CLEANSPARK, INC.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “Form 10-K”). This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in other parts of this Quarterly Report on Form 10-Q, as well as those identified in the “Risk Factors” section of our Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. See “Forward-Looking Statements.”

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with the interim Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in the Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in other parts of this Quarterly Report on Form 10-Q, as well as those identified in the “Risk Factors” section of our Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. See “Forward-Looking Statements.”

Previous wording

We are a bitcoin mining company. We independently own, lease 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 987 megawatts (“MW”) as of June 30, 2025. We intend to continue our growth in these regions and are actively developing plans for additional capacity in 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 June 30, 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 June 30, 2025.

Current wording

We are a data center developer, until recently focused exclusively on bitcoin mining. We focus on providing scalable, energy-efficient digital infrastructure across the United States. We independently own, lease and operate a large portfolio of data centers and power assets with locations in Georgia, Tennessee, Mississippi and Wyoming for a total contracted power capacity of approximately 1,455 megawatts (“MW”) as of December 31, 2025. In October 2025, we acquired property and secured long-term power supply agreements in Texas to support the development of a next-generation data center campus. In December 2025, we acquired property in South Dakota with the intention to build out infrastructure. We intend to continue our growth in these regions and are actively developing plans for additional capacity in these states and other regions. We have no intention to mine, purchase or hold any crypto assets other than bitcoin at this time or in the foreseeable future, and we did not hold any other crypto asset as of December 31, 2025.

Previous wording

We design our infrastructure to efficiently, profitably, and responsibly secure and support bitcoin, the world’s most recognized digital commodity. We cultivate trust and transparency among our employees, the communities where we operate, our public market stakeholders, and the people around the world who depend on bitcoin.

Current wording

We design our infrastructure to responsibly secure and support both bitcoin mining and AI and HPC workloads. We cultivate trust and transparency among our employees and the communities where we operate.

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 June 30, 2025, our operating mining units produced an average computing power of 45.3 exahash per second (“EH/s”), reaching a peak of 50 EH/s during the period. 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 Tennessee, 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.

Current wording

Bitcoin mining has historically been our principal revenue generating business activity. 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, 2025, our operating mining units produced an average computing power of 47.1 exahash per second (“EH/s”), following our first achievement of a peak hashrate of 50 EH/s during fiscal year 2025. 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 infrastructure at our owned sites in Tennessee, Georgia, Mississippi, and Wyoming, while also pursuing regional expansion opportunities and evaluating strategic acquisition targets. A company’s computing power, measured in hashrate, is a significant driver of its bitcoin mining revenue, and when compared to the global hashrate, determines the company’s market share, making hashrate one of the most important metrics for evaluating bitcoin mining companies.

Previous wording

We owned approximately 329,001 miners as of June 30, 2025, of which approximately 241,227 were in service as of June 30, 2025 and the remainder pertain to new machines ready to install in expansion opportunities, are being evaluated for relocation or are pending repair. Our miners range in age from 1-54 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 in service as of June 30, 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 16.2 w/th.

Current wording

We owned approximately 318,776 miners, of which approximately 245,199 were in service as of December 31, 2025. The remainder primarily consists of new machines that are ready for installation at expansion sites, are under evaluation for relocation, or are awaiting repair. Our miners range in age from 3-60 months and have an average age of approximately 18 months. 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 in service as of December 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 16.8 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. 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, or bitcoin balance hedging, incremental other income 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 from our mining operations by contributing all of our computing power to a single mining pool operator, which is currently our sole customer under a contract terminable at any time by either party. In exchange, we earn variable consideration in the form of bitcoin rewards, determined daily using a predetermined formula based on our contributed computing power. The consideration is included in revenue once it is no longer constrained, when we can reasonably estimate the rewards and determine a significant reversal is unlikely, and our sole performance obligation of providing computing power is satisfied. Revenue is not disaggregated into block rewards and transaction fees. From time to time, we sell bitcoin to support operations and strategic growth, and we may also use bitcoin as collateral for lending arrangements. In April 2025, we launched an institutional-grade in-house trading function as we shift to a balanced approach between monetizing new production and building long-term holdings, and we plan to continue to integrate these strategies into our regular treasury management activities. As part of this strategy, we began entering into bitcoin-linked derivative contracts to economically hedge the volatility of bitcoin prices and to generate liquidity in support of core operating activities. These contracts serve as a strategic alternative to selling bitcoin directly and are intended to monetize our bitcoin holdings while managing exposure to adverse price movements. The types of derivatives utilized for this purpose may include bitcoin futures, options, and other structured instruments. These contracts are typically short-term in nature and may be cash-settled or settled in-kind. Treasury management activities may serve cash management, strategic growth, or bitcoin balance hedging, incremental other income or other general corporate purposes. Currently, we do not employ a fixed formula for when or how much bitcoin to sell, and decisions are made by management based on working capital needs, real-time market conditions, risk management objectives, and broader strategic considerations.

