CLEANSPARK INC

Previous wording

We are a bitcoin mining company. We independently own and operate a large portfolio of data centers across the United States with locations in Georgia, Mississippi, Tennessee and Wyoming for a total contracted power capacity of approximately 853 megawatts (“MW”) as of December 31, 2024. We intend to continue our growth in these regions and are actively developing plans for additional capacity in Wyoming, Georgia, and Tennessee. We have an independent data center operation in Massena, NY subject to a hosting agreement that operated 50 MW, which expired on December 31, 2024. The parties commenced wind-down procedures upon expiration, during this time miners will operate until they are removed in batches from allocated rack space. All MW allocated to the Company are expected to be vacated no later than March 31, 2025. We have no intention to mine, purchase or hold any other cryptoassets at this time or in the foreseeable future, and we did not hold any other cryptoasset as of December 31, 2024.

Current wording

We are a bitcoin mining company. We independently own and operate a large portfolio of data centers across the United States with locations in Georgia, Mississippi, Tennessee and Wyoming for a total contracted power capacity of approximately 915 megawatts (“MW”) as of March 31, 2025. We intend to continue our growth in these regions and are actively developing plans for additional capacity in Wyoming, Georgia, and Tennessee. We had an independent data center operation in Massena, NY subject to a hosting agreement that operated 50 MW, which expired on December 31, 2024. The parties commenced wind-down procedures upon expiration. All MW allocated to the Company have been vacated as of March 31, 2025. We have no intention to mine, purchase or hold any other crypto assets at this time or in the foreseeable future, and we did not hold any other crypto asset as of March 31, 2025.

Previous wording

Factors such as access to specialized mining servers, energy, electricity cost, environmental factors (such as cooling capacity) and location play important roles in mining. As of December 31, 2024, our operating mining units were capable of producing over 39.1 exahash per second (“EH/s”) of computing power. In bitcoin mining, “hashrate” is a measure of the computing and processing power and speed by which a mining computer mines and processes transactions on the bitcoin network. We expect to continue increasing our computing power through 2025 and beyond as we expand our infrastructure at our owned sites in Wyoming, Tennessee, and Georgia, seek regional expansion opportunities, and evaluate strategic acquisition targets. As of January 31, 2025, we operated a high of 40 EH/s of computing power. A company’s computing power measured in hashrate is a significant factor in its bitcoin mining revenue.

Current wording

Factors such as access to specialized mining servers, energy, electricity cost, environmental factors (such as cooling capacity) and location play important roles in mining. As of March 31, 2025, our operating mining units were capable of producing over 42.4 exahash per second (“EH/s”) of computing power. In bitcoin mining, “hashrate” is a measure of the computing and processing power and speed by which a mining computer mines and processes transactions on the bitcoin network. We expect to continue increasing our computing power through 2025 and beyond as we expand our infrastructure at our owned sites in Wyoming, Tennessee, and Georgia, seek regional expansion opportunities, and evaluate strategic acquisition targets. A company’s computing power measured in hashrate is a significant factor in its bitcoin mining revenue.

Previous wording

We owned approximately 285,098 miners as of December 31, 2024, of which approximately 201,808 were in service as of December 31, 2024 and the remainder pertain to new machines ready to install in the Cheyenne, WY expansion and Jackson, TN and other expansion opportunities, are being evaluated for relocation or are pending repair. Our miners range in age from 1-48 months and have an average age of approximately 13 months. Effective May 2024, we estimate the useful lives of our miners to be three years. We do not have scheduled downtime for our miners, however, we periodically perform unscheduled maintenance and curtailments 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, 2024 had a range of energy efficiency (watts per terahash – “w/th”) of 13.5 to 29.5 w/th with an average operating energy efficiency of 17.6 w/th.

Current wording

We owned approximately 313,074 miners as of March 31, 2025, of which approximately 205,412 were in service as of March 31, 2025 and the remainder pertain to new machines ready to install in the Cheyenne, WY and Jackson, TN expansions and other expansion opportunities, are being evaluated for relocation or are pending repair. Our miners range in age from 2-51 months and have an average age of approximately 13 months. Effective May 2024, we estimate the useful lives of our miners to be three years. We do not have scheduled downtime for our miners, however, we periodically perform unscheduled maintenance and curtailments 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 March 31, 2025 had a range of energy efficiency (watts per terahash – “w/th”) of 13.5 to 29.5 w/th with an average operating energy efficiency of 17 w/th.

