mining companies that own and operate their facilities are increasingly repurposing or reallocating portions of their power and physical infrastructure to support data center applications. This shift is enabled by the similarities between the underlying facility requirements for Bitcoin mining and AI/HPC workloads, including large electrical loads, advanced cooling systems, and high-density rack deployments.

As a result, the industry is experiencing an evolution in which mining operators with robust power portfolios are leveraging their existing assets to participate in the rapidly growing market for data center services. This trend reflects both the challenges facing the Bitcoin mining sector and the significant economic opportunities presented by the global expansion of compute-intensive digital infrastructure.

Volatile Transaction Fees

The bitcoin mining industry recently experienced an increase in transaction fees on the bitcoin network, alongside growing overall demand for bitcoin. While transaction fees remain inherently volatile, they are paid directly to miners and are representative of the public interest in transacting on the bitcoin network. These transaction fees, combined with the block subsidy issued by the bitcoin network, make up the total reward paid to miners upon solving a block.

Vertical Integration

Since 2021, we have focused on a vertically integrated business model. We remain committed to building long-term stockholder value by taking strategic actions to further vertically integrate our business at the current Rockdale Facility, developing the Corsicana Facility, expanding the Kentucky Facility, and integrating our acquisitions, including the Kentucky Facility and E4A Solutions. Management believes that vertical integration will strengthen each of our business segments by providing increased capacity for our Bitcoin Mining operations, expanding opportunities for implementing our proprietary power strategy, and positioning us to capitalize on supply chain efficiencies and electrical engineering services through our Engineering segment. We continue to focus on deploying our efficient Bitcoin Mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining facilities.

Prior to the 2024 halving event, shifts in strategy by prominent bitcoin miners focused on implementing vertically-integrated business models by investing in infrastructure, and upgrading and expanding fleets at their own facilities rather than renting out space from a third-party data center. Vertical integration provides additional control over operational outcomes as well as better management of

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any input costs such as power and overhead fees. Flexibility, and the ability to manage expenses, becomes increasingly important as the amount of competition on the bitcoin network expands and the subsidy in bitcoin provided by the network contracts decreases.

We anticipate the bitcoin network will continue to see increased competition and consolidation in the bitcoin mining industry. Further, given our relative position and liquidity, we believe we are well positioned to benefit from such consolidation. We are continuously evaluating opportunities which we may decide to undertake as part of our strategic growth initiatives; however, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on the schedule or within the budget we anticipate, if at all, and our business and financial results may change significantly as a result of such strategic growth.

Grid Curtailment

The Public Utility Commission of Texas, ERCOT, and Oncor collectively oversee the regulatory, administrative, and delivery aspects of our power supply in Texas. In Kentucky, MISO oversees our power supply. As the bitcoin mining industry has expanded in recent years, regulatory scrutiny on bitcoin mining facilities and their energy consumption has intensified accordingly.

As Texas’s grid operator, ERCOT is responsible for monitoring and testing market participants, including our Bitcoin Mining facilities at the Rockdale Facility and the Corsicana Facility, to evaluate their impact on grid reliability. As part of this process, ERCOT may issue curtailment notices to reduce the power usage at our Texas operations. Our Facilities in Texas are subject to periodic testing and monitoring and have experienced power curtailments in response to instructions we receive from Oncor and ERCOT. Given the inherent uncertainty regarding the duration or extent of power curtailments and testing procedures, we are currently unable to reasonably estimate their potential impact on our operations. If we cannot secure adequate access to electrical power, we may be forced to reduce or shut down our operations, which would have a material adverse effect on our business, prospects, financial condition, and operating results.

See Part I, Item 1A. “Risk Factors” of this Annual Report for additional discussion regarding potential impacts that our competitive and evolving industry may have on our business.

Recent Events Affecting the Company

Global supply chain disruptions and inflationary pressures have, at times, resulted in delays to our miner delivery schedules, infrastructure development timelines, and the manufacturing and delivery schedules within our Engineering segment. These delays are primarily driven by constraints in the globalized supply chains for miners, specialized electrical distribution equipment, and construction materials. While we effectively mitigated these delays during the year ended December 31, 2025, there can be no assurance that we will be successful in mitigating such disruptions in the future.