Previous wording

As of June 30, 2025, we held 10,075 bitcoins of which, we held 99% in cold storage and 1% in hot wallets. The fair value of our bitcoin as of June 30, 2025 was $1,079,754 on our condensed consolidated balance sheets. Our bitcoin is classified on our balance sheet as either current or noncurrent. We also have 2,533 bitcoin that are held as collateral for our borrowings under our Coinbase Line of credit, which are classified in our balance sheet as Receivable from bitcoin collateral. 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 December 31, 2025, we held approximately 11,452 bitcoins and had a receivable for 1,648 bitcoin that was posted as collateral and recorded on our Condensed Consolidated Balance Sheets as Receivable for bitcoin collateral. The fair value of our bitcoin as of December 31, 2025 was $1,001,997 on our Condensed Consolidated Balance Sheets and the fair value of our Receivable for bitcoin collateral was $144,163. The fair value of bitcoin for each 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.

Previous wording

As of June 30, 2025 and September 30, 2024, the Company did not hold any digital currency other than bitcoin.

Current wording

As of December 31, 2025 and September 30, 2025, the Company did not hold any other cryptocurrency of value other than bitcoin.

Previous wording

($ presented in 000's, except for bitcoin price and information set forth under the heading “Bitcoin Mining Operations”)

Current wording

($ presented in 000's, except for per share amounts, bitcoin price and information set forth under the heading “Bitcoin Mining Operations”)

Previous wording

We operate a fleet of servers commonly known as miners or ASICs (Application-Specific Integrated Circuits), which are computer chips customized for a specific use. In the case of bitcoin mining, ASICs calculate the SHA-256 algorithm as efficiently and quickly as possible in order to compete with other miners to solve blocks. Each calculation is a hash, and each machine’s computational power is measured in terahash processed per second (“th/s”). One terahash is equal to 1 trillion hashes. The more terahash we produce and contribute into the mining pool, the higher our percentage of the blockchain reward.

Current wording

We operate a fleet of servers commonly known as miners or ASICs (Application-Specific Integrated Circuits), which are computer chips customized for a specific use. In the case of bitcoin mining, ASICs calculate the SHA-256 algorithm as efficiently and quickly as possible in order to compete with other miners to solve blocks. Each calculation is a hash, and each machine’s computational power is measured in terahash processed per second. One terahash is equal to 1 trillion hashes. The more terahash we produce and contribute into the mining pool, the higher our percentage of the blockchain reward.

Previous wording

As of June 30, 2025, our operating hashrate was approximately 5.14% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date equaled approximately 23-24 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 December 31, 2025, our operating hashrate was approximately 4.46% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date equaled approximately 20-21 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 and nine months ended June 30, 2025 and 2024 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 months ended December 31, 2025 and 2024 and the total energy usage and cost per each kilowatt hour (“kWh”) utilized within our owned facilities.