Previous wording

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 also will utilize our bitcoin as collateral for lending arrangements. We do not currently engage in regular trading of bitcoin (other than as necessary to convert our bitcoin into U.S. dollars) or 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. As hedging, derivative, lending, and other structured products mature, we will evaluate them and consider integrating them into our regular treasury management activities. Treasury management activities may serve cash management, strategic growth, revenue or bitcoin balance hedging, incremental revenue or other general corporate purposes. 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 the need for working capital, forecasts and monitoring the market in real time.

Current wording

We obtain bitcoin as a result of our mining operations, and we may sell bitcoin from time to time to support our operations and strategic growth. We also will utilize our bitcoin as collateral for lending arrangements. Prior to April 2025, we did not engage in regular trading of bitcoin (other than as necessary to convert our bitcoin into U.S. dollars) or engage in hedging activities related to our holding of bitcoin. In April 2025, we launched our institutional grade in-house trading function as we shift to a balanced approach between monetizing new production and building long-term holdings which may include various derivative strategies to generate yield from our bitcoin holdings balance, and we plan to continue to integrate these strategies into our regular treasury management activities. Treasury management activities may serve cash management, strategic growth, revenue or bitcoin balance hedging, incremental revenue or other general corporate purposes. 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 the need for working capital, forecasts and monitoring the market in real time.

Previous wording

As of December 31, 2024, we held 9,952 bitcoins. As of December 31, 2024, we held 99% of our bitcoin in cold storage and 1% in hot wallets. The fair value of our bitcoins as of December 31, 2024 was $929,080 on our condensed consolidated balance sheets. Effective October 1, 2023, we adopted ASC 350-60, which requires bitcoin to be measured at fair value; as a result, the carrying value of each bitcoin we held at October 1, 2023 and each subsequent reporting period reflects the price of one bitcoin quoted on the active exchange, Coinbase, at the end of the reporting period. Therefore, decreases in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin. See Note 2 - Summary of Significant Accounting Policies for more details on the impact of implementation in the Form 10-K.

Current wording

As of March 31, 2025, we held 11,869 bitcoins of which, we held 99% in cold storage and 1% in hot wallets. The fair value of our bitcoins as of March 31, 2025 was $979,635 on our condensed consolidated balance sheets. Effective October 1, 2023, we adopted ASC 350-60, which requires bitcoin to be measured at fair value; as a result, the carrying value of each bitcoin we held at October 1, 2023 and each subsequent reporting period reflects the price of one bitcoin quoted on the active exchange, Coinbase, at the end of the reporting period. Therefore, decreases in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin. See Note 2 - Summary of Significant Accounting Policies for more details on the impact of implementation in the Form 10-K.

Previous wording

Results of continuing operations for the three months ended December 31, 2024 and 2023

Current wording

Results of continuing operations for the three and six months ended March 31, 2025 and 2024

Previous wording

As of December 31, 2024, our operating hashrate was approximately 4.87% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date equaled approximately 21-22 bitcoin per day, excluding the bitcoin earned from network transaction fees. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

Current wording

As of March 31, 2025, our operating hashrate was approximately 5.08% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date equaled approximately 22-23 bitcoin per day, excluding the bitcoin earned from network transaction fees. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

Previous wording

The table below describes the average cost of mining each bitcoin for the three months ended December 31, 2024 and 2023 and the total energy usage and cost per each kilowatt hour (“KWH”) utilized within our owned facilities.

Current wording

The table below describes the average cost of mining each bitcoin for the three and six months ended March 31, 2025 and 2024 and the total energy usage and cost per each kilowatt hour (“kWh”) utilized within our owned facilities.

Previous wording

Power prices are the most significant cost driver for our wholly owned locations, and energy expense represented 40.4% and 35.0% as expressed as a percentage of bitcoin mining revenues during the three months ended December 31, 2024 and 2023, respectively.

Current wording

Power prices are the most significant cost driver for our wholly owned locations, and energy expense represented 46.0% and 26.6% as expressed as a percentage of bitcoin mining revenues during the three months ended March 31, 2025 and 2024, respectively, and 43.4% and 29.8% as expressed as a percentage of bitcoin mining revenues during the six months ended March 31, 2025 and 2024, respectively.

Previous wording

Energy prices can be highly volatile and global events can impact energy rates. We have a diverse portfolio of power contracts across our wholly owned and operated sites in the State of Georgia, Mississippi, Tennessee and Wyoming. The majority of these contracts and our previously hosted miners in New York State are currently subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by power purchase agreements which vary by location, 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 and polar vortices, which periodically increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates, at the request of grid operators in cases of emergencies or to support utility grid resiliency efforts. The average power prices we paid under our power contracts at our owned facilities for the three months ended December 31, 2024 and 2023 were $0.049 and $0.044 per KWH, respectively.