The development and expansion of our Facilities require significant quantities of critical components that are currently in high demand and may be difficult to source. To mitigate the risks associated with supply chain volatility, increasing demand, and uncertainty arising from U.S. and retaliatory international tariffs, we have proactively procured and currently maintain an inventory of essential electrical infrastructure components and construction materials. These strategic reserves are intended to support the development of the Corsicana Facility, the expansion of our Kentucky facilities, and the maintenance of our existing systems, thereby reducing our exposure to potential inflationary pricing and equipment delivery delays.

We sell our bitcoin to fund operations. Subsequent to the fiscal year ending December 31, 2025, we have experienced an impact from the recent volatility and downward trend in the market price of Bitcoin reducing the purchasing power of our bitcoin holdings.  This decline may necessitate the sale of a greater volume of our bitcoin than previously anticipated to generate the liquidity required to fund our ongoing operations and working capital needs. By diversifying our infrastructure to support broader data services, we aim to mitigate our direct exposure to cryptocurrency price fluctuations and establish a more stable, diversified revenue stream centered on digital infrastructure.

RESULTS OF OPERATIONS

Results of Operations Comparative Results for the Years Ended December 31, 2025 and 2024

Revenue

Our total revenue for the years ended December 31, 2025 and 2024, was $647.4 million and $376.7 million, respectively, and consisted of Bitcoin Mining revenue, Engineering revenue, and Other revenue. Other revenue consists almost entirely of residual activity related to our ceased Data Center Hosting segment.

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For the years ended December 31, 2025 and 2024, Bitcoin Mining revenue was $576.3 million and $321.0 million, respectively. The increase of $255.3 million was primarily due to higher average market prices for bitcoin in the 2025 period, which averaged $101,350 per bitcoin, as compared to $66,488 per bitcoin during the 2024 period, our increase in deployed hash rate as a result of the development of the Corsicana Facility, the acquisition of Block Mining, and our significantly improved operational efficiency, partially offset by the increase in the global network hash rate and the halving that occurred in April 2024.

For the years ended December 31, 2025 and 2024, Engineering revenue was $64.7 million and $38.5 million, respectively. The increase of $26.2 million was primarily attributable to the completion of certain custom products delayed during 2024, and therefore, the recognition of revenue, combined with an increase as a result of the E4A Solutions Acquisition in December 2024. Our custom electrical products are used as important components in data center development and in power generation and distribution facilities. There continues to be significant third-party demand for these products due to the increased interest in data center construction, as well as growing worldwide demand for power.

Costs and expenses

For the years ended December 31, 2025 and 2024, Cost of revenue for Bitcoin Mining consisted of the following:

Years ended December 31,

Power

Compensation

Insurance on miners

Ground rent, water, and property tax

Other (1)

Total Bitcoin Mining cost of revenue

All amounts included within Other are individually immaterial.

The increase of approximately $149.8 million was primarily due to increased Bitcoin Mining capacity and power consumption due to the Corsicana Facility coming online in April 2024, the 125 MW of power capacity at the Rockdale Facility that was assumed in the Rhodium Settlement in April 2025 and the acquisition of Block Mining in July 2024. The expanded facilities required additional headcount and direct costs necessary to maintain and support our expanded Bitcoin Mining operations. Cost of revenue for Bitcoin Mining excludes depreciation and amortization, which are stated separately on our Consolidated Statements of Operations.

Cost of revenue for Engineering for the years ended December 31, 2025 and 2024 was $50.9 million and $41.7 million, respectively. These costs consist primarily of direct materials and labor, as well as indirect manufacturing costs. Consistent with the causes of increased Engineering revenue noted above, the increase of approximately $9.2 million was primarily due to increased receipts of materials resulting in our ability to complete projects, combined with the E4A Solutions Acquisition.

