POWERCOMPUTE, INC.
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
PWCM$0.53+13.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0000950170-24-038953
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0000950170-25-047901
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 129 current paragraphs.
58 unchanged; 31 reworded; 35 added; 34 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
As of December 31, 2024, we own approximately 5,840 machines with total hashing capacity of approximately 0.634 EH/s.
Current report
Mining Site
Current report
As of December 31, 2024, we own a 15 MW hosting site located in Oklahoma (the “Oklahoma site”) with 3,006 installed S19J Pro Antminer machines which have a total projected hashrate of 301 PH. As of March 15, 2025, we have 4,320 installed S19 J Pro Antminer machines at this location which have a total projected hashrate of 432 PH. We have another 719 mining machines in storage at the Oklahoma site. During fiscal year 2024, we moved 5,039 mining machines from our three hosting companies to the Oklahoma site of which approximately 2,033 were stored in containers at Oklahoma site and not plugged into power as of December 31, 2024.
Current report
Power prices are the most significant cost driver for our wholly owned locations. Energy prices can be highly volatile and global events (including the war in Ukraine and the resulting natural gas shortage) can cause power prices to increase. Our wholly owned and operated site in Oklahoma is currently subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by power purchase agreements and said prices can change hour to hour. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with a goal of increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms, polar vortices and hurricanes, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates.
Current report
Our management team makes real-time determinations on the need and timing during which we should curtail our operations. We curtail when power prices exceed the value we would receive for the corresponding fixed Bitcoin reward. This means if Bitcoin’s value decreases or energy prices increase, our curtailment will increase; likewise, when Bitcoin’s value increases and energy prices decrease, our curtailment will decrease. Our management team manages this decision on an hour-by-hour basis for our owned site.
Current report
The Company records depreciation expense (a non-cash expense) on its miners on a straight-line basis over the miners' expected useful life. Such non-cash depreciation amounts are recorded within the Consolidated Statements of Operations and Comprehensive Loss as “Depreciation and Amortization”. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment since depreciation expense is not an avoidable operating cost, such as energy costs. The table above presents the non-cash miner depreciation expense on a “per Bitcoin” basis, calculated by dividing miner depreciation expense in our hosted facilities by the number of Bitcoin mined in the hosted facilities. On a “cost per Bitcoin” ratio, miner depreciation expense was approximately $45,300 and $11,600 for the years ended December 31, 2024, and 2023, respectively. The Company recorded accelerated depreciation on certain of its miners based on the reduction of the estimated useful life from 5 years to 4 years.
Current report
The number of Bitcoin received by the Company as a result of its mining operations was reduced by approximately 50% effective April 19, 2024 when the Bitcoin algorithm halved the rewards from 6.25 per block to 3.125 per block.
Current report
Bitcoin mining revenues are determined by two main drivers: quantity of Bitcoin mined and the price of Bitcoin on the date the Bitcoin is mined. During the twelve months ended December 31, 2024, we mined 170.6 Bitcoin with an average Bitcoin price of approximately $61 thousand as compared with 423.4 Bitcoin with an average Bitcoin price of approximately $29 thousand during the twelve months ended December 31, 2023. The decrease in Bitcoin mining revenue for the twelve months ended December 31, 2024 was attributable to the halving that occurred in April 2024 and approximately 4,000 mining machines that were off-line as we repositioned the miners to our Oklahoma site offset in part by the increase in Bitcoin prices.
Current report
Digital mining cost of revenues
Current report
Bitcoin mining costs of revenues for the year ended December 31, 2024 were approximately $7.0 million or 67% of digital mining revenues compared with approximately $9.4 million or 77% of digital mined revenues for the year ended December 31, 2023 as the Company transitioned approximately 4,000 miners from various hosting sites over a 6 month period to the recently acquired Oklahoma site resulting in no hosting costs for those idled machines. The improved direct mining cost to revenue metric was achieved as the result of lower hosting and electrical costs associated with our Oklahoma mining activity.
Current report
Staff costs and payroll
Current report
Depreciation and amortization
Current report
The increase in depreciation and amortization expense of $2.8 million to $7.8 million for the twelve months ended December 31, 2024 was primarily due to the change in useful life of mining machines from 60 months to 48 months effective January 1, 2024.
Current report
Professional fees
Current report
Professional fees (excluding fees paid pursuant to our service agreement with BLG and BLGAL), for the years ended December 31, 2024 and 2023 were approximately $1.5 million and $1.2 million, respectively. The $0.3 million increase was due in part to various regulatory filings, deal costs for potential acquisitions and various other matters.
Current report
Loss (gain) on fair value of Bitcoin, net
Current report
The gain on fair value of Bitcoin, net for the twelve months ended December 31, 2024 and 2023, was $7.4 million and nil, respectively. As discussed in the financial statements, the Company adopted the amendments per ASC 350-60 as of January 1, 2024, accordingly, we measured crypto assets at fair value in accordance with ASC Topic 820 - Fair Value Measurement and included the gains and losses from remeasurement in net income. The gain pertains to the change in Bitcoin's fair value from January 1, 2024, through December 31, 2024. The fair value of Bitcoin was approximately $93 thousand per Bitcoin at December 31, 2024 and $42 thousand per Bitcoin at December 31, 2023.