Current wording

Energy prices can be highly volatile and global events can impact energy rates. We have a diverse portfolio of power contracts across our sites in the State of Georgia, Mississippi, Tennessee and Wyoming. The majority of these contracts and our previously hosted miners in New York State are currently subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by power purchase agreements which vary by location, 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 and polar vortices, which periodically increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates, at the request of grid operators in cases of emergencies or to support utility grid resiliency efforts. The average power prices we paid under our power contracts at our owned facilities were $0.060 and $0.043 per kWh for the three months ended March 31, 2025 and 2024, respectively, and were $0.055 and $0.043 per kWh, for the six months ended March 31, 2025 and 2024 respectively.

Previous wording

The management and operations teams make 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 in response to utility programs. This means if bitcoin’s value decreases or energy prices increase, our curtailment may increase; likewise, when bitcoin’s value increases and energy prices decrease, our curtailment may decrease. The management and operations teams manage these decision on an hour-by-hour basis across all our sites, both wholly owned and hosted. The Company did not have significant curtailment and maintained an average uptime greater than 90% during the three months ended December 31, 2024. A large portion of the curtailment during the quarter related to Hurricane Helene which affected our Georgia sites at the end of September 2024 to the beginning of October 2024. The southeast Georgia sites were shut down as the hurricane began impacting the region, thus at the beginning of the October 2024, these sites were operating on approximately 200 MW which gradually increased during the same week to its the full 365 MW capacity when utilities was restored to the communities.

Current wording

The management and operations teams make 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 in response to utility programs. This means if bitcoin’s value decreases or energy prices increase, our curtailment may increase; likewise, when bitcoin’s value increases and energy prices decrease, our curtailment may decrease. The management and operations teams manage these decisions on an hour-by-hour basis across all our sites, both wholly owned and hosted. The Company did not have significant curtailment and maintained an average uptime greater than 90% during the six months ended March 31, 2025. A large portion of the curtailment during the first quarter related to Hurricane Helene which affected our Georgia sites at the end of September 2024 to the beginning of October 2024. The southeast Georgia sites were shut down as the hurricane began impacting the region, thus at the beginning of the October 2024, these sites were operating on approximately 200 MW which gradually increased during the same week to its the full 365 MW capacity when utilities was restored to the communities.

Previous wording

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 condensed consolidated statements of operations and comprehensive income 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 owned facilities by the number of bitcoin mined in the owned facilities. On a “cost per bitcoin" ratio, miner depreciation expense was $31,949 and $11,384 for the three months ended December 31, 2024 and 2023, respectively. The number of bitcoin received by all the miners, including the Company was reduced by 50% effective April 19, 2024 when the bitcoin algorithm halved the rewards from 6.25 per block to 3.125 per block increasing depreciation expense on a comparable per bitcoin basis as it takes more miners to produce the same number of bitcoin.

Current wording

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 condensed consolidated statement of operations and comprehensive income 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 owned facilities by the number of bitcoin mined in the owned facilities. On a “cost per bitcoin” ratio, miner depreciation expense was $33,552 and $11,757 for the six months ended March 31, 2025 and 2024, respectively. The number of bitcoin received by all the miners, including the Company was reduced by 50% effective April 19, 2024 when the bitcoin algorithm halved the rewards from 6.25 per block to 3.125 per block increasing depreciation expense on a comparable per bitcoin basis as it takes more miners to produce the same number of bitcoin.

Previous wording

We have financing costs for a limited number of miners in our miner fleet and such costs are recorded within Interest Expense in our condensed consolidated statements of operations and comprehensive income. The table above presents financing costs per bitcoin calculated by dividing direct interest expense on our miner financing agreement by the number of bitcoin mined in our owned facilities. On a cost per bitcoin ratio, financing costs were $98 and $237 for the three months ended December 31, 2024 and 2023, respectively.

Current wording

We have financing costs for a limited number of miners in our miner fleet and such costs are recorded within Interest Expense in our condensed consolidated statement of operations and comprehensive income. The table above presents financing costs per bitcoin calculated by dividing direct interest expense on our miner financing agreement by the number of bitcoin mined in our owned facilities. On a cost per bitcoin ratio, financing costs were $60 and $197 for the three months ended March 31, 2025 and 2024, respectively and were $78 and $216 for the six months ended March 31, 2025 and 2024, respectively.

Previous wording

The table below describes the average cost of mining each bitcoin for the three months ended December 31, 2024 and 2023 and the total energy usage and cost per each KWH utilized within our hosted facilities.