Previous wording

(1)Average revenue of each bitcoin mined is calculated by dividing the sum of bitcoin mining revenue for our owned facilities by the total number of bitcoin mined by our owned facilities during the respective periods. We have determined that Coinbase is the principal market for valuing bitcoin transactions and use the closing price of bitcoin at 23:59:59 UTC as the source of recording revenue. See the table “Range of intraday bitcoin prices” for information on the range of intraday bitcoin prices for quarterly periods since September 30, 2023.

Current wording

(1)Average revenue of each bitcoin mined is calculated by dividing the sum of bitcoin mining revenue for our owned facilities by the total number of bitcoin mined by our owned facilities during the respective periods. We have determined that Coinbase is the principal market for valuing bitcoin transactions and use the closing price of bitcoin at 23:59:59 UTC as the source of recording revenue. See the table “Range of intraday bitcoin prices” for information on the range of intraday bitcoin prices for quarterly periods between October 1, 2024 and December 31, 2025.

Previous wording

Power prices are the most significant cost driver for our wholly owned locations, and energy expense represented 45.3% and 40.7% as expressed as a percentage of bitcoin mining revenues during the three months ended June 30, 2025 and 2024, respectively, and 44.1% and 33.9% as expressed as a percentage of bitcoin mining revenues during the nine months ended June 30, 2025 and 2024, respectively.

Current wording

Power prices are the most significant cost driver for our wholly owned locations, and energy expense represented 52.7% and 40.4% as expressed as a percentage of bitcoin mining revenues during the three months ended December 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 sites in the State of Georgia, Mississippi, Tennessee and Wyoming. The majority of these contracts 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 $0.056 and $0.048 per kWh for the three months ended June 30, 2025 and 2024, respectively, and were $0.056 and $0.045 per kWh, for the nine months ended June 30, 2025 and 2024 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 states of Georgia, Mississippi, Tennessee and Wyoming. These contracts 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, polar vortices and hurricanes, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates. The average power prices we paid under our power contracts at our owned facilities were $0.056 and $0.049 per kWh for the three months ended December 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 decisions on an hour-by-hour basis across all our sites. The Company did not have significant curtailment and maintained an average uptime greater than 90% during the nine months ended June 30, 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.

Current wording

The management team makes real-time determinations on the need and timing during which we should curtail our operations. We curtail when power prices exceed the value we would receive for the corresponding fixed bitcoin reward. This means if bitcoin’s value decreases or energy prices increase, our curtailment will increase; likewise, when bitcoin’s value increases and energy prices decrease, our curtailment will decrease. The management and operations teams manage these decisions on an hour-by-hour basis across all our sites. The Company did not have significant curtailment and maintained an average uptime greater than 90% during the three months ended December 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 their full 365 MW capacity when utility service 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 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 41,601 and 16,753 for the three months ended June 30, 2025 and 2024, respectively, and $36,358 and $13,067 for the nine months ended June 30, 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.

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 Statements of Operations and Comprehensive (Loss) 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 $52,209 and $31,949 for the three months ended December 31, 2025 and 2024, respectively.

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 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 $21 and $208 for the three months ended June 30, 2025 and 2024, respectively and were $58 and $214 for the nine months ended June 30, 2025 and 2024, 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 Statements of Operations and Comprehensive (Loss) 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, there were no financing costs for three months ended December 31, 2025 and $98 for the three months ended December 31, 2024.

Previous wording

We earned $198,644 in bitcoin mining revenue during the three months ended June 30, 2025, which was an increase of $94,536, or 91%, as compared with $104,108 for the three months ended June 30, 2024. Bitcoin mining revenues are recorded net of bitcoin mining fees charged by our sole mining pool operator (Foundry) that equaled approximately 0.25% of gross bitcoin mining revenues for the three months ended June 30, 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 June 30, 2025, we mined 2,012 bitcoin (gross of Foundry fees) with an average bitcoin price of $98,736 as compared to 1,580 bitcoin with an average bitcoin price of $65,891 during the three months ended June 30, 2024. The increase in bitcoin mining revenue for the three months ended June 30, 2025 was attributable to the increase in the average bitcoin price and total bitcoin mined during the period as compared to the three months ended June 30, 2024. This occurred as we increased the number of our miners in operation, which rose to 241,227 compared to 152,505, an expansion of 88,722 or 58% between June 30, 2024 and June 30, 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.