Current report
Prior to adoption of ASC Topic 350-60 - Intangibles - Goodwill and Other - Crypto Assets, Bitcoin was classified as indefinite-lived intangible assets and were measured at cost less impairment. Additionally, in the previous guidance, subsequent increases in Bitcoin prices are not allowed to be recorded unrealized gains unless the Bitcoin is sold, at which point the gain is recognized. Accordingly, (gains) losses recognized on fair value of Bitcoin in fiscal year 2024 are not comparable to fiscal year 2023.
Current report
Impairment loss on mining equipment
Current report
The Company incurred a $1.4 million impairment and nil loss on mining equipment for the year ended December 31, 2024, respectively, primarily related to machines disposed of in April 2024.
Current report
Other operating costs was relatively flat at $0.9 million and $1.0 million for the year ended December 31, 2024 and 2023, respectively.
Current report
The Company incurred an impairment loss on prepaid mining machine deposits of $13 thousand and $37 thousand for the years ended December 31, 2024 and 2023, respectively.
Current report
Impairment loss on Symbiont assets
Current report
Other income - coupons
Current report
The Company generated income of $4 thousand and $639 thousand for the years ended December 31, 2024 and 2023, respectively, from the sale of Antminer purchase coupons to third parties.
Current report
Gain on fair value of purchased Bitcoin, net
Current report
The Company recognized a $39 thousand and nil gain related to the remeasurement of purchased Bitcoin for the years ended December 31, 2024 and 2023, respectively.
Current report
Interest Income
Current report
During the year ended December 31, 2024, interest income increased to approximately $0.3 million as compared with $0.2 million for the year ended December 31, 2023 due to various loans provided to the Arthur Group for the Oklahoma site before it was purchased by the Company.
Current report
Interest Expense
Current report
During the year ended December 31, 2024, interest expense was approximately $0.4 million as compared with nil for the year ended December 31, 2023 due to $6.5 million of new loans used for working capital and the purchase of the Oklahoma site in 2024.
Current report
Net Loss Attributable to Common Shareholders
Current report
During the year ended December 31, 2024, net loss attributable to common shareholders was $6.8 million higher than net loss attributable to LM Funding America, Inc. due to deemed dividends related to warrant repricing and warrant inducement. During the year ended December 31, 2024, net loss attributable to common shareholders was $14.1 million as compared with $15.9 million for the year ended December 31, 2023.
Current report
The Company received $6.9 million in net proceeds from equity financing transactions during the year ended December 31, 2024 compared with nil for the year ended December 31, 2023.
Current report
Net cash used in operations was approximately $11.9 million during the year ended December 31, 2024 compared with net cash used in operations of $3.4 million during the year ended December 31, 2023. Bitcoin received from mining operations of approximately $10.4 million for 2024 and $12.3 million for 2023 is not considered a cash generative activity for cashflow purposes. Due to ASC 350-60, proceeds from sale of digital assets (primarily Bitcoin) of approximately $8.3 million are reported in 2024 as a net cash provided by investing activity. However, such sales totaling approximately $10.9 million are reported in 2023 as net cash provided from operating activities.
Removed paragraphs (34)
Previous report
the spread of the novel coronavirus (COVID-19), its impact on the economy generally and, more specifically, the specialty finance industry, and
Previous report
Corporate History
Previous report
The Company was originally organized in January 2008 as a Florida limited liability company under the name LM Funding, LLC. Prior to our initial public offering in 2015, all of our business was conducted through LM Funding, LLC and its subsidiaries. Immediately prior to our initial public offering in October 2015, the members of the LM Funding, LLC contributed all of their membership interests to LM Funding America, Inc., a Delaware corporation incorporated on April 20, 2015 (“LMFA”), in exchange for shares of the common stock of LMFA. Immediately after such contribution and exchange, the former members of LM Funding, LLC became the holders of 100% of the issued and outstanding common stock of LMFA, thereby making LM Funding, LLC a wholly-owned subsidiary of LMFA.
Previous report
The Company organized two new subsidiaries in 2020: LMFA Financing LLC, a Florida limited liability company, on November 21, 2020, and LMFAO Sponsor LLC, a Florida limited liability company, on October 29, 2020. LMFAO Sponsor LLC organized a subsidiary, LMF Acquisition Opportunities Inc., on October 29, 2020. LM Funding America Inc. organized a subsidiary, US Digital Mining and Hosting Co., LLC. ("US Digital"), on September 10, 2021. US Digital has created various 100% owned subsidiaries to engage in business in various states. The Company also from time to time organizes other subsidiaries to serve a specific purpose or hold a specific asset.