Current wording

The table below describes the average cost of mining each bitcoin for the three and six months ended March 31, 2025 and 2024 and the total energy usage and cost per each kWh utilized within our hosted facilities. As of March 31, 2025, we no longer operated mining at hosted facilities. Accordingly, the bitcoin mined in the three months ended March 31, 2025 was approximately 1% of our total bitcoin mined for the consolidated entity.

Previous wording

For our co-locations, hosting fees (which comprise direct operating costs of the third-party operator with energy as the largest cost) and profit sharing were a combined 87.1% and 61.3% as a percentage of bitcoin mining revenues during the three months ended December 31, 2024 and 2023, respectively.

Current wording

For our co-locations, hosting fees (which comprise direct operating costs of the third-party operator with energy as the largest cost) and profit sharing were a combined 146.5% and 62.0% as a percentage of bitcoin mining revenues during the three months ended March 31, 2025 and 2024, respectively and 96.7% and 61.7% as a percentage of bitcoin mining revenues during the six months ended March 31, 2025 and 2024, respectively. In connection with our decision to terminate our hosting arrangements, we incurred $665 of non-recurring fees for the transition and vacating the location, included in the hosting fees.

Previous wording

At our hosted facilities, the hosting fee as compared to KWHs utilized in the hosted facilities was $0.070 and $0.067 per KWH for the three months ended December 31, 2024 and 2023, respectively. The Company did not have significant curtailment greater than 20% of total operating time during the three months ended December 31, 2024.

Current wording

At our hosted facilities, the hosting fee as compared to kWh utilized in the hosted facilities was $0.121 and $0.075 per kWh for the three months ended March 31, 2025 and 2024, respectively and was $0.078 and $0.071 per kWh for the six months ended March 31, 2025 and 2024, respectively. The Company did not have significant curtailment greater than 20% of total operating time during the six months ended March 31, 2025.

Previous wording

On a “cost per bitcoin” ratio, miner depreciation expense was $4 and $19,564 for the three months ended December 31, 2024 and 2023, respectively. The decrease presented was mainly due to the miners being nearly fully depreciated as of September 30, 2024.

Current wording

On a “cost per bitcoin” ratio, miner depreciation expense was $4 and $21,763 for the six months ended March 31, 2025 and 2024, respectively. The decrease presented was mainly due to the miners being nearly fully depreciated as of September 30, 2024.

Previous wording

We earned $162,306 in bitcoin mining revenue during the three months ended December 31, 2024, which was an increase of $88,520, or 120%, as compared with $73,786 for the three months ended December 31, 2023. Bitcoin mining revenues are recorded net of bitcoin mining fees charged by our sole mining pool operator that equaled approximately 0.15% of gross bitcoin mining revenues for the three months ended December 31, 2024, and are determined by two main drivers: quantity of bitcoin mined and the price of bitcoin on the date the bitcoin is mined. During the three months ended December 31, 2024, we mined 1,945 bitcoin with an average bitcoin price of $83,443 as compared to 2,020 bitcoin with an average bitcoin price of $36,535 during the three months ended December 31, 2023. The increase in bitcoin mining revenue for the three months ended December 31, 2024 was attributable to the increase in the average bitcoin price offset by the decrease in the bitcoin mined during the period and as compared to the three months ended December 31, 2023. The decrease in the quantity of bitcoin mined was primarily driven by the reduction in bitcoin block rewards from 6.25 per block recognized during the three months ended December 31, 2023 as compared to 3.125 per block recognized during the three months ended December 31, 2024. This reduction in block rewards due to the halving in April 2024 was offset by the increased number of our miners in operation, which increased to 201,808 compared to 88,559, an increase of 128% between December 31, 2023 and December 31, 2024. The increase in our miners in operation increases our hashrate, which is our total computational power, and which when understood in the context of global hashrate, determines how much bitcoin we are able to mine.

Current wording

We earned $181,712 in bitcoin mining revenue during the three months ended March 31, 2025, which was an increase of $69,913, or 63%, as compared with $111,799 for the three months ended March 31, 2024. Bitcoin mining revenues are recorded net of bitcoin mining fees charged by our sole mining pool operator that equaled approximately 0.15% of gross bitcoin mining revenues for the three months ended March 31, 2025, and are determined by two main drivers: quantity of bitcoin mined and the price of bitcoin on the date the bitcoin is mined. During the three months ended March 31, 2025, we mined 1,957 bitcoin with an average bitcoin price of $92,870 as compared to 2,031 bitcoin with an average bitcoin price of $55,046 during the three months ended March 31, 2024. The increase in bitcoin mining revenue for the three months ended March 31, 2025 was attributable to the increase in the average bitcoin price offset by the decrease in the bitcoin mined during the period and as compared to the three months ended March 31, 2024. The decrease in the quantity of bitcoin mined was primarily driven by the reduction in bitcoin block rewards from 6.25 per block recognized during the three months ended March 31, 2024 as compared to 3.125 per block recognized during the three months ended March 31, 2025. This reduction in block rewards due to the halving in April 2024 was offset by the increased number of our miners in operation, which increased to 205,412 compared to 133,963, an increase of 71,449 or 53% between March 31, 2024 and March 31, 2025. The increase in our miners in operation increases our hashrate, which is our total computational power, and which when understood in the context of global hashrate, determines how much bitcoin we are able to mine.

