Big Digital Energy, Inc.
For the period ended Dec 31, 2024. Filed Mar 28, 2025.
View on SEC.govAbout this filing
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 28, 2025
BGDE$3.16+19.7%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.
0001213900-24-028158
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-28.
0001013762-25-004161
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 81 previous paragraphs and 69 current paragraphs.
16 unchanged; 26 reworded; 27 added; 39 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 3 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 (27)
Current report
We are a technology company focused on digital infrastructure platforms.
Current report
The Company develops and operates digital infrastructure platforms for enterprise customers and for its own purposes. The Company’s digital infrastructure platforms can be used to operate computing resources for a number of applications, and are offered across AI, HPC, digital asseets, and other computing applications. The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company adapts its operations to the real-time needs of the power grid. The Company also periodically transacts in digital computational machines, data center infrastructure, and related equipment, subject to business and commercial opportunities.
Current report
The Company manages and operates two data center facilities in Pennsylvania delivering a total current capacity of approximately 129 megawatts (MW) and has an additional 24 MW of future capacity in Ohio that is under development, all strategically located in locations served by the PJM Energy Market in the United States. The PJM Energy Market is the largest wholesale power market in North America.
Current report
The Company previously had interests in the Australian market, however for strategic and commercial reasons, the Company is currently focused on advancing its interests in North America. The Company currently operates facilities in the United States of America and does not have operating sites in Australia.
Current report
Digital colocation revenue for the years ended December 31, 2024 and 2023, were $38.5 million and $16.4 million, respectively. This represented an increase of $22.1 million or a 136% year-over-year revenue increase. The increase in revenue was due to the Company expanding its number of digital colocation customers, increasing the number of machines using our digital colocation infrastructure services, and growing its digital colocation business.
Current report
Energy management revenue for the years ended December 31, 2024 and 2023, were $7.6 million and $5.4 million, respectively. This represented an increase of $2.2 million or a 42% year-over-year revenue increase. This increase is due to the Company’s enhanced energy management programs, which utilizes software and analysis, to generate revenue when the Company adapts its power usage to the real-time needs of the grid. The revenue opportunity from energy management is expected to be impacted by seasonal patterns and other weather-related events as well as the dynamic nature of global power prices.
Current report
Digital assets mining revenue from self-mining of bitcoin for the years ended December 31, 2024 and 2023, were $12.6 million and $21.6 million, respectively. This represented a decrease of $9.0 million or 42% over the prior year period. The decrease for the year ended December 31, 2024, was due to a number of factors, including the impact of the April 2024 halving event, and a higher global network difficulty rate in the year ended December 31, 2024, compared to the same period in 2023, which led to lower bitcoin production from self-mining. In the year ended December 31, 2024, the Company also significantly expanded and grew its digital colocation services business across multiple customers reallocating some of its digital asset mining capacities. The Company believes its digital asset mining revenue may continue to fluctuate with bitcoin pricing and market conditions as the bitcoin industry works through the expected volatility inherently associated with bitcoin including the impact post the April 2024 halving event.
Current report
Our overall revenue for the years ended December 31, 2024 and 2023, were $59.3 million and $43.6 million, respectively. This represented an increase of $15.7 million or a 36% year-over-year revenue increase.
Current report
Cost of revenues for the years ended December 31, 2024 and 2023, were $39.0 million and $28.6 million, respectively. The increase in cost of revenues was primarily attributable to an increase in power costs related to an increase in energy used to operate the colocated equipment for our enterprise digital colocation customers within our facilities.
Current report
Operating expenses
Current report
Selling, general and administrative expenses for the years ended December 31, 2024 and 2023, were $18.3 million and $19.2 million, respectively. Total selling, general and administrative expenses decreased by $0.9 million in 2024. The decrease was primarily due decreases in rent and equipment rental of $0.9 million each, marketing of $0.4 million, and property costs of $0.3 million, partially offset by an increase in overall employee and personnel compensation of $2.0 million.
Current report
Stock based compensation expenses for the years ended December 31, 2024 and 2023, were $14.1 million and $10.8 million, respectively. The increase was primarily due to an increase in stock-based compensation related to service-based restricted stock awards of $5.3 million as a result of an increase in awards issued of 6.4 million shares, partially offset by a decrease in stock-based compensation related to stock warrants/options of $1.8 million as a result of a decrease in stock warrants/options issued of 3.0 million shares.
Current report
Depreciation and amortization for the years ended December 31, 2024 and 2023, were $17.9 million and $38.1 million, respectively. The lower depreciation and amortization expense is the result of an increased number of the Company’s digital asset mining hardware being fully depreciated during 2023 and 2024, and a lower number of digital asset miners being acquired during the year ended December 31, 2024.