Previous report
Bitcoin Mining
Previous report
Bitcoin was introduced in 2008 with the goal of serving as a digital means of exchanging and storing value. Bitcoin is a form of digital currency that depends upon a consensus-based network and a public ledger called a “blockchain,” which contains a record of every bitcoin transaction ever processed. The bitcoin network is the first decentralized peer-to-peer payment network, powered by users participating in the consensus protocol, with no central authority or middlemen, that has wide network participation. The authenticity of each bitcoin transaction is protected through digital signatures that correspond with addresses of users that send and receive bitcoin. Users have full control over remitting bitcoin from their own sending addresses. All transactions on the bitcoin blockchain are transparent, allowing those running the appropriate software to confirm the validity of each transaction. To be recorded on the blockchain, each bitcoin transaction is validated through a proof-of-work consensus method, which entails solving cryptographic functions to validate transactions and post them on the blockchain. This process is called mining. Miners are rewarded with bitcoins, both in the form of newly created bitcoins and fees in bitcoin, for successfully solving for the cryptographic function and providing computing power to the network.
Previous report
Factors such as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and location play important roles in mining. As of December 31, 2023, our operating mining units were capable of producing over 0.61 EH/s of computing power. In bitcoin mining, “hashrate” is a measure of the computing and processing power and speed by which a computer processes transactions on the bitcoin network. A company’s computing power measured in hashrate is generally considered to be one of the most important metrics for evaluating bitcoin mining companies. We expect to continue increasing our computing power through 2024 and beyond.
Previous report
We owned approximately 5,900 miners as of December 31, 2023. These miners range in age as of date of placed in service from 6-16 months and have an average age of approximately 11 months. We do not have scheduled downtime for our miners. We periodically perform unscheduled maintenance on our miners, but such downtime has not historically been significant. When performing unscheduled maintenance, we will typically replace the miner with a substitute miner to limit overall downtime. The miners owned as of December 31, 2023 have a range of energy efficiency (watts per terahash – “w/th”) of 18.9 to 29.5 w/th with an average energy efficiency of 28.6 w/th.
Previous report
We obtain bitcoin as a result of our mining operations, and we sell bitcoin from time to time, to support our operations and strategic growth. We do not currently plan to engage in regular trading of bitcoin (other than as necessary to convert our bitcoin into U.S. dollars) or to engage in hedging activities related to our holding of bitcoin; however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility. Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins we will sell. Rather, decisions to hold or sell bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time.
Previous report
Factors Affecting Profitability
Previous report
Market Price of Bitcoin
Previous report
Our business is heavily dependent on the price of bitcoin. The prices of digital assets, including bitcoin, have historically experienced substantial volatility, and digital asset prices have in the past and may in the future be driven by speculation and incomplete information, subject to rapidly changing investor sentiment, and influenced by factors such as technology, macroeconomic conditions, regulatory void or changes, fraudulent actors, manipulation, and media reporting. Further, the value of bitcoin and other digital assets may be significantly impacted by factors beyond our control, including consumer trust in the market acceptance of bitcoin as a means of exchange by consumers and producers.
Previous report
Bitcoin “Halving” Events
Previous report
Bitcoin halving is a phenomenon that has historically occurred approximately every four years on the Bitcoin network. Halving is a key part of the Bitcoin protocol and serves to control the overall supply and reduce the risk of inflation in digital assets using a Proof-of-Work consensus algorithm. At a predetermined block, the mining reward is cut in half, hence the term “halving.” For example, the reward for adding a single block to the blockchain was initially set at 50 bitcoin currency rewards. The Bitcoin blockchain has undergone halving three times since its inception as follows: (1) on November 28, 2012 at block height 210,000; (2) on July 9, 2016 at block height 420,000; and (3) on May11, 2020 at block height 630,000, when the reward was reduced to its current level of 6.25 bitcoin per block. The next halving for the Bitcoin blockchain is anticipated to occur around April 2024 at block height 840,000. This process will recur until the total amount of bitcoin currency rewards issued reaches 21.0 million, and the theoretical supply of new bitcoin is exhausted, which is expected to occur around 2140. Many factors influence the price of Bitcoin, and potential increase or decrease in prices in advance of or following the future halving is unknown.
Previous report
Halving is an important part of the Bitcoin ecosystem, and it is closely watched by miners, investors, and other participants in the digital asset market. Each halving event has historically been associated with significant price movements in the value of bitcoin.
Previous report
Network Hash Rate and Difficulty
Previous report
Generally, a bitcoin mining rig’s chance of solving a block on the Bitcoin blockchain and earning a bitcoin reward is a function of the mining rig’s hash rate, relative to the global network hash rate (i.e., the aggregate amount of computing power devoted to supporting the Bitcoin blockchain at a given time). As demand for bitcoin increases, the global network hash rate rapidly increases, and as more adoption of bitcoin occurs, we expect the demand for new bitcoin will likewise increase as more mining companies are drawn into the industry by this increase in demand. Further, as more and increasingly powerful mining rigs are deployed, the network difficulty for Bitcoin increases. Network difficulty is a measure of how difficult it is to solve a block on the Bitcoin blockchain, which is adjusted every 2,016 blocks, or approximately every two weeks, so that the average time between each block is approximately ten minutes. A high difficulty means that it will take more computing power to solve a block and earn a new bitcoin reward, which, in turn, makes the Bitcoin network more secure by limiting the possibility of one miner or mining pool gaining control of the network. Therefore, as new and existing miners deploy additional hash rate, the global network hash rate will continue to increase, meaning a miner’s share of the global network hash rate (and therefore its chance of earning bitcoin rewards) will decline if it fails to deploy additional hash rate at pace with the industry.