Previous wording

Our cost of revenues was $70,290 for the three months ended December 31, 2024, an increase of $41,394, or 143%, as compared with $28,896 for the three months ended December 31, 2023. These costs were primarily related to energy costs to operate the miners within our owned facilities, which were $63,075 for the three months ended December 31, 2024, an increase of $41,244, or 189%, as compared to $21,831 for the three months ended December 31, 2023. The increase in energy costs was due to the increases in the volume of miners operating in our owned locations. We continually evaluate energy and bitcoin prices and periodically will curtail our mining operations when it is advantageous to do so.

Current wording

Our cost of revenues was $85,424 for the three months ended March 31, 2025, an increase of $51,126, or 149%, as compared with $34,298 for the three months ended March 31, 2024. These costs were primarily related to energy costs to operate the miners within our owned facilities, which were $82,668 for the three months ended March 31, 2025, an increase of $56,440, or 215%, as compared to $26,228 for the three months ended March 31, 2024. The increase in energy costs was due to the expansion of our operations since March 31, 2024 and the increase in the volume of miners operating in our owned locations. We continually evaluate energy and bitcoin prices and periodically will curtail our mining operations when it is advantageous to do so.

Previous wording

We also incurred hosting fees of $6,350 and profit sharing fees of $683 for the three months ended December 31, 2024, an increase of $776, or 14%, and a decrease of $727, or 52%, as compared to $5,574 and $1,411, respectively, for the three months ended December 31, 2023. The hosting fees and profit sharing fees were primarily the result of our co-location agreement with Coinmint. The hosting fees increased period over period due to increased rates charged per KWH even though KWHs utilized decreased slightly.

Current wording

We also incurred hosting fees of $2,736 and profit-sharing fees of $15 for the three months ended March 31, 2025, an decrease of $3,829, or 58%, and a decrease of $1,488, or 99%, as compared to $6,565 and $1,503, respectively, for the three months ended March 31, 2024. The hosting fees and profit-sharing fees were primarily the result of our co-location agreement with Coinmint. The hosting fees decreased period over period due to the expiration of the hosting agreement, subsequent wind-down procedures and removal of miners during the three months ended March 31, 2025.

Previous wording

Professional fees, which consisted primarily of legal, accounting and consulting fees, were $3,885 for the three months ended December 31, 2024, an increase of $2,313, or 147%, from $1,572 for the three months ended December 31, 2023. Legal expenses were $1,445 for the three months ended December 31, 2024, as compared to $173 for the three months ended December 31, 2023. This increase was primarily attributable to legal and other professional fees in connection with merger and acquisition transactions of $396 during the three months ended December 31, 2024, as compared to $0 during the three months ended December 31, 2023. Other professional fees, namely accounting and consulting, were $2,445 for the three months ended December 31, 2024, as compared to $1,403 for the three months ended December 31, 2023, representing an increase of $1,042. The increase in accounting fees was primarily related to tax services and consulting.

Current wording

Professional fees, which consisted primarily of legal, accounting and consulting fees, were $2,983 for the three months ended March 31, 2025, an increase of $775, or 35%, from $2,208 for the three months ended March 31, 2024. This increase was primarily attributable to legal and other professional consulting fees during the three months ended March 31, 2025. Legal expenses were $1,042 for the three months ended March 31, 2025, as compared to $772 for the three months ended March 31, 2024. Other professional fees, namely accounting and consulting, were $1,942 for the three months ended March 31, 2025, as compared to $1,432 for the three months ended March 31, 2024, representing an increase of $509. The increase in accounting fees was primarily related to tax services and consulting.

Previous wording

Payroll expenses were $20,869 for the three months ended December 31, 2024, an increase of $5,549, or 36%, from $15,320 for the three months ended December 31, 2023. Our payroll expenses include all compensation related expenses for our employees and mainly include salaries, wages, payroll-related taxes and benefits and non-cash stock-based compensation. Payroll expenses, excluding non-cash stock-based compensation, were $17,847 for the three months ended December 31, 2024, representing an increase of 232% from $5,368 for the three months ended December 31, 2023, mainly attributed to an increase in employee headcount along with employee bonuses.