Current report
Non-operating income (expense)
Current report
Non-operating expense was $14.2 million for the year ended December 31, 2024, compared to non-operating income of $7.7 million for the year ended December 31, 2023. The expense for 2024 was primarily attributed to the loss on deconsolidation of $12.4 million and interest expense of $3.1 million, partially offset by gain on foreign currency transactions of $1.0 million. The income for 2023 was primarily attributed to the gain on deconsolidation of $9.5 million, profit from the sale of site of $3.4 million, and gain on sale of marketable securities of $1.4 million, partially offset by interest expense of $3.0 million, impairment of financial assets of $1.8 million, and loss on foreign currency transactions of $1.7 million.
Current report
During the year ended December 31, 2024, we recorded a net loss on deconsolidation of $12.4 million relating to the liquidation and deconsolidation of MIG No.1, Mawson AU, and Mawson PL. During the year ended December 31, 2023, we recorded a gain on deconsolidation of $9.5 million relating to the liquidation and deconsolidation of Mawson PL. The deconsolidation gain and loss recorded were the result of removing the net assets and certain liabilities of the various subsidiaries from the consolidated financial statements.
Current report
During the year ended December 31, 2024, we recorded a gain on foreign currency transactions of $1.0 million, compared to a loss on foreign currency transactions of $1.7 million for the year ended December 31, 2023. The change was due to the change in foreign exchange rates.
Current report
During the year ended December 31, 2023, we recorded gain on sale of marketable securities of $1.4 million, which is related to the sale of CleanSpark, Inc shares.
Current report
The Company reports all financial information required in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information. Adjusted EBITDA, which is a non-GAAP financial measure, is defined by the Company as net loss plus income tax, depreciation and amortization, further adjusted by impairment of financial assets, net loss of equity method investments, stock based compensation, loss on foreign currency, other non-operating income and expenses, change in fair value of derivative asset, fair value loss on investments, and gain on deconsolidation.
Current report
Adjusted EBITDA should not be considered an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.
Current report
The table below reconciles Adjusted EBITDA, which is a non-GAAP financial measure, to net loss.
Current report
On May 27, 2022, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), and filed a prospectus supplement, to sell shares of our Common Stock through an “at the market offering” program as defined in Rule 415 promulgated under the Securities Act. During the year ended December 31, 2023, 415,271 shares were issued in accordance with the ATM Agreement for cash proceeds of $1.2 million, net of issuance costs. Effective September 6, 2024, the Company terminated the ATM Agreement with Wainwright.
Current report
On December 13, 2024, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Lead Agent”) and A.G.P./Alliance Global Partners (collectively with the Lead Agent, the “Agents” and individually an “Agent”), to sell shares of our Common Stock (the “Shares”), having an aggregate sales price of up to $12 million, from time to time, through an “at the market offering” program under which the Agents will act as sales agent. The sales, if any, of the Shares made under the Sales Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act.
Current report
We will need to raise substantial additional capital to continue our operations, execute our business strategy and meet our debt service obligations. We may not be able to raise adequate capital on a timely basis, on favorable terms, or at all. Our inability to raise sufficient capital would have a material adverse effect on our financial condition and business.
Current report
For the year ended December 31, 2024, net cash provided by operating activities was $3.6 million and for the year ended December 31, 2023, net cash used in operating activities was $2.5 million. We had a net loss of $46.3 million for the year ended December 31, 2024, which included $17.9 million of depreciation and amortization expense, $14.1 million of stock based compensation, $13.0 million of loss on deconsolidation, and $3.1 million of non-cash interest expense. We had a net loss of $58.5 million for the year ended December 31, 2023, which included $38.1 million of depreciation and amortization expense, $10.8 million of stock based compensation, $9.5 million of gain on deconsolidation, and $7.2 million of unrealized loss on derivative asset.
Current report
For the years ended December 31, 2024 and 2023, net cash used in financing activities was $0.8 million and $4.6 million., respectively. Net cash used in financing activities for the year ended December 31, 2024, was due to loan payments of $0.5 million and lease payments of $0.3 million. Net cash used in financing activities for the year ended December 31, 2023 was primarily due to loan payments of $12.5 million, partially offset by proceeds from issuance of common stock of $6.2 million and proceeds from loans of $2.0 million.
Current report
The Company is included as a guarantor of a Secured Loan Facility Agreement (the “W Capital Loan”) for working capital by Mawson PL with W Capital Advisors Pty Ltd for the W Capital Advisors Fund (collectively, “W Capital”). As of December 31, 2024, the balance was AUD $2.1 million (USD $1.3 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.
Removed paragraphs (39)
Previous report
Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated February 6, 2023 Mawson executed at a ratio of 1-6 reverse stock split of its outstanding Common Stock and reduced its authorized common stock to 90,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed February 9, 2023.
Previous report
Mawson Infrastructure Group Inc. (the “Company” or “Mawson” or “we”) is a digital infrastructure company headquartered in the United States.