Selling, general and administrative expenses for the years ended December 31, 2025 and 2024, totaled $298.8 million and $266.9 million, respectively. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs.  The increase of approximately $31.9 million was primarily due to a $17.3 million increase in legal and professional fees primarily related to ongoing litigation and an $8.7 million increase in compensation expense, including stock based compensation, as a result of hiring additional employees to support our ongoing growth and data center team. The remaining increase was due to an increase in other general operating costs such as insurance and information technology projects to support our growth.

Depreciation and amortization expense during the years ended December 31, 2025 and 2024 totaled $346.8 million and $212.1 million, respectively, an increase of $134.8 million. The increase was primarily attributable to the completion of the first phase of development of the Corsicana Facility for Bitcoin Mining purposes in late 2024 and increases in miners deployed at our Rockdale Facility and Corsicana Facility.

The changes in fair value of bitcoin for the years ended December 31, 2025 and 2024 were losses of $115.9 million and gains of $457.4 million, respectively, and were recognized to adjust the fair value of our bitcoin held at the end of each period.

The changes in fair value of our derivative assets for the years ended December 31, 2025 and 2024 were losses of $1.4 million and gains of $45.3 million, respectively, and were recorded to adjust the fair values of our PPAs, which are classified as derivative assets

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and measured at fair value. The loss incurred during the year ended December 31, 2025, was primarily attributable to a decrease in the fair value of the derivative assets of approximately $13.9 million due to settlements and the passage of time, partially offset by an increase in the fair value of approximately $12.5 million due to the forward prices utilized in the discounted cash flow estimation models increasing from $51.98 per MWh as of December 31, 2024, to $55.70 per MWh as of December 31, 2025. The gain recognized during the year ended December 31, 2024, was primarily attributable to the average of the forward prices utilized in the discounted cash flow estimation models increasing from $45.15 per MWh as of December 31, 2023, to $51.98 per MWh as of December 31, 2024.

Power curtailment credits during the years ended December 31, 2025 and 2024 were $56.7 million and $33.7 million, respectively, and represent sales of unused power under our PPAs and participation in ancillary services under ERCOT and MISO Demand Response Services Programs. The amount of these credits varies from period to period depending on various factors impacting the supply of power to, and the demand for power on, the power grids, such as weather and global fuel costs .

The change in fair value of contingent consideration during the years ended December 31, 2025 and 2024 were gains of $18.1 million and $2.5 million, respectively, and were a result of the change in estimates for the potential earnout contingent consideration to the former sellers in the Block Mining Acquisition and the E4A Solutions Acquisition.

The loss on contract settlement during the years ended December 31, 2025 and 2024 was $158.1 million and $0.0 million, respectively. The loss in 2025 was attributable to the Rhodium Settlement.

The loss on legal settlement during the years ended December 31, 2025 and 2024 was $20.0 million and $0 million, respectively. The loss in 2025 was attributable to a settlement reached with one of our legacy Data Center Hosting bitcoin mining customers in February 2026.

Gains/losses on the sale of equipment during the years ended December 31, 2025 and 2024, were gains of $2.3 million and losses of $17.4 million, respectively. The gain on sale during the year ended December 31, 2025, was primarily attributable to the sale of various miners and mining equipment for proceeds of $6.8 million. The loss on sale during the year ended December 31, 2024, was primarily attributable to the sale of Antminer model S19 XP miners for proceeds of $14.3 million.

Casualty-related recoveries, net during the years ended December 31, 2025 and 2024 were $0.2 million and $2.8 million, respectively. In December 2022, the Rockdale Facility was damaged during severe winter storms in Texas, resulting in casualty-related charges being recognized in 2023 and 2022. The recoveries recognized during the years ended December 31, 2025 and 2024, were the result of cash recoveries from insurance claims related to the December 2022 winter storms.

The impairment of property and equipment during the years ended December 31, 2025 and 2024 was $29.7 million and $0.0 million, respectively. The impairment in 2025 was from c ertain long-lead items previously included in Construction in progress related to the planned expansion of the Corsicana Facility for bitcoin mining purposes. These items were deemed to be impaired as a result of our decision to expand the Corsicana Facility for data center application purposes instead.