Current wording

Payroll expenses were $15,254 for the three months ended March 31, 2025, a decrease of $1,565, or 9%, from $16,820 for the three months ended March 31, 2024. Our payroll expenses include all compensation related expenses for our employees and mainly include salaries, wages, payroll-related taxes and benefits and non-cash stock-based compensation. Payroll expenses, excluding non-cash stock-based compensation, were $12,154 for the three months ended March 31, 2025, representing an increase of 73% from $7,023 for the three months ended March 31, 2024, mainly attributed to an increase in employee headcount along with employee bonuses.

Previous wording

We grant stock-based awards to certain employees as a significant portion of our payroll-related costs. Stock-based compensation, which is a non-cash expense, was $3,021 for the three months ended December 31, 2024, a decrease of $6,931, or 70%, from $9,953 for the three months ended December 31, 2023. The decrease in stock based compensation was mainly attributed to the vesting of a certain performance based restricted stock awards vesting in the three months ended December 31, 2023.

Current wording

We grant stock-based awards to certain employees as a significant portion of our payroll-related costs. Stock-based compensation, which is a non-cash expense, was $3,101 for the three months ended March 31, 2025, a decrease of $6,697, or 68%, from $9,797 for the three months ended March 31, 2024. The decrease in stock-based compensation was mainly attributed to the vesting of a certain market-based restricted stock awards in February 2024. Additionally, there is no grant date or service inception date for the 2025 LTIP and accordingly there is no expense recognized in the six months ended March 31, 2025.

Previous wording

General and administrative expenses increased to $10,054 for the three months ended December 31, 2024 from $5,003 for the three months ended December 31, 2023, representing an increase of $5,051. This increase was primarily attributable to increases in corporate overhead, including, but not limited to, property taxes and insurance premiums (primarily due to the substantial increase in owned assets).

Current wording

General and administrative expenses increased to $11,736 for the three months ended March 31, 2025 from $6,819 for the three months ended March 31, 2024, representing an increase of $4,917. This increase was primarily attributable to increases in corporate overhead, including, but not limited to, property taxes and insurance premiums (primarily due to the substantial increase in owned assets) and rent.

Previous wording

Gain on fair value of bitcoin

Current wording

Loss (gain) on fair value of bitcoin

Previous wording

Gain on fair value of bitcoin for the three months ended December 31, 2024 was $218,206 as compared to $36,041 for the three months ended December 31, 2023, an increase of $182,165. We measured crypto assets within the scope of ASC Topic 350-60 -Intangibles - Goodwill and Other - Crypto Assetsat fair value in accordance with ASC Topic 820 -Fair Value Measurementand included the gains and losses from remeasurement in net income. The gain for the three months ended December 31, 2024 pertains to the change in bitcoin's fair value from approximately $63,300 per bitcoin on September 30, 2024 to approximately $93,400 per bitcoin on December 31, 2024.

Current wording

Loss on fair value of bitcoin for the three months ended March 31, 2025 was $127,667 as compared to a gain on fair value of bitcoin of $119,702 for the three months ended March 31, 2024, a change of $247,369. We measured crypto assets within the scope of ASC Topic 350-60 -Intangibles - Goodwill and Other - Crypto Assetsat fair value in accordance with ASC Topic 820 -Fair Value Measurementand included the gains and losses from remeasurement in net income. The loss for the three months ended March 31, 2025 pertains to the change in bitcoin's fair value from approximately $93,400 per bitcoin on December 31, 2024 to approximately $82,500 per bitcoin on March 31, 2025. Meanwhile the gain for the three months ended March 31, 2024 pertains to the change in bitcoin's fair value from approximately $42,300 per bitcoin on December 31, 2023 to $71,300 per bitcoin on March 31, 2024.

Previous wording

Depreciation and amortization expense increased to $66,229 for the three months ended December 31, 2024, from $29,847 for the three months ended December 31, 2023, an increase of $36,382, or 122%. Depreciation expense increased by $35,792, or 122%, during the three months ended December 31, 2024, to $65,125 from $29,333, mainly due to an increase in miners and mining-related equipment being placed in service during the comparative period. Additionally, effective May 1, 2024, all miners would be adjusted to a useful life of 3 years, a reduction from 5 years.