Previous report
The Company has 3 primary businesses – digital currency mining, co-location and related services, and energy markets.
Previous report
The Company develops and operates digital infrastructure for digital currency, such as bitcoin, mining activities on the Bitcoin blockchain network. The Company also provides digital infrastructure services for its co-location services customers that use computational machines to mine bitcoin through our data centers and the Company charges for the use of its digital infrastructure and related services. The Company also has an energy markets program through which it can receive net energy benefits in exchange for curtailing the power we utilize from the grid in response to instances of high electricity demand. As of the date of this Annual Report, we operate two data center facilities in Pennsylvania, USA.
Previous report
The Company may also transact in digital currency mining, data center infrastructure and related equipment on a periodic basis, subject to prevailing market conditions.
Previous report
The Company designs, develops, operates and manages its digital infrastructure to responsibly support the Bitcoin network by contributing to the scale, structure, and decentralization of the Bitcoin network and optimizing energy consumption. The Company helps contribute to the ecosystem and growth of digital currencies and commodities as there continues to be a global transition to the new digital economy.
Previous report
We strive to operate and invest in markets and communities that offer low or zero-carbon renewable energy sources and participate in energy management activities. We also invest in the communities in which we operate to support our broader ecosystem.
Previous report
Bitcoin mining and co-location power capacity
Previous report
Towards the close of 2023, Mawson’s two Pennsylvania sites, Midland and Bellefonte had approximately 109 MW of total power capacity capable of supporting 35,650 miners for either self-mining or co-location services. The Midland facility had approximately 100 MW of total power and the capacity to support a total of approximately 32,930 miners for self-mining and/or co-location services. As of December 31, 2023, the Bellefonte facility was operating at approximately 8.8 MW of capacity and continues to be used entirely for self-mining purposes.
Previous report
Recent Developments.
Previous report
On October 4, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810-2(c)(3)(A), the Company had a period of 180 calendar days, or until April 1, 2024, to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of the Company’s Common Stock had meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period. On December 19, 2023, the Company received formal written notice from Nasdaq indicating that the Company had regained compliance with the Bid Price Rule.
Previous report
On October 12, 2023, the Company entered into a new Service Framework Agreement with a wholly owned subsidiary of Consensus Technology Group, Consensus Colocation PA LLC, for co-location services for approximately 15,876 Bitmain Antminer S19 XP miners or approximately 50 MW at Mawson’s Midland, Pennsylvania facilities (the “Service Framework Agreement”). The Service Framework Agreement has the Company providing co-location services to the customer for 12 months and the parties can extend further upon mutual agreement.
Previous report
On December 26, 2023, the Company entered into an additional Addendum to the Employment Agreement between the Company and Rahul Mewawalla, the Company’s Chief Executive Officer and President, dated May 22, 2023 (the “Addendum B”). The Addendum B is intended to reflect that the Company did not make certain equity grants and compensation per the terms and timelines it was obligated to Mr. Mewawalla and provides benefits to Mr. Mewawalla to compensate Mr. Mewawalla . The Addendum B provides for Mr. Mewawalla receiving fully vested restricted stock unit awards and compensation in calendar year 2024, but no later than October 31, 2024, as per the Addendum B. The Addendum B also updates certain provisions of the Employment Agreement as per the Addendum B.
Previous report
On February 2, 2024, the Company’s lease for property in Sharon, Pennsylvania was terminated, and as of March 2024 the Company has moved completely out of the facility, which was a non-operating site.
Previous report
Mr. James Manning, who stepped down as Chief Executive Officer of the Company effective May 22, 2023, had agreed with Mawson AU that he would be issued 1.35 million RSUs and his other RSU agreements and entitlements would be cancelled, as set forth in the Company’s Current Report on Form 8-K filed May 25, 2023. The Company’s Audit Committee of the Board commenced an investigation in the third quarter of 2023 into potential related party transactions involving former Board member and CEO, Mr. James Manning, including but not limited to Mr. Manning’s failure to appropriately disclose certain related party transactions, late or incomplete disclosure of certain transactions, and a failure to confirm to the Company’s satisfaction that the disclosures made about related party transactions were complete. Following the investigation, the Audit Committee reported its initial findings to the Board on February 15, 2024. Based on the information obtained to date and Mr. Manning’s repeated refusal to either provide a full and complete disclosure of his related party transactions (or confirm the accuracy of prior related party disclosures provided to the Company) the Audit Committee determined that there is a prima facie basis to conclude that Mr. Manning did not fully and properly disclose his related party transactions to the Company. Based on this determination, the Board resolved on February 19, 2024, that certain RSUs and other equity grants provided for in Mr. Manning’s May 2023 Separation Agreement should not be issued by the Company.