Previous report
Recent Developments
Previous report
On November 9, 2023, our shareholders voted in favor of the approval of an amendment to our Certificate of Incorporation, in the event it is deemed advisable by our Board of Directors, to effect a reverse stock split of the Company’s issued and outstanding common stock at a ratio within the range of one-for-two (1:2) and one-for-ten (1:10), as determined by the Board of Directors.
Previous report
On February 23, 2024, the Board approved a one-for-six (1:6) reverse split of the Company’s issued and outstanding common stock, par value $0.001 per share, pursuant to which every six outstanding shares of common stock was converted into one share of common stock (the “Reverse Stock Split”). The Reverse Stock Split was effected by the filing of an amendment to our Certificate of Incorporation on March 7, 2024 which provided that the Reverse Stock Split become effective at 12:01 a.m. eastern time on March 12, 2024. The amendment provides that no fractional shares shall be issued and, in lieu thereof, any person who would otherwise be entitled to a fractional share of common stock as a result of the Reverse Stock Split will be entitled to receive one share of common stock. The Company’s common stock began trading on The Nasdaq Capital Market on a split-adjusted basis on March 12, 2024. The Company has retroactively adjusted all share amounts and per share data herein to give effect to the Reverse Stock Split.
Previous report
Underwriting and origination fees decreased by approximately $29 thousand or 30.1% due to a reduction in units submitted for collection.
Previous report
Rental revenue (which includes sales of units) for the year ended December 31, 2023 was approximately $144 thousand as compared to approximately $162 thousand for the year ended December 31, 2022.
Previous report
The increase in depreciation and amortization expense of $4.5 million and digital mining cost of revenues of $8.4 million for the year ended December 31, 2023 is related to the commencement of mining operations in late September 2022.
Previous report
Professional fees (excluding fees paid pursuant to our service agreement with BLG and BLGAL), for the years ended December 31, 2023 and 2022 were approximately $1.2 million and $2.4 million, respectively. Professional fees for the year ended December 31, 2022 included an expense of $0.3 million related to the settlement of a legal claim and an expense of $0.7 million due to the amortization of prepaid annual consulting fees paid in 2021 for digital strategy consultant work performed in 2022, which did not recur in the year ended December 31, 2023.
Previous report
Other operating costs decreased by $0.5 million for the year ended December 31, 2023 as the result of a $1.1 million decrease in non-cash stock expense for consultants incurred in the year ended December 31, 2022 that did not recur during the year ended December 31, 2023, offset in part by a $0.2 million increase in investor relations cost, $0.1 million increase in audit fees and $0.2 million increase in insurance costs.
Previous report
Realized loss on marketable securities - the Company recognized a $4 thousand dollar realized gain on marketable securities for the year ended December 31, 2023 as compared to a $0.3 million loss for the year ended December 31, 2022. The prior year loss was primarily due to the sale of Borqs stock.
Previous report
Realized gain on convertible debt securities - the Company incurred a realized gain on convertible debt securities of nil for the year ended December 31, 2023 as compared to $0.3 million for the year ended December 31, 2022 due to the conversion of Borqs convertible debt securities to common stock during fiscal year 2022.
Previous report
Impairment loss on digital assets - During the year ended December 31, 2022, the Company purchased an aggregate of approximately 32 Bitcoin for $1.0 million. During the year ended December 31, 2022, we recorded approximately $0.5 million of impairment losses on such digital assets.
Previous report
Interest (Income) Expense, net
Previous report
During the year ended December 31, 2023, net interest income was approximately $0.2 million as compared to $0.4 million of net interest income for the year ended December 31, 2022. The decrease is related to the reduction in investments in notes receivable for the year ended December 31, 2023.
Previous report
The Company did not receive cash from equity financing transactions during the year ended December 31, 2023 or 2022.
Previous report
Net cash used in operations was approximately $3.4 million during the year ended December 31, 2023 compared with net cash used in operations of $9.1 million during the year ended December 31, 2022. During the year ended December 31, 2022, the Company paid $3.2 million as a deposit for hosting services.
Previous report
Long-Lived Assets Impairment Assessments
Previous report
The Company assesses whether there has been an impairment of long-lived assets when a triggering event occurs, such as significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. The assessment involves comparing undiscounted expected future cash flows to the carrying value of the long-lived asset. When the undiscounted cash flow analysis indicates a long-lived asset is not recoverable, the amount of the impairment loss is determined by measuring the excess of the carrying amount of the long-lived asset over its estimated fair value. The Company believes accounting estimates related to long-lived asset impairments are critical estimates, as they are highly susceptible to change and the impact of an impairment on reported assets and earnings could be material. Management is required to make assumptions based on expectations regarding results of operations for future periods and expected market conditions in such periods, including future fair market value of Bitcoin and network difficulty. Cryptocurrency markets can experience significant volatility and uncertainty. The Company’s assumptions relating to future results of operations are based on a combination of historical experience, economic analysis and observable market activity. The Company’s expectations regarding the holding periods of assets are based on internal budgets and projections, which consider external factors such as market conditions and advances in technology, as of the end of each reporting period. During the years ended December 31, 2023 and December 31, 2022 the Company did not record impairment expense for long-lived assets.