Current wording

We earned $181,180 in bitcoin mining revenue during the three months ended December 31, 2025, which was an increase of $18,874, or 12%, as compared to $162,306 for the three months ended December 31, 2024. Bitcoin mining revenues are recorded net of bitcoin mining fees charged by our sole mining pool operator (Foundry) that equaled approximately 0.19% of gross bitcoin mining revenues for the three months ended December 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 December 31, 2025, we mined 1,817 bitcoin (gross of Foundry fees) with an average bitcoin price of $99,697 as compared to 1,945 bitcoin with an average bitcoin price of $83,443 during the three months ended December 31, 2024. The increase in bitcoin mining revenue for the three months ended December 31, 2025 was attributable to the increase in the average bitcoin price despite a decrease in total bitcoin mined during the period as compared to the three months ended December 31, 2024. This occurred as we increased the number of our miners in operation, which rose to 245,199 compared to 201,808, an expansion of 43,391 or 22% between December 31, 2024 and December 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 $90,128 for the three months ended June 30, 2025, an increase of $44,948, or 99%, as compared with $45,180 for the three months ended June 30, 2024. These costs were primarily related to energy costs to operate the miners within our owned facilities, which were $89,895 for the three months ended June 30, 2025, an increase of $51,350, or 133%, as compared to $38,545 for the three months ended June 30, 2024. The increase in energy costs was due to the expansion of our operations since June 30, 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.

Current wording

Our cost of revenues was $95,621 for the three months ended December 31, 2025, which represents an increase of $25,331, or 36%, as compared with $70,290 for the three months ended December 31, 2024. This increase in costs was primarily related to energy costs to operate the miners within our owned facilities, which were $95,536 for the three months ended December 31, 2025, an increase of $32,461, or 51%, as compared to $63,075 for the three months ended December 31, 2024. The increase in energy costs was due to the expansion of our operations since December 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

Professional fees, which consisted primarily of legal, accounting and consulting fees, were $3,004 for the three months ended June 30, 2025, a decrease of $1,364, or 31%, from $4,368 for the three months ended June 30, 2024. This decrease was primarily attributable to legal and other professional consulting fees during the three months ended June 30, 2025. Legal expenses were $996 for the three months ended June 30, 2025, as compared to $2,493 for the three months ended June 30, 2024. Other professional fees, namely accounting and consulting, were $2,008 for the three months ended June 30, 2025, as compared to $1,875 for the three months ended June 30, 2024, representing an increase of $133. 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 $5,406 for the three months ended December 31, 2025, an increase of $1,521, or 39%, from $3,885 for the three months ended December 31, 2024. This increase was primarily attributable to consultant fees for operations, legal, and other professional fees during the three months ended December 31, 2025. Legal expenses were $2,139 for the three months ended December 31, 2025, as compared to $1,445 for the three months ended December 31, 2024. Other professional fees, namely accounting and consulting, were $2,672 for the three months ended December 31, 2025, as compared to $2,445 for the three months ended December 31, 2024, representing an increase of $227.

Previous wording

Payroll expenses were $16,398 for the three months ended June 30, 2025, a decrease of $752, or 4%, from $17,150 for the three months ended June 30, 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 $11,911 for the three months ended June 30, 2025, representing a decrease of 16% from $14,204 for the three months ended June 30, 2024, mainly attributed to the reduction in bonus accruals in the three months ended June 30, 2025, partially offset by increased headcount due to expansion of operational locations.

Current wording

Payroll expenses were $23,785 for the three months ended December 31, 2025, an increase of $2,916, or 14%, from $20,869 for the three months ended December 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 $12,700 for the three months ended December 31, 2025, representing a decrease of 29% from $17,847 for the three months ended December 31, 2024, mainly attributed to the reduction in bonus accruals in the three months ended December 31, 2025, partially offset by increased headcount due to expansion of operational locations.