Previous report
Digital currency revenues from self-mining of bitcoin for the year ended December 31, 2023 and 2022, were $21.59 million and $43.11 million respectively. This represented a decrease of $21.52 million or 50% over the prior year period. The decrease in self-mining revenue for 2023 was primarily attributable to a decrease in the total bitcoin produced given amongst other reasons, the change in the Company’s portfolio of operating facilities. During 2023, the Company had operations across its two Pennsylvania facilities, whereas 2022 included the operations of the Georgia facility, which was sold by the Company in October 2022. The sale of the Georgia facility included the sale of 6,468 miners. Due to the change in portfolio of operating facilities, consequently less miners were deployed during 2023. Bitcoin produced in 2023 totaled 741.33 compared with 1,342.59 in the 2022 period, a decrease of 45% of bitcoin produced over the respective period. The average price of bitcoin during both the year ended December 31, 2023, and 2022 remained relatively consistent. During the year ended December 31, 2023, the average price of bitcoin was $28,893 whereas the average price of bitcoin during year ended December 31, 2022 was $28,205.
Previous report
Co-location services revenue for the years ended December 31, 2023 and 2022, were $16.36 million and $13.34 million, respectively. This 23% year over year increase was due to an increase in the number of miners we co-located during 2023. The Company announced the Service Framework Agreement on October 19, 2023, providing co-location services to a subsidiary of Consensus Technology Group LLC for 50 MW. The Company also announced on December 19, 2023, it had signed another new customer co-location agreement with Krypton Technologies LLC for 6 MW, both these agreements replace the Customer Equipment Co-Location Agreement the Company’s subsidiary, Luna Squares LLC, had with Celsius Mining LLC, which expired on August 23, 2023.
Previous report
Net energy benefits for the years ended December 31, 2023 and 2022, were $5.35 million and $13.70 million, respectively. This represented a decrease of $8.35 million or a 61% decrease. This decrease is due to the Company participating less in the energy programs in 2023 because of lower power prices than in 2022.
Previous report
Operating costs and expenses
Previous report
Cost of revenue for the years ended December 31, 2023 and 2022, were $28.56 million and $47.7 million, respectively. The decrease in cost of revenue was primarily attributable to a decrease in power costs related to energy used to operate our self-mining equipment and co-location services. This decrease is attributable to the change in the Company’s portfolio of operating facilities in 2023, where the Company had operations across its two Pennsylvania facilities, whereas the prior period included the operations of the Georgia facility including 6,468 miners, which was sold by the Company in October 2022.
Previous report
Selling, general and administrative expenses for the years ended December 31, 2023 and 2022, were $19.18 million and $25.85 million, respectively. Total selling, general and administrative expenses were lower by $6.67 million in 2023. Some of the main factors contributing to the decrease in the expenses were lower payroll costs that decreased by $0.51 million; consultant fees that decreased by $0.73 million; marketing costs that decreased by $1.05 million; while contract labor costs decreased by $1.34 million; and equipment repairs decreased by $2.30 million, as a result of the cost reduction actions that the Company had undertaken during 2023.
Previous report
Stock based compensation expenses for the years ended December 31, 2023 and 2022, were $10.83 million and $3.01 million, respectively. In the year ended December 31, 2023, stock based compensation was largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $1.84 million, shares issued to W Capital Advisors Pty Ltd amounting to $0.31 million for consultancy and advisory work and $9.60 million in relation to the Company’s employees’ long-term incentive plans. Whereas in December 31, 2022, share based payments were largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $1.67 million and $1.26 million in relation to long-term incentives for the Company’s leadership team.
Previous report
Depreciation and amortization for the years ended December 31, 2023 and 2022, were $38.08 million and $63.20 million, respectively. The decrease is primarily attributable to the Company owning less miners in 2023 following the sale of its Georgia facilities in October 2022. There was also a revised estimate of the useful life of miners effective on December 1, 2022, to better reflect the pattern of consumption, and the method of depreciation was changed from reducing balance to the straight line method from that date.
Previous report
Non-operating expense
Previous report
Non-operating expenses consist primarily of interest expense, losses on foreign currency transactions, impairment of financial assets, share of losses of equity accounted investments and other expenses.
Previous report
Interest expense for years ended December 31, 2023 and 2022, were $3.05 million and $6.06 million, respectively. This was a decrease of $3.01 million, which was attributable to the paydown of debt during 2023.
Previous report
During the years ended December 31, 2023 and 2022, the realized and unrealized loss on foreign currency transactions was $1.74 million and $6.67 million, respectively. This movement was due to the movement in foreign exchange rates.
Previous report
Non-operating income
Previous report
Non-operating income consists primarily of profit on sale of site assets, gain on sales of marketable securities, gain on deconsolidation and other income.