Reworded paragraphs (31)
Previous wording
This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Annual Report on Form 10-K, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” “believes” or the negative thereof or any variation thereon or similar terminology or expressions.
Current wording
This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Annual Report on Form 10-K, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “project,” “predict,” “plan,” “intend,” or “estimate,” “guidance,” and other similar expressions, or the negative of these expressions. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking.
Previous wording
negative press regarding the debt collection industry which may have a negative impact on a debtor’s willingness to pay the debt we acquire,
Current wording
negative press regarding the debt collection industry which may have a negative impact on a debtor’s willingness to pay the debt we acquire; and
Previous wording
LM Funding America, Inc. (“we”, “our”, “LMFA”, or the “Company”) currently has two lines of business: our recently commenced cryptocurrency mining business and our historical specialty finance business.
Current wording
LM Funding America, Inc. (“we”, “our”, “LMFA”, or the “Company”) currently has two lines of business: our cryptocurrency mining business and our specialty finance business.
Previous wording
On September 15, 2021, we announced our plan to operate in the Bitcoin mining ecosystem, and we commenced Bitcoin mining operations in late September 2022. This business operation deploys our computing power to mine Bitcoin and validate transactions on the Bitcoin network. We believe that developments in Bitcoin mining have created an opportunity for us to deploy capital and conduct large-scale mining operations in the United States. We conduct this business through a wholly owned subsidiary, US Digital, which we formed in 2021 to develop and operate our cryptocurrency mining business.
Current wording
The Bitcoin mining business operation deploys our computing power to mine Bitcoin and validate transactions on the Bitcoin network. We believe that developments in Bitcoin mining have created an opportunity for us to deploy capital and conduct large-scale mining operations in the United States. We conduct this business through a wholly owned subsidiary, US Digital, which we formed in 2021 to develop and operate our Bitcoin mining business.
Previous wording
As of December 31, 2023 and 2022, we held approximately 95 and 55 bitcoins, respectively. The carrying value of our bitcoins as of December 31, 2023 and 2022 was approximately $3.4 million and $0.9 million, respectively, on our Consolidated Balance Sheet. We account for our bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our bitcoin decreases below their carrying value at any time since their acquisition. Impairment losses cannot be recovered for any subsequent increase in fair value. The carrying value of each bitcoin we held at the end of each reporting period reflects the lowest price of one bitcoin quoted on the active exchange at any time since its acquisition. Therefore, negative swings in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin.
Current wording
Effective January 1, 2024, we adopted ASC 350-60 which required Bitcoin to be measured at fair value. See Note 1, Summary of Significant Accounting Policies, for more details on impact of implementation to the financial statements. As a result, the carrying value of each Bitcoin we held at the end of December 31, 2024 and each subsequent reporting period reflects the price of one Bitcoin quoted on the active exchange at the end of the reporting period. Therefore, negative swings in the market price of Bitcoin could have a material impact on our earnings and on the carrying value of our Bitcoin.
Previous wording
During the year ended December 31, 2023, total revenues increased by approximately $11.3 million to approximately $13.0 million from approximately $1.7 million in the year ended December 31, 2022.
Current wording
During the year ended December 31, 2024, total revenues decreased by approximately $2.0 million to approximately $11.0 million from approximately $13.0 million in the year ended December 31, 2023.
Previous wording
Digital mining revenues increased to approximately $12.3 million for the year ended December 31, 2023 from $0.9 million for the year ended December 31, 2022, due to the commencement of our digital mining operations in late September 2022.
Current wording
Bitcoin mining revenues decreased to approximately $10.4 million for the year ended December 31, 2024 from $12.3 million for the year ended December 31, 2023.
Previous wording
Interest on delinquent association fees for the year ended December 31, 2023 was approximately $266 thousand which represents a decrease of 25.9% as compared to the approximately $359 thousand generated in the year ended December 31, 2022.
Current wording
Specialty finance revenues for the year ended December 31, 2024 was approximately $444 thousand which represents a decrease of 19.4% as compared with the approximately $550 thousand generated in the year ended December 31, 2023.
Previous wording
During the year ended December 31, 2023, operating costs and expenses decreased by approximately $3.4 million, or 12.7%, to approximately $23.0 million from approximately $26.4 million for the year ended December 31, 2022 primarily due to a decrease in staff costs and payroll and professional fees and an increase in realized gain on sale of digital assets, offset by an increase in digital mining costs of revenues, depreciation, and other expenses.
Current wording
During the year ended December 31, 2024, operating costs and expenses decreased by approximately $5.6 million, or 24.3%, to approximately $17.5 million from approximately $23.1 million for the year ended December 31, 2023 primarily due to a decrease in digital mining costs, staff costs and payroll and professional fees and an increase in fair market value gain on digital assets, offset in part by an increase in depreciation expense.
Previous wording
The net decrease of approximately $13.6 million in staff costs and payroll is due to a decrease in the non-cash stock compensation expense of which $2.9 million was incurred in 2023 versus $17.7 million was incurred in 2022 ($5.3 million of the 2022 expense is associated with the cancellation of options for the CEO and CFO), offset in part by an increase in payroll of approximately $1.0 million in the year ended December 31, 2023.