Previous wording

Stock-based awards granted to certain employees are a significant portion of our payroll-related costs. Stock-based compensation, which is a non-cash expense, was $4,488 for the three months ended June 30, 2025, an increase of $1,542, or

Current wording

Stock-based awards granted to certain employees are a significant portion of our payroll-related costs. Stock-based compensation for employees, which is a non-cash expense, was $11,085 for the three months ended December 31, 2025, an increase of $8,064, or 267%, from $3,021 for the three months ended December 31, 2024 primarily due to no stock based compensation related to the 2025 Long Term Incentive Program in the comparable period.

Previous wording

General and administrative expenses increased to $16,566 for the three months ended June 30, 2025 from $8,235 for the three months ended June 30, 2024, representing an increase of $8,331 or 101%. 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), rent, maintenance, and marketing expenses as we focused on increasing visibility in the current period.

Current wording

General and administrative expenses increased to $15,442 for the three months ended December 31, 2025 from $10,054 for the three months ended December 31, 2024, representing an increase of $5,388 or 54%. 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), rent, and maintenance expenses.

Previous wording

Gain on fair value of bitcoin, net

Current wording

Loss (gain) on fair value of bitcoin, net

Previous wording

Gain on fair value of bitcoin for the three months ended June 30, 2025 was $268,651 as compared to a loss on fair value of bitcoin of $48,338 for the three months ended June 30, 2024, a change of $316,989 or 656%. 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 June 30, 2025 pertains to the change in bitcoin's fair value from approximately $82,500 per bitcoin on March 31, 2025 to approximately $107,200 per bitcoin on June 30, 2025. Meanwhile the loss for the three months ended June 30, 2024 pertains to the change in bitcoin's fair value from approximately $71,300 per bitcoin on March 31, 2024 to $62,700 per bitcoin on June 30, 2024.

Current wording

Loss on fair value of bitcoin, net for the three months ended December 31, 2025 was $246,832 as compared to a gain on fair value of bitcoin of $218,206 for the three months ended December 31, 2024, a total variance of $465,038. We measured crypto assets at fair value and included the gains and losses from remeasurement in net income. The loss for the three months ended December 31, 2025 is attributable to the change in bitcoin’s fair value from approximately $114,100 per bitcoin on September 30, 2025 to approximately $87,500 per bitcoin on December 31, 2025. Meanwhile 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 $93,400 per bitcoin on December 31, 2024.

Previous wording

Depreciation and amortization expense increased to $94,880 for the three months ended June 30, 2025, from $40,727 for the three months ended June 30, 2024, an increase of $54,153, or 133%. Depreciation expense increased by $53,659, or 133%, during the three months ended June 30, 2025, to $93,858 from $40,199, 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 $106,311 for the three months ended December 31, 2025, from $66,229 for the three months ended December 31, 2024, an increase of $40,082, or 61%. Depreciation expense increased by $40,243, or 62%, during the three months ended December 31, 2025, to $105,368 from $65,125, mainly due to an increase in miners and mining-related equipment being in service during the comparative period.

Previous wording

Amortization expense for the three months ended June 30, 2025 was $1,023, an increase of $495, or 94%, from $528 for the three months ended June 30, 2024. The increase in amortization expense is primarily due to the Company's acquisition of software in the amount of $7,000 throughout the current year.

Current wording

Amortization expense for the three months ended December 31, 2025 was $942, a decrease of $161, or 15%, from $1,104 for the three months ended December 31, 2024. The decrease in amortization expense is primarily due to some of the Company’s intangible assets aging off of the balance sheet.

Previous wording

Other income was $29,334 for the three months ended June 30, 2025, compared with other income, net of $3,341 for the three months ended June 30, 2024, which is a change of $25,993 or 778%.

Current wording

Other expense was $93,572 for the three months ended December 31, 2025, compared with other income, net of $46,032 for the three months ended December 31, 2024, which is a change of $139,604 or 303%.