Previous report
The gain on sales of marketable securities for the years ended December 31, 2023 and 2022, were $1.44 million and $0, respectively. The gain during the year ended December 31, 2023 was in relation to the sale of CleanSpark, Inc shares.
Previous report
During the year ended December 31, 2023, the Company recognized a deconsolidation gain of $9.47 million. This gain was as a result of Mawson Infrastructure Group Pty Ltd going into voluntary administration and accordingly the subsidiary was deconsolidated. The deconsolidation gain recorded was as a result of removing the net assets and certain liabilities of this subsidiary from the consolidated financial statements. See Note 3 Subsidiary Deconsolidation for further discussion.
Previous report
Net loss available to Common Shareholders
Previous report
As a result of the foregoing, the Company recognized a net loss for the years ended December 31, 2023 and 2022, of $60.42 million and $52.76 million, respectively.
Previous report
The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the company’s financial results for the foreseeable future. In addition, other companies, including other companies in the Company’s industry, may calculate non-GAAP financial measures differently than the Company does, limiting their usefulness as a comparative tool.
Previous report
The Company is providing supplemental financial measures for (i) non-GAAP adjusted earnings before interest, taxes, depreciation and amortization, or (“adjusted EBITDA”) that excludes the impact of interest, income tax, depreciation, amortization, stock based compensation expense, change in fair value of derivative asset, impairment of financial assets, unrealized gains/losses, share of net loss of equity method investments, gain on deconsolidation and certain non-recurring expenses. We believe that adjusted EBITDA is useful to investors in comparing our performance across reporting periods on a consistent basis where one-time, or non-recurring gains or losses or expenses unrelated to operating activities would otherwise mask the Company’s operating performance.
Previous report
During the year ended December 31, 2023, we repaid $12.46 million of principal payments against the historical facilities provided by Celsius, Marshall and W Capital Advisors Pty Ltd.
Previous report
For the year ended December 31, 2023, net cash used by operating activities was $2.55 million and for the year ended December 31, 2022, net cash provided in operating activities was $14.26 million. The decrease in net cash provided by operating activities was primarily attributable to timing differences in trade and other receivables and trade and other payables.
Previous report
For the year ended December 31, 2023, net cash used in financing activities was $4.65 million and for the year ended December 31, 2022, net cash provided by financing activities was $13.99 million. The cash used in financing activities during the year ended December 31, 2023, was primarily attributable to the repayment of borrowings.
Previous report
On September 2, 2022, Mawson AU entered into a Secured Loan Facility Agreement with W Capital Advisors Pty Ltd with a total loan facility of AUD $3.00 million (USD $1.9 million). This was amended on September 29, 2022, and the loan facility was increased to AUD$8.00 million (USD $5.2 million). As of December 31, 2023, AUD $1.68 million (USD $1.15 million) has been drawn down from this facility, all of which is classified as a current liability. The Secured Loan Facility accrues interest daily at a rate of 12% per annum and is paid monthly. Principal repayments are paid ad hoc in line with the loan facility agreement. The Secured Loan Facility expired in March 2023 and Mawson Infrastructure Group Pty Ltd and W Capital Advisors Pty Ltd are in ongoing discussions in respect of the facility. On October 30, 2023, Mawson AU appointed voluntary administrators, and the facility will be managed as part of the voluntary administration. Refer to note 3 subsidiary deconsolidation for further information.
Reworded paragraphs (26)
Previous wording
The following discussion of our financial condition and results of operations for the years ended December 31, 2023 and 2022, should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Annual Report. All amounts are in U.S. dollar unless otherwise stated.
Current wording
The following discussion of our financial condition and results of operations for the years ended December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under Item 1A “Risk Factors” and elsewhere in this Annual Report.
Previous wording
Sales of digital mining equipment for the years ended December 31, 2023 and 2022, were $0.26 million and $14.24 million, respectively.
Current wording
Sales of digital mining equipment for the years ended December 31, 2024 and 2023, were $0.6 million and $0.3 million, respectively. This represented an increase of 50% over the prior year period.
Previous wording
Our cost of revenue consists primarily of direct power costs related to digital currency mining and co-location services and cost of mining equipment sold.
Current wording
Our cost of revenues consists primarily of direct power costs related to digital asset mining and colocation services and cost of mining equipment sold.
Previous wording
Our operating costs and expenses include cost of revenues; selling, general and administrative expenses; stock based compensation; change in fair value of derivative asset; and depreciation and amortization.
Current wording
Our operating expenses include: selling, general and administrative expenses; stock based compensation; change in fair value of derivative asset; and depreciation and amortization.
Previous wording
Our selling, general and administrative expenses consist primarily of professional and management fees relating to: employee compensation, audit; legal; equipment repairs; marketing; freight; insurance; consultant fees; lease amortization and general expenses.
Current wording
Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs; marketing; freight; insurance; consultant fees; lease amortization and general expenses.