Other income (expense)

Interest income for the years ended December 31, 2025 and 2024 was $14.0 million and $27.2 million, respectively, and was earned from interest on cash balances held during the year.

Interest expense for the years ended December 31, 2025 and 2024 was $24.1 million and $2.0 million, respectively, and was primarily related to interest paid on our revolving lines of credit and letters of credit.

Loss on equity method investment – marketable securities during the years ended December 31, 2025 and 2024 was $28.2 million and $69.5 million, respectively, and was recognized to adjust the fair value of our equity method investment held at the end of each period. The equity method investment was sold in its entirety during the year ended December 31, 2025.

Loss on convertible notes investment during the years ended December 31, 2025 and 2024, was $5.8 million and $0.0 million, respectively. The loss in 2025 was due to the Company determining that not only was a conversion event highly unlikely, but also that no proceeds were expected to be received from the convertible note investment, including the original investment and accrued interest.

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Non-GAAP Measures

In addition to financial measures presented under Generally Accepted Accounting Principles (“GAAP”), we consistently evaluate our use of and calculation of non-GAAP financial measures such as “Adjusted EBITDA.” EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes result in a performance measurement that represents a key indicator of our core business operations in Bitcoin Mining. The adjustments include fair value adjustments such as derivative power contract adjustments, equity securities fair value changes, and non-cash stock-based compensation expense, in addition to financing and legacy business income and expense items.

We believe Adjusted EBITDA can be an important financial performance measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period to period by making such adjustments. Additionally, Adjusted EBITDA is used as a financial performance metric for share-based compensation.

Adjusted EBITDA is provided in addition to, and should not be considered a substitute for, or superior to, net income, the most comparable measure under GAAP to Adjusted EBITDA. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted net income per share, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this financial measure either in isolation or as a substitute for analyzing our results as reported under GAAP.

The following table reconciles Adjusted EBITDA to  Net income (loss) , the most comparable GAAP financial measure:

Years Ended December 31,

Net income (loss)

Interest income

Interest expense

Income tax expense (benefit)

Depreciation and amortization

EBITDA

Adjustments:

Stock-based compensation expense

Acquisition-related costs

Change in fair value of derivative assets

Change in fair value of contingent consideration

Loss (gain) on equity method investment - marketable securities

Loss (gain) on sale of equipment

Casualty-related charges (recoveries), net

Loss on contract settlement

Loss on legal settlement

(Gain) on acquisition post-close dispute settlement

Impairment of property and equipment

Loss on convertible notes investment

Other (income) expense

Amortization of license fee revenue

Adjusted EBITDA

LIQUIDITY AND CAPITAL RESOURCES

We generate non-cash revenue through mining bitcoin at our Facilities, while financing operations and other expenses through the sales of our bitcoin production, borrowing against our credit facilities, and issuance of common stock under the ATM program offerings. During the years ended December 31, 2025 and 2024, we issued and sold approximately 16.7 million shares and 90.6 million shares, respectively, of our common stock under our ATM program offerings for aggregate net proceeds (net of sales commissions and expenses) of $207.7 million and $956.6 million, respectively.

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As of December 31, 2025, our net working capital totaled approximately ($21.1) million, including cash and cash equivalents of $233.5 million. During the year ended December 31, 2025, we reported a net loss of $663.2 million, which included $96.7 million in non-cash losses, primarily resulting from $346.8 million of depreciation and amortization, stock-based compensation of $125.7 million, and $115.9 million change of fair value of Bitcoin, partially offset by Bitcoin Mining revenue of $576.3 million.

During the year ended December 31, 2025, we sold 5,363 bitcoin for proceeds of approximately $535.5 million. We monitor our balance sheet on an ongoing basis and evaluate the level of bitcoin retained in consideration of our cash requirements for ongoing operations and expansion.

Contractual Commitments and Obligations

As of December 31, 2025, we had a remaining commitment of approximately $29.4 million due to MicroBT for the contractual purchase of miners, which we expect to pay through the second quarter of 2026.