Current wording
The net decrease of approximately $1.3 million in staff costs and payroll is due to a decrease in the non-cash stock compensation expense to $0.5 million for the year ended December 31, 2024 as compared with $2.9 million for the year ended December 31, 2023, offset in part by an increase in payroll and bonuses of approximately $1.1 million for the year ended December 31, 2024.
Previous wording
Legal fees for BLG and BLGAL for the year ended December 31, 2023 were approximately $0.6 million compared to approximately $0.8 million for the year ended December 31, 2022. Legal fees for the year ended December 31, 2022 include a $150 thousand termination fee paid to BLG which did not recur in the year ended December 31, 2023. See Note 9. Related Party Transactions for further discussion regarding the service agreements with BLG and BLGAL.
Current wording
Legal fees for BLG and BLGAL for the year ended December 31, 2024 were approximately $0.5 million compared with approximately $0.6 million for the year ended December 31, 2023. See Note 11 Related Party Transactions for further discussion regarding the service agreements with BLG and BLGAL.
Previous wording
The Company recognized an impairment loss on the holding of mined digital assets (Bitcoin) of $1.0 million for the year ended December 31, 2023 compared to $80 thousand for year ended December 31, 2022. Impairment loss is measured using the intraday low bitcoin price during the holding period of the mined digital asset. ASC Topic 350 -Goodwill and Other provides that subsequent increases in bitcoin prices are not allowed to be recorded (unrealized gains) unless the bitcoin is sold, at which the point the gain is recognized.
Current wording
The Company recognized an impairment loss on the holding of mined digital assets (Bitcoin) of nil for the year ended December 31, 2024 and $1.0 million for the year ended December 31, 2023.
Previous wording
The Company also recognized a realized gain on the sale of mined digital assets of $2.1 million for the year ended December 31, 2023 compared to nil for year ended December 31, 2022. Realized gain on sale of bitcoin is the difference between the sale proceeds of bitcoin and the carrying amount.
Current wording
The Company recognized a realized gain on the sale of mined digital assets of nil for the year ended December 31, 2024 compared with $2.1 million for year ended December 31, 2023.
Previous wording
Impairment loss on prepaid mining machine deposits - the Company incurred an impairment loss on prepaid mining machine deposits of $3.15 million for the year ended December 31, 2022 due to a $3.15 million impairment charge for deposits held by Uptime Armory arising from the non-performance of Uptime Armory under the Uptime Purchase Agreement.
Current wording
Impairment loss on prepaid mining machine deposits
Previous wording
Impairment loss on prepaid hosting deposits - the Company incurred an impairment loss on prepaid hosting deposits of $0.2 million for the year ended December 31, 2023 versus a $1.8 million for the year ended December 31, 2022 due to a $0.2 million and $1.0 million, respectively of impairment charge on the deposits held by Compute North, which is in bankruptcy, and a $0.8 million impairment charge in fiscal year 2022 for deposits held by Uptime Hosting arising from the non-performance of Uptime Hosting under the Uptime Purchase Agreement.
Current wording
The Company incurred an impairment loss on prepaid hosting deposits of nil for the year ended December 31, 2024 versus a $0.2 million for the year ended December 31, 2023 due to a $0.2 million impairment charge on the deposits held by Compute North LLC, which is in bankruptcy.
Previous wording
Impairment loss on Symbiont assets - The Company recognized an impairment loss on Symbiont assets of approximately $0.8 million for the year ended December 31, 2023 as compared to impairment loss on debt securities of approximately $1.1 million for the year ended December 31, 2022. During the year ended December 31, 2022 an impairment of the Symbiont debt security was recognized due to Symbiont declaring bankruptcy. During the year ended December 31, 2023, the Company acquired Symbiont intangible assets through bankruptcy proceedings, and then subsequently recognized a $0.8 million impairment on such assets as a result of the sale of Symbiont assets in December 2023.
Current wording
The Company recognized an impairment loss on Symbiont assets of nil for the year ended December 31, 2024 as compared with approximately $0.8 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company acquired Symbiont intangible assets through bankruptcy proceedings, and then subsequently recognized a $0.8 million impairment on such assets as a result of the sale of Symbiont assets in December 2023.
Previous wording
Gain on adjustment of note receivable allowance - During the year ended December 31, 2023, the Company reversed the previously established $1.1 million loss reserve on Symbiont notes receivable due to the acquisition of the Symbiont intangible assets as a result of Symbionts bankruptcy proceedings.
Current wording
The Company recognized a gain on adjustment of note receivable allowance of nil for the year ended December 31, 2024 as compared to approximately $1.1 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company reversed the previously established $1.1 million loss reserve on Symbiont notes receivable due to the acquisition of the Symbiont intangible assets as a result of Symbionts bankruptcy proceedings.
Previous wording
Unrealized gain (loss) on investment and equity securities - The Company recognized an unrealized loss on securities of approximately $9.8 million for the year ended December 31, 2023 as compared to an unrealized gain of approximately $4.4 million for the year ended December 31, 2022 from the revaluation of Seastar Medical Holding Corporation (formerly LMAO’s) common stock and warrants upon LMAO’s merger with Seastar Medical Holding Corporation.