Previous wording
Depreciation consists primarily of depreciation of digital currency mining hardware and MDC equipment.
Current wording
Depreciation consists primarily of depreciation of digital asset mining hardware and MDC equipment.
Previous wording
During the years ended December 31, 2023 and 2022, there was a loss on the fair value of the derivative asset by $7.24 million and a gain of $11.30 million, respectively, in relation to our power supply arrangements. The loss on the derivative asset in the current year is due to the fall in the price of energy costs combined with less time remaining on the power supply agreement.
Current wording
During the years ended December 31, 2024 and 2023, there was an unrealized loss on the fair value of the derivative asset of $1.2 million and $7.2 million, respectively, in relation to our power supply arrangements. The change in fair value between December 31, 2023 and December 31, 2024 is primarily due to one less year remaining on the derivative asset as of December 31, 2024 and a reduction of approximately 5% in the forward market prices between 2024 and 2025.
Previous wording
The profit on sale of site for the years ended December 31, 2023 and 2022, were $3.35 million and $8.28 million, respectively. The 2023 amounts related to the sale of the Luna Squares Texas LLC along with 59 transformers. Whereas the 2022 amount relates to the sale of our Georgia bitcoin mining site which was sold to CleanSpark Inc. on October 7, 2022.
Current wording
During the year ended December 31, 2023, we recorded profit from the sale of site of $3.4 million, of which $2.6 million relates to the sale of the Luna Squares Texas LLC along with 59 transformers, and $0.8 million relates to sale of the Georgia site.
Previous wording
During the year ended December 31, 2023 the Company recognized an impairment of $1.84 million for the equity accounted investment in Tasmania Data Infrastructure Pty Ltd (“TDI”). The impairment was recognized on the basis of TDI’s updates and its change in strategic direction, including changing from being a bitcoin miner to mine copper and gold and therefore the value of the company was deemed much lower than our investment value. During the year ended December 31, 2022, the Company recognized an impairment of $3.38 million of which $2.06 million related to the equity accounted investment TDI, $1.13 million related to the equity accounted investment Cosmos Asset Management Pty Ltd and $0.19 million was in relation to the deconsolidation of the Wize Entities.
Current wording
During the year ended December 31, 2023, the Company recognized an impairment of $1.8 million for the equity accounted method investment in Tasmania Data Infrastructure Pty Ltd.
Previous wording
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the year ended December 31, 2023, we financed our operations primarily through:
Current wording
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the year ended December 31, 2024, we financed our operations primarily through net positive cash flow provided by operating activities and other cash reserves.
Previous wording
We believe our working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to us, further issuances of shares, and other potential sources of capital, monetization or funds. These are expected to be adequate to fund our operations over the next twelve months. For our business to grow it is expected, we may continue investing in mining equipment and infrastructure and will require additional working capital in the short-term and long-term. As of December 31, 2023, we had an aggregate of $19.35 million of debt of which $16.87 million is overdue for repayment and the remaining is all required to be repaid within two months of December 31, 2023 unless we refinance or renegotiate the terms. In addition, the Celsius deposit of $15.33 million is the subject of an ongoing legal dispute.
Current wording
We believe our near-term working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to us, future issuances of shares, and other potential sources of capital, monetization, or funds. We believe a combination of these opportunities are expected to be adequate to fund our long-term operations needed over the next twelve months. For our business growth, it is expected we may continue investing in expanding our infrastructure, expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term. As of December 31, 2024, we had an aggregate of $20.9 million of debt, all of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims. In addition, the Celsius deposit of $15.3 million is the subject of an ongoing legal dispute in arbitration with Mawson and Celsius having claims and counterclaims.
Previous wording
As of December 31, 2023 and 2022, we had a cash and cash equivalent balance of $4.48 million and $0.95 million, respectively. The Company expects to continue to focus on improving its cash flows through a number of various activities that should better position our future cash position.
Current wording
As of December 31, 2024 and 2023, we had a cash and cash equivalent balance of $6.1 million and $4.5 million, respectively. The Company expects to continue to focus on improving its cash flows through a number of various activities.
Previous wording
As of December 31, 2023 and 2022, the trade receivables balance was $12.11 million and $10.46 million, respectively.
Current wording
As of December 31, 2024 and 2023, the trade receivables balance was $15.2 million and $12.1 million, respectively.
Previous wording
As of December 31, 2023, we had $19.35 million of outstanding short-term borrowings, and as of December 31, 2022, we had $23.61 million of short-term borrowings. The short-term borrowings as of December 31, 2023, relate to Celsius Mining LLC, W Capital Advisors Pty Ltd, the secured convertible promissory notes issued to investors and Marshall Investments MIG Pty Ltd (these loans are currently in default, refer to Material Cash Requirements section below for more information*)*. As of December 31, 2023 and 2022, we had $0 and $4.51 million, respectively, of outstanding long-term borrowings.