Current wording

Depreciation and amortization expense increased to $78,901 for the three months ended March 31, 2025, from $32,187 for the three months ended March 31, 2024, an increase of $46,714, or 145%. Depreciation expense increased by $46,267, or $0, during the three months ended March 31, 2025, to $77,933 from $31,666, mainly due to an increase in miners and mining-related equipment being placed in service during the comparative period. Additionally, effective May 1, 2024, all miners would be adjusted to a useful life of 3 years, a reduction from 5 years.

Previous wording

Net income for the three months ended December 31, 2024 was $246,791, an increase of $220,882 compared to net income of $25,909 for the three months ended December 31, 2023, for the reasons stated above.

Current wording

Net loss for the three months ended March 31, 2025 was $138,792, as compared to net income of $126,735 for the three months ended March 31, 2024, for the reasons stated above.

Previous wording

Amortization expense for the three months ended December 31, 2024 was $1,104, an increase of $591, or 115%, from $513 for the three months ended December 31, 2023. In the three months ended December 31, 2024, the Company acquired software in the total amount of $4,000, which was the primary cause for the increase in amortization expense.

Current wording

Amortization expense for the six months ended March 31, 2025 was $2,072, an increase of $1,037, or 100%, from $1,035 for the six months ended March 31, 2024. In the six months ended March 31, 2025, the Company acquired software in the total amount of $6,000, which was the primary cause for the increase in amortization expense.

Previous wording

Other income, net was $46,032 for the three months ended December 31, 2024, compared with other expense, net of $1,203 for the three months ended December 31, 2023, which is a change of $47,235. Other income (expenses) for the three months ended December 31, 2024 consisted primarily of gain on bitcoin collateral returned of $42,493. The Company did not have any bitcoin collateral in the three months ended December 31, 2023.

Current wording

Other income, net was $42,221 for the six months ended March 31, 2025, compared with other income, net of $6 for the six months ended March 31, 2024, which is an increase of $42,215. Other expense for the six months ended March 31, 2025 consisted primarily of gain on bitcoin collateral returned of $42,493. The Company did not have any bitcoin collateral in the six months ended March 31, 2024.

Previous wording

We have not excluded our net gain on fair value of bitcoin ($218,206 and $36,041 in the three months ended December 31, 2024 and 2023, respectively), which we now record in our condensed consolidated statements of operations and comprehensive income as provided in ASC 350-60, as discussed in the Form 10-K.

Current wording

We have not excluded our net gain on fair value of bitcoin $127,667 and $119,702 in the three months ended March 31, 2025 and 2024, respectively, and $90,539 and $155,743 in the six months ended March 31, 2025 and 2024, respectively, which we now record in our condensed consolidated statement of operations and comprehensive income as provided in ASC 350-60, as discussed in the Form 10-K.

Previous wording

Our primary requirements for liquidity and capital are working capital, capital expenditures, loan payments, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, bitcoin inventory and proceeds from our convertible note.

Current wording

Our primary requirements for liquidity and capital are working capital, capital expenditures, loan payments, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, bitcoin inventory, proceeds from our convertible note and line of credit.

Previous wording

As of December 31, 2024, we had total current assets of $1,225,265, consisting of cash and cash equivalents, inventory, prepaid expenses and other current assets, bitcoin, investment in debt security and related derivative asset, current assets held for sale, and total assets in the amount of $2,779,292. Our total current liabilities and total liabilities as of December 31, 2024 were $96,677 and $757,706, respectively. We had working capital of $1,128,588 as of December 31, 2024. We may sell the bitcoin we mine to fund operations and to fund capital expenditures. In addition, we have $633,812 zero-coupon convertible notes and a $50,000 line of credit with Coinbase as discussed in Note 9 - Loans.

Current wording

As of March 31, 2025, we had total current assets of $947,493, consisting of cash and cash equivalents, prepaid expenses and other current assets, bitcoin, investment in debt security and related derivative asset, and total assets in the amount of $2,656,998. Our total current liabilities and total liabilities as of March 31, 2025 were $109,312 and $766,507, respectively. We had working capital of $838,181 as of March 31, 2025. With the recent launch of our bitcoin treasury function in April 2025, we may use a portion of the bitcoin we mine to fund operations and to fund capital expenditures. In addition, we have $634,553 zero-coupon convertible notes outstanding and a $200,000 line of credit with Coinbase as discussed in Note 9 - Loans and Note 16 - Subsequent Events.