Current wording
The Company recognized an unrealized loss on securities of approximately $1.1 million for the year ended December 31, 2024 as compared with an unrealized loss of approximately $9.8 million for the year ended December 31, 2023 from the revaluation of Seastar Medical Holding Corporation common stock and warrants.
Previous wording
During the year ended December 31, 2022, the Company generated a $26.4 million net loss before income taxes. However, due to a change in estimate from the year ended December 31, 2021 that resulted in a limitation on the use of its net operating loss carryforwards, the Company's income tax due was $1.4 million during the year ended December 31, 2022. The Company recognized net income tax expense of $1.4 million for the year ended December 31, 2022.
Current wording
During the year ended December 31, 2024, the Company generated a $7.7 million net loss before income taxes. The Company's income tax due was nil as of December 31, 2024. The Company recognized net income tax expense of nil for the year ended December 31, 2024.
Previous wording
Under ASC 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The Company considers all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses. Based on operating losses reported by the Company during 2022, 2020, 2019 and 2018, the Company concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, the Company believes that a valuation allowance continues to be necessary based on the more-likely-than-not threshold noted above. The Company recorded a valuation allowance of approximately $14.1 million and $8.5 million for the year ended December 31, 2023 and 2022, respectively.
Current wording
Under ASC 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The Company considers all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses. Based on operating losses reported by the Company during 2023, 2022, 2020, 2019 and 2018, the Company concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, the Company believes that a valuation allowance continues to be necessary based on the more-likely-than-not threshold noted above. The Company recorded a valuation allowance of approximately $16.2 million and $14.1 million for the year ended December 31, 2024 and 2023, respectively.
Previous wording
Net Income Attributable to Non-Controlling Interest
Current wording
Net Loss Attributable to Non-Controlling Interest
Previous wording
The Company owns 69.5% of LMFAO Sponsor LLC ("Sponsor"). As such, approximately $2.9 million and $1.4 million of the $9.8 million and $4.4 million net unrealized gain recognized by the Sponsor’s ownership of Seastar Medical Holding Corporation (formerly LMAO) is attributed to the Non-Controlling Interest for the years ended December 31, 2023 and 2022, respectively.
Current wording
The Company owns 69.5% of LMFAO Sponsor LLC (“Sponsor”). As such, approximately $0.3 million and $2.9 million of the $1.1 million and $9.8 million net unrealized loss recognized by the Sponsor’s ownership of Seastar Medical Holding Corporation (formerly LMAO) is attributed to the Non-Controlling Interest for the years ended December 31, 2024 and 2023, respectively.
Previous wording
During the year ended December 31, 2023, the Company generated a net loss attributable to LM Funding America, Inc. of approximately $15.9 million as compared to net loss attributable to LM Funding America, Inc. of approximately $29.2 million for the year ended December 31, 2022, for the reasons mentioned above.
Current wording
During the year ended December 31, 2024, the Company generated a net loss attributable to LM Funding America, Inc. of approximately $7.3 million as compared with net loss attributable to LM Funding America, Inc. of approximately $15.9 million for the year ended December 31, 2023, for the reasons mentioned above.
Previous wording
As of December 31, 2023, we had $2.4 million of cash and cash equivalents and $3.4 million of digital assets (95.1 BTC with average cost of approximately $36 thousand) compared with $4.2 million of cash and cash equivalents and $0.9 million of digital assets (54.9 BTC with average cost of approximately $16 thousand) at December 31, 2022. The Company also had $18 thousand of marketable securities as of December 31, 2023 compared with $4 thousand at December 31, 2022. The decrease in cash for the year ended December 31, 2023 is due primarily to the use of $1.6 million for the purchase of Bitcoin mining machines offset in part by the receipt of $2.7 million of loan repayments from Seastar Medical Holding Corporation.
Current wording
As of December 31, 2024, we had $3.4 million of cash and cash equivalents and $14.0 million of digital assets (150.2 Bitcoin with average cost of approximately $93 thousand), of which $5.0 million is pledged as collateral against outstanding borrowings, compared with $2.4 million of cash and cash equivalents and $3.4 million of digital assets (95.1 Bitcoin with average cost of approximately $36 thousand) at December 31, 2023). The increase in cash for the year ended December 31, 2024 is due primarily to several equity and warrant transaction net proceeds totaling $6.9 million, net borrowings totaling $6.3 million and the receipt of $1.4 million of loan repayments from Seastar Medical Holding Corporation offset in part by the purchase of $0.5 million of digital assets and $3.6 million used towards the purchase of the Oklahoma site.
Previous wording
Our working capital needs may increase in the future as we continue to expand and enhance our mining operations. Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our then current business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control. No assurance can be given that we will be successful in raising the required capital at a reasonable cost and at the required times, or at all. Further equity financings may have a dilutive effect on shareholders and any debt financing, if available, may require restrictions to be placed on our future financing and operating activities. If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations in the cryptocurrency mining industry which could adversely impact our business, financial condition and results of operations.