Current wording
As of December 31, 2024 and 2023, we had $20.9 million and $19.4 million, respectively, of outstanding short-term borrowings. The short-term borrowings as of December 31, 2024, relate to Celsius Mining LLC, W Capital Advisors Pty Ltd, the secured convertible promissory notes issued to investors and Marshall Investments MIG Pty Ltd (these loans are currently in default, refer to Material Cash Requirements section below for more information*)*.
Previous wording
As of December 31, 2023 and 2022, we had negative working capital of $33.18 million and $15.17 million, respectively.
Current wording
As of December 31, 2024 and 2023, we had negative working capital of $35.9 million and $33.2 million, respectively.
Previous wording
For the year ended December 31, 2023, net cash provided by investing activities was $10.74 million and for the year ended December 31, 2022, net cash used in investing activities was $32.54 million. The net cash provided by investing activities during the year ended December 31, 2023, was primarily attributable to the proceeds from sale the subsidiary Luna Squares Texas LLC and the 59 transformers, as well as the proceeds from the sale of shares in CleanSpark, Inc.
Current wording
For the year ended December 31, 2024, net cash used in investing activities was $1.1 million and for the year ended December 31, 2023, net cash provided by investing activities was $10.7 million. Net cash used in investing activities for the year ended December 31, 2024 was due to capital expenditures of $2.0 million partially offset by proceeds from sales of property, plant and equipment of $0.8 million. Net cash provided by investing activities during the year ended December 31, 2023, was primarily attributable to the proceeds from the sale of Luna Squares Texas LLC and the 59 transformers of $9.2 million, as well as the proceeds from the sale of shares in CleanSpark, Inc of $6.9 million, partially offset by capital expenditures of $5.4 million.
Previous wording
The following discussion summarizes our material cash requirements from contractual and other obligations. For more information on these matters, please see Item 3. Legal Proceedings section.
Current wording
The following discussion summarizes our material cash requirements from contractual and other obligations. For more information on these matters, please see Note 10 – Commitments and Contingencies to the consolidated financial statements included in Item 15. “Exhibits, Financial Statement Schedules” in this Annual Report.
Previous wording
On December 9, 2021, MIG No. 1 Pty Ltd (on March 19, 2024, MIG No.1 Pty Ltd was placed into a court appointed liquidation and wind-up process, as disclosed in note 15 subsequent events) entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd. The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 Pty Ltd and a general security agreement given by the Company. Principal repayments began during November 2022. The outstanding balance is $9.10 million as of December 31, 2023, all of which is classified as a current liability. MIG No. 1 Pty Ltd has not made a principal and interest payment since May 2023. MIG No. 1 is in receivership under Australian law. All relevant parties have reserved their respective rights.
Current wording
The Company is included as a guarantor of a Secured Loan Facility Agreement (the “Marshall Loan”) by MIG No. 1 Pty Ltd (“MIG No.1”) with Marshall Investments GCP Pty Ltd ATF for the Marshall Investments MIG Trust (collectively, “Marshall”). The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company. Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $9.9 million as of December 31, 2024, all of which is currently classified as a current liability.
Previous wording
On February 23, 2022, Luna Squares LLC entered into a Co-Location Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares LLC a principal amount of $20 million, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Secured Promissory Note has a maturity date of August 23, 2023, the outstanding balance is $8.54 million as of December 31, 2023, all of which is classified as a current liability. Celsius Mining LLC transferred the benefit of the promissory note to Celsius Network Ltd. Celsius Mining LLC and Celsius Network Ltd filed for Chapter 11 bankruptcy protection on July 13, 2022. Under the Co-location Agreement, Celsius Mining LLC advanced $15.33 million to Luna Squares LLC that was held as a deposit. Whether that amount has been forfeited or must be returned to Celsius Mining LLC is the subject of a dispute between the parties.
Current wording
On February 23, 2022, Luna Squares LLC (“Luna”) entered into a Digital Colocation Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna issued a Secured Promissory Note (the “Celsius Loan”) for repayment of such amount. The Celsius Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Loan had a maturity date of August 23, 2023. The outstanding balance including interest is $9.7 million as of December 31, 2024, all of which is currently classified as a current liability.