Revenue from Operations

Bitcoin Mining

We expect to generate ongoing revenue from bitcoin rewards in connection with our Bitcoin Mining operations and we will continue to evaluate our ability to liquidate bitcoin rewards at future values to generate cash for operations.

Generating bitcoin rewards which exceed our production and overhead costs is critical to our ability to report profit margins from our Bitcoin Mining operations, although accounting for our reported profitability is increasingly complex. Furthermore, regardless of our ability to generate proceeds from the sale of our bitcoin produced from our Bitcoin Mining business, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy.

The ability to raise funds through the sale of equity, debt financings, or the sale of bitcoin to maintain our operations is subject to many risks and uncertainties and any future equity issuances or convertible debt offerings could result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through bitcoin production and successfully convert bitcoin into cash or fund overhead with bitcoin is subject to a number of risks, including regulatory, financial and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the market price of bitcoin and, as such, future prices cannot be predicted.

Engineering

Substantially all Engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract. The length of time required to complete a custom product varies but is typically between four and 12 weeks.

Customers are typically required to make periodic progress payments based on contractually agreed-upon milestones.

If we are unable to generate sufficient revenue from our Bitcoin Mining or Engineering operations when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.

ATM Equity Offerings

During 2025 and 2024, we offered and sold shares of our common stock through ATM offering programs pursuant to sales agreements with sales agents (each, an “ATM Program”). For additional information regarding our ATM Program, see Note 14, Stockholders’ Equity .

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The following table sets forth shares sold and net proceeds received (net of sales commissions and expenses) from shares sold under each ATM Program:

Years Ended December 31

Shares

Net Proceeds

Shares

Net Proceeds

2023 ATM Program

February 2024 ATM Program

August 2024 ATM Program

Total

As of December 31, 2025, $500.0 million of our common stock remained available for issuance and sale pursuant to the 2025 ATM Program. The remaining prior 2024 ATM Program sales agreement was terminated on December 30, 2025.

Debt Financing

During 2025 and 2024, we received total net proceeds of $251.9 million and $578.3 million, respectively, from the issuance of debt and use of revolving credit facilities.

During 2025, proceeds primarily consisted of $54.3 million of net proceeds from revolving credit facilities and proceeds of $200.0 million from our bitcoin-backed credit facility. Our revolving credit facilities are fully collateralized by cash held as Restricted cash and our bitcoin-backed credit facility is fully collateralized by certain of our bitcoin held as Restricted bitcoin .

During 2024, the net proceeds were entirely from the issuance of our 0.75% Convertible Senior Notes (the “2030 Notes”).

Legal Proceedings

We have been named a defendant in several lawsuits, as more fully described in Note 17. Commitments and Contingencies .

Cash Flows

The following table presents a summary of our cash flows:

Years Ended December 31,

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Operating Activities

The $317.9 million increase in cash used in operating activities during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily attributable to increased power costs of $132.4 million, $122.6 million related to the Rhodium Settlement, and a $31.4 million increase in selling, general, and administrative costs, excluding stock-based compensation, all of which were primarily driven by our increased mining capacity and headcount, combined with other general operating costs such as insurance and information technology projects to support our growth.

Investing Activities

For the year ended December 31, 2025, net cash provided by investing activities of $76.1 million was primarily attributable to proceeds from the sale of bitcoin of $535.5 million and proceeds of $106.1 million from the sale of marketable securities, partially offset by purchases and deposits paid for miners and purchases of property and equipment for our ongoing expansions of $213.6 million, with anticipated additional payments of $29.4 million to be made through the second quarter of 2026, payments of $201.4 million for the purchase of property and equipment, and payments of $148.4 million for the purchase of land, which included the acquisition of land previously subject to a ground lease and other land intended for ongoing data center development.

For the year ended December 31, 2024, net cash used in investing activities was $1.5 billion. We acquired bitcoin for $577.5 million, paid $442.5 million in deposits and payments for the purchase of miners, paid $240.3 million for the purchase of property and equipment, and paid $203.8 million for our investment in marketable securities.