Current wording
Our working capital needs may increase in the future as we continue to expand and enhance our mining operations. Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our then current business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control. No assurance can be given that we will be successful in raising the required capital at a reasonable cost and at the required times, or at all. Further equity financings may have a dilutive effect on shareholders and any debt financing, if available, may require restrictions to be placed on our future financing and operating activities. If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations in the Bitcoin mining industry which could adversely impact our business, financial condition and results of operations.
Previous wording
The Company has digital mining hosting contracts that expire between May 2024 and December 2024. These contracts currently require total monthly payments of approximately $700 thousand to $800 thousand monthly.
Current wording
The Company has a digital mining hosting contract that expires April 2025. This contract currently requires total monthly payments of approximately $130 thousand.
Previous wording
Net cash provided by investing activities was $2.3 million during the year ended December 31, 2023 as compared to net cash used in investing activities of $18.9 million during the year ended December 31, 2022. During the year ended December 31, 2023, the Company invested $1.6 million in deposits for mining equipment but received $2.7 million from a notes receivable for Seastar Medical Holding Corporation and $1.8 million from the sale of Symbiont assets. During the year ended December 31, 2022, the Company invested $14.7 million in deposits for mining equipment and $3.7 million in a notes receivable for Seastar Medical Holding Corporation.
Current wording
Net cash provided by investing activities was $0.4 million during the year ended December 31, 2024 as compared with net cash provided by investing activities of $2.3 million during the year ended December 31, 2023. During the year ended December 31, 2024, the Company invested $1.7 million in mining equipment, received $1.4 million from a notes receivable for Seastar Medical Holding Corporation and acquired a mining site for approximately $7.4 million, of which $3.6 million was paid in cash and $3.8 million was credited against outstanding loans, including accrued interest, made by the Company and its affiliates to Seller. During the year ended December 31, 2023, the Company invested $1.6 million in deposits for mining equipment but received $2.7 million from a notes receivable for Seastar Medical Holding Corporation and $1.8 million from the sale of Symbiont assets.
Previous wording
Net cash used in financing activities was $0.7 million during the year ended December 31, 2023 as compared to net cash used in financing activities of $0.3 million for the year ended December 31, 2022.
Current wording
Net cash from financing activities was $12.5 million during the year ended December 31, 2024 as compared with net cash used in financing activities of $0.7 million for the year ended December 31, 2023. During 2024, the Company received net proceeds from borrowings of $6.3 million for working capital and acquisition purposes and raised $6.9 million in net proceeds from equity offerings.
Previous wording
During the years ended December 31, 2023 and 2022 the Company paid $624 thousand and $299 thousand in principal and financing repayments, respectively.
Current wording
During the years ended December 31, 2024 and 2023 the Company paid $709 thousand and $624 thousand in principal and financing repayments, respectively.
Previous wording
Our reported results are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We also disclose Earnings before Interest, Tax, Depreciation and Amortization ("EBITDA") and Core Earnings before Interest, Tax, Depreciation and Amortization ("Core EBITDA") which adjusts for unrealized loss on investment and equity securities, unrealized gain on convertible debt securities, impairment loss on mined digital assets, impairment of intangible long-lived assets, impairment of prepaid hosting deposits, impairment of mining machine deposits and gain on adjustment of note receivable allowance, non-cash lease expenses, and stock compensation expense and option expense, all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of Bitcoin miners.
Current wording
Our reported results are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We also disclose Earnings before Interest, Tax, Depreciation and Amortization (“EBITDA”) and Core Earnings before Interest, Tax, Depreciation and Amortization (“Core EBITDA”) which adjusts for unrealized loss on investment and equity securities, unrealized gain on convertible debt securities, gain on adjustment of note receivable allowance, impairment loss on mined digital assets, impairment of intangible long-lived assets, impairment of prepaid hosting deposits, impairment of prepaid mining machine deposits and gain on adjustment of note receivable allowance, non-cash lease expenses, costs associated with At-the-Market Equity program, contract termination costs, Impairment loss on Symbiont assets, impairment loss on mining equipment, and stock compensation expense and option expense, all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of Bitcoin miners.
Previous wording
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure or inclusion of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. Our critical accounting policies include revenue recognition, digital assets, and policies related to long-lived assets. Refer to Note 1 - Significant Accounting Policies to our financial statements for a complete discussion of the significant accounting policies and methods used in the preparation of our financial statements. We consider our critical accounting estimates to be those related to long-lived asset impairment assessments.
Current wording
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure or inclusion of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. There are no critical accounting estimates for the year ended December 31, 2024.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
As of December 31, 2024 and 2023, we held approximately 150 and 95 Bitcoin, respectively. The carrying value of our Bitcoin as of December 31, 2024 and 2023 was approximately $14.0 million and $3.4 million, respectively, on our Consolidated Balance Sheet.
Current report — wording carried from elsewhere
The table below describes the Bitcoin activity for the years ended December 31, 2024 and 2023.
Current report — wording carried from elsewhere
Impairment loss on prepaid hosting deposits
Current report — wording carried from elsewhere
Gain on adjustment of note receivable allowance
Current report — wording carried from elsewhere
Unrealized loss on investment and equity securities