Previous wording
On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3.60 million (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3.60 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million has been classified as a current liability. The convertible note matured in July 2023 and the Company has not repaid the principal amount as of December 31, 2023. Interest has been accrued from July onwards and therefore the outstanding balance is $0.57 million as of December 31, 2023, all of which is classified as a current liability. During March 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
Current wording
On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3.6 million (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3.6 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The convertible note matured in July 2023. Interest has been accrued from July onwards and therefore the outstanding balance is $0.1 million as of December 31, 2024, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
Previous wording
As of December 31, 2023, and 2022, we had net current liabilities of $33.18 million and $15.17 million, respectively. As of December 31, 2023 and 2022, we had net assets of $30.38 million and $76.17 million, respectively. As of December 31, 2023, we had an accumulated deficit of $182.67 million compared to $122.26 million as of December 31, 2022. Our cash position of December 31, 2023, was $4.48 million in comparison to $0.95 million as of December 31, 2022. For the years ended December 31, 2023 and 2022 the Company incurred a loss after tax of $60.42 million and a loss after tax of $52.76 million, respectively. Included in trade and other receivables is a $2 million payment being the final payment due from CleanSpark, Inc for the sale of the Georgia facility. CleanSpark, Inc has disputed this payment. On December 22, 2023, the Company made formal demand on CleanSpark Inc. and CSRE Properties Sandersville, LLC for $2,000,000 for breach of contract on the debtors’ obligation to pay for an energy earnout provision contained in a Bill of Sale dated October 1, 2022 between the parties. Subsequently, on January 12, 2024, Mawson and Luna filed notice of its claim for formal arbitration before the American Arbitration Association. The arbitration is proceeding.
Current wording
As of December 31, 2024, and 2023, we had negative working capital of $35.9 million and $33.2 million, respectively. As of December 31, 2024 and 2023, we had net assets of ($3.2) million and $30.4 million, respectively. As of December 31, 2024, we had an accumulated deficit of $228.8 million compared to $182.7 million as of December 31, 2023. Our cash position of December 31, 2024, was $6.1 million in comparison to $4.5 million as of December 31, 2023. For the years ended December 31, 2024 and 2023, the Company incurred a loss after tax of $46.1 million and $60.4 million, respectively. Included in trade and other receivables is a $2.0 million payment being the final payment due from CleanSpark, Inc. for the sale of the Georgia facility. CleanSpark, Inc. has disputed this payment. On December 22, 2023, the Company made formal demand on CleanSpark Inc. and CSRE Properties Sandersville, LLC for at least $2.0 million for breach of contract of a Bill of Sale dated October 1, 2022 between the parties. Subsequently, on January 12, 2024, Mawson and Luna filed notice of its claim for formal arbitration before the American Arbitration Association which was dismissed on May 1, 2024, as it was determined that the arbitration was not the proper forum. On July 16, 2024 the Company filed a formal complaint in the matter entitled Mawson Infrastructure Group, Inc., and Luna Squares, LLC v. CleanSpark, Inc. and CSRE Properties Sandersville, LLC in the US District Court for the Southern District of New York, Civil Action No. 1:24-cv-5379 against CleanSpark Inc. and CSRE Properties Sandersville, LLC for $2.0 million for breach of contract of the debtors’ obligation to pay for an energy earnout provision contained in a Bill of Sale dated October 1, 2022 between the parties. On September 13, 2024, the defendants filed a motion to dismiss the proceedings. The parties briefed their positions, and a determination remains before the Court. At this time, the matter is pending.
Previous wording
Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. In particular, we have large power usage costs, and other significant costs include our lease, operational and employee costs. We expect these capital and liquidity 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, external debt facilities available to us and further issuances of shares.
Current wording
Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. In particular, we have large power usage costs, and other significant costs include our lease, operational and employee costs. We expect these capital and liquidity 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, which are available to us, and further issuances of shares.
Previous wording
We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, potential acquisitions or unforeseen circumstances, and we will likely need to determine to engage in equity or debt financings in the short term. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to fund, grow or support our business model and to respond to business challenges could be significantly limited, our business, financial condition and results of operations could be adversely affected, and this may result in bankruptcy or our ceasing operations.
Current wording
We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, potential acquisitions or unforeseen circumstances, and we will likely need to engage in equity or debt financings in the short term. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to fund, grow or support our business model and to respond to business challenges could be significantly limited, our business, financial condition and results of operations could be adversely affected, and this may result in bankruptcy or our ceasing operations.
Previous wording
The Company is taking steps to preserve cash by optimizing costs and negotiating with suppliers to improve their terms of trade. The Company has been improving its revenue generation by improving the efficiency of its operations and adding co-location services customers. The Company will continue to seek to optimize its cashflows.
Current wording
The Company is taking steps to preserve cash by optimizing operations, reducing costs and pursuing efficiencies. The Company has been improving its revenue generation by enhancing its operations, driving growth in business lines, adding multiple digital colocation services customers and diversifying its businesses. The Company will continue to seek to optimize its cashflows through these and other initiatives.
Previous wording
For information with respect to recent accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
For information with respect to recent accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Annual Report for the year ended December 31, 2024.
Previous wording
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, and the contingent obligation with respect to future revenues.
Current wording
The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions, the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, and the contingent obligation with respect to future revenues.