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Financing Activities

For the years ended December 31, 2025 and 2024, net cash provided by financing activities was $455.3 million and $1.5 billion, respectively, which included net proceeds from our ATM Program offerings totaling $207.7 million and $956.6 million, respectively.

During the year ended December 31, 2025, we received total net proceeds of $251.9 million from the use of our debt instruments. As of December 31, 2025, we had approximately $853.7 million in total principal on our debt outstanding, consisting of $594.4 million from our 2030 Notes, $200.0 million from our bitcoin-backed credit facility, $54.3 million from our revolving credit facilities, and $5.0 million of notes payable. During the year ended December 31, 2024, we received net proceeds from the issuance of our 2030 Notes of $579.1 million.

We have primarily financed our strategic growth through proceeds from issuances of our common stock through ATM Program offerings and various credit facilities, and it is reasonably likely that we will continue to finance our ongoing growth similarly and may use additional debt financing.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing our financial statements in accordance with GAAP, there are certain accounting policies that may require a choice between acceptable accounting methods or may require substantial judgment or estimation in their application. The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our Consolidated Financial Statements. An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our Consolidated Financial Statements. These include: business combinations, valuation of the Rockdale PPA and the Corsicana PPA, long-lived assets and stock-based compensation. We believe these and other accounting policies set forth in Note 2 . Significant Accounting Policies and Recent Accounting Pronouncements should be reviewed as they are integral to understanding our results of operations and financial condition.

We have discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of our Board.

Business combinations

Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for property and equipment and contingent consideration, where applicable. Although we believe our assumptions and estimates have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. Estimates used in determining the value of property and equipment included the estimated replacement costs, which included replacement cost new, remaining life, and effective age. Estimates primarily used in determining the value of the contingent consideration included the timing and probability of achieving milestones and discount rates.

Rockdale PPA and Corsicana PPA Valuation

The Rockdale PPA and the Corsicana PPA are accounted for as derivatives, the valuations of which are based on significant unobservable inputs, which include discounted cash flow estimation models containing quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the respective terms of the Rockdale PPA and the Corsicana PPA. Significant judgment and estimations are required when creating the discounted cash flow estimation models. Should our discounted cash flow estimation models change significantly, potentially material changes to the fair value of the derivative assets may result, which could have a material impact on our financial statements.

See Note 9. Power Supply Agreements for a discussion of the unobservable inputs and their impact on the valuation.

Long-lived assets

Long-lived assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Judgment is necessary in estimating our various assets’ useful lives. This includes evaluating our own usage experience with our currently owned assets, the quality of materials used in construction-related projects, and for its miners, the rate of technological advancement and market-related factors such as the price of bitcoin and the bitcoin network hash rate, which impact the value of the miners. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, which is determined based on a comparison of the carrying amount of an asset to

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undiscounted future cash flows expected to be generated by the asset. Significant judgment is used when estimating future cash flows, particularly the price of bitcoin and the bitcoin network hash rate. If such assets are considered impaired, an impairment is recognized based on the amount by which the carrying amount exceeds the estimated fair value of the assets.

Should our estimates of useful lives, undiscounted future cash flows, or asset fair values change, additional and potentially material impairments may be required, which could have a material impact on our reported financial results.

Stock-based Compensation

Stock-based compensation expense related to share-based payment awards is recognized at the grant date of the award and is estimated based on the fair market value of our common stock on the date of the grant. Compensation cost for performance-based, share-based payment awards is recognized over the performance period when achievement of the milestones and targets becomes probable. We use significant judgment in determining the likelihood of meeting milestones and market conditions. Inputs into valuation models such as Monte Carlo simulations include both the Company’s and the RUSSELL 3000’s historical and expected annual volatilities, and depending on the inputs selected, we could calculate significantly different estimated grant date fair values, materially impacting the valuation of our stock-based awards and the stock-based compensation expense we recognize in future periods.

Recently Issued and Adopted Accounting Pronouncements

See Note 2. Significant Accounting Policies and Recent Accounting Pronouncements for a description of applicable recent accounting pronouncements and any material impact on our financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.