Previous wording

Based on our current plans and business conditions, we believe that existing cash and cash equivalents and bitcoin, together with cash generated from operations, will be sufficient to satisfy our anticipated cash requirements for the next 12 months and for the reasonably foreseeable future until we reach consistent profitability, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in the liquidity of our assets. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the ongoing impacts of inflation and fluctuations in interest rates, global conflicts including the conflict between Russia and Ukraine, and increases in tariffs, have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

Current wording

Based on our current plans and business conditions, we believe that existing cash and cash equivalents and bitcoin, together with cash generated from operations and our future investing activities, will be sufficient to satisfy our anticipated cash requirements for the next 12 months and for the reasonably foreseeable future until we reach consistent profitability, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in the liquidity of our assets. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the ongoing impacts of inflation and fluctuations in interest rates, global conflicts including the conflict between Russia and Ukraine, and increases in tariffs, have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

Previous wording

The Company generates non-cash revenue through mining Bitcoin, which it retains the majority based on its long-term value strategy, while funding all operating expenses with cash. As a result, net cash used in operating activities for the three months ended December 31, 2024 was $119,452 primarily due to cost of revenues of $70,290 and payroll expenses of $20,869, in spite of a net income of $246,791, due to the increase of the non-cash gains in the held bitcoin balance. Changes in operating assets and liabilities used a net total of $18,079 of cash.

Current wording

The Company generates non-cash revenue through mining Bitcoin, which it retains the majority based on its long-term value strategy, while funding all operating expenses with cash. As a result, net cash used in operating activities for the six months ended March 31, 2025 was $231,735 primarily due to cost of revenues of $155,714 and payroll expenses of $36,124, in spite of a net income of $107,999, due to the increase of the non-cash gains in the held bitcoin balance. Changes in operating assets and liabilities used a net total of $20,529 of cash.

Previous wording

Operating activities from continuing operations for the three months ended December 31, 2023, resulted in a net cash outflow of $47,276 . This was primarily driven by net income of $25,909, which included significant non-cash revenue and gains, in the form of bitcoin. The non-cash adjustments to reconcile net income to net cash included $29,847 for depreciation and amortization and $9,953 for stock-based compensation, offset by $73,786 of non-cash bitcoin mining revenues. Additionally, changes in operating assets and liabilities contributed a net cash inflow of $6,863.

Current wording

Operating activities from continuing operations for the six months ended March 31, 2024, resulted in a net cash outflow of $92,115. This was primarily driven by net income of $152,644, which included significant non-cash revenue and gains, in the form of bitcoin. The non-cash adjustments to reconcile net income to net cash included $62,034 for depreciation and amortization and $19,750 for stock-based compensation, offset by $185,585 of non-cash bitcoin mining revenues. Additionally, changes in operating assets and liabilities resulted in a net cash outflow of $3,801.

Previous wording

Investing activities from operations used $255,947 during the three months ended December 31, 2024, as compared with using $32,818 for the three months ended December 31, 2023. Our payments on miners (including miner deposits) of $126,867, purchase of fixed assets of $57,359, and payment for the asset acquisition of the Tennessee locations of $8,105 were the main components of our investing cash outflow for the three months ended December 31, 2024. This was partly offset by cash received in the acquisition of GRIID of $1,411 and by cash proceeds received from the sale of miners of $30,134.

Current wording

Investing activities from operations used $315,877 during the six months ended March 31, 2025, as compared with using $231,565 for the six months ended March 31, 2024. Our payments on miners (including miner deposits) of $253,754, purchase of fixed assets of $91,451, and payment for the asset acquisition of the Tennessee and Twin Cities locations of $8,105 and $5,490, respectively were the main components of our investing cash outflow for the six months ended March 31, 2025. This was partly offset by cash received in the acquisition of GRIID of $1,411 and by cash proceeds received from the sale of miners of $41,512.

Previous wording

Cash flows generated from financing activities of continuing operations during the three months ended December 31, 2024 amounted to $531,128 compared to $99,745 for the three months ended December 31, 2023. Our cash flows from financing activities for the three months ended December 31, 2024 consisted primarily of proceeds from the convertible note of $635,695 and proceeds from equity offerings of $186,807, partially offset by the repurchase of common stock of $145,000, aggregate payments for capped call transactions of $90,350, and payments on loans in the amount of $52,158. Our cash flows from financing activities for the three months ended December 31, 2023 mainly consisted of proceeds from underwritten offerings of $108,926.

Current wording

Cash flows generated from financing activities of continuing operations during the six months ended March 31, 2025 amounted to $523,751 compared to $617,933 for the six months ended March 31, 2024. Our cash flows from financing activities for the six months ended March 31, 2025 consisted primarily of proceeds from the convertible note of $635,695 and proceeds from equity offerings of $186,808, partially offset by the repurchase of common stock of $145,000, aggregate payments for capped call transactions of $90,350, and payments on loans in the amount of $54,423. Our cash flows from financing activities for the six months ended March 31, 2024 mainly consisted of proceeds from underwritten offerings of $638,664.