Previous wording

Gain on bitcoin collateral was the primary reason for the increase in other income (expense) since in the prior year there was no collateral held by Coinbase. The gain in the fair value of collateral of $31,354 for the three months ended June 30, 2025 pertains to the change in the underlying collateral due to bitcoin's fair value from approximately $82,500 per bitcoin on March 31, 2025 to approximately $107,200 per bitcoin on June 30, 2025.

Current wording

(Loss) gain on bitcoin collateral was the primary reason for the decrease in Other (expense) income since in the prior year there was no collateral held by Coinbase. The loss in the fair value of collateral of $103,620 for the three months ended December 31, 2025 is attributable to the change in the underlying collateral that was posted while bitcoin’s fair value fell during the period from approximately $114,100 per bitcoin on September 30, 2025 to approximately $87,500 per bitcoin on December 31, 2025.

Previous wording

Interest income in the three months ended June 30, 2025 decreased by $2,283 to $355 from $2,638 for the three months ended June 30, 2024 due to lower balance of cash retained in short term interest bearing accounts and the interest earned on the note receivable from GRIID (See Note 5 - Note Receivable from GRIID).

Current wording

Interest income in the three months ended December 31, 2025 increased by $709 to $2,185 from $1,476 for the three months ended December 31, 2024 due to greater balance of cash retained in short term interest bearing accounts.

Previous wording

Interest expense in the three months ended June 30, 2025 increased by $2,969 to $3,454 from $485 for the three months ended June 30, 2024 due to the amortization of deferred insurance costs from the Convertible Note, the promissory note, and equipment line of credit, which the Company did not have as of June 30, 2024.

Current wording

Interest expense in the three months ended December 31, 2025 increased by $2,137 to $3,696 from $1,559 for the three months ended December 31, 2024 due to the amortization of deferred issuance costs from the convertible notes and the lines of credit which the company had smaller volumes of outstanding amounts during the comparative period.

Previous wording

Net income for the three months ended June 30, 2025 was $257,390, as compared to net loss of $236,242 for the three months ended June 30, 2024, for the reasons stated above.

Current wording

Net loss for the three months ended December 31, 2025 was $378,711, as compared to net income of $246,791 for the three months ended December 31, 2024, for the reasons stated above.

Previous wording

Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company's core business operating results and those of other companies, and provides the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time. In addition to management's internal use of non-GAAP Adjusted EBITDA, management believes that Adjusted EBITDA is also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis. Management believes the foregoing to be the case even though some of the excluded items involve cash outlays and some of them recur on a regular basis (although management does not believe any of such items are normal operating expenses necessary to generate our bitcoin related revenues). For example, we expect that share-based compensation expense, which is excluded from Adjusted EBITDA, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers and directors. Additionally, management does not consider any of the excluded items to be expenses necessary to generate our bitcoin-related revenue.

Current wording

Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company’s core business operating results and those of other companies, and provides the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time. In addition to management’s internal use of non-GAAP Adjusted EBITDA, management believes that Adjusted EBITDA is also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis. Management believes the foregoing to be the case even though some of the excluded items involve cash outlays and some of them recur on a regular basis (although management does not believe any of such items are normal operating expenses necessary to generate our bitcoin related revenues). For example, we expect that share-based compensation expense, which is excluded from Adjusted EBITDA, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers and directors.

Previous wording

The following is a reconciliation of our non-GAAP Adjusted EBITDA to its most directly comparable GAAP measure (i.e., net income (loss)) for the periods indicated:

Current wording

The following is a reconciliation of our non-GAAP Adjusted EBITDA to its most directly comparable GAAP measure (i.e., net (loss) income) for the periods indicated:

Previous wording

We have not excluded our net gain on fair value of bitcoin $268,651 and net loss of $48,338 in the three months ended June 30, 2025 and 2024, respectively, and net gain $359,190 and $107,406 in the nine months ended June 30, 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.

Current wording

We have not excluded our Loss (gain) on fair value of bitcoin, net totaling a loss of $246,832 and a gain of $218,206 in the three months ended December 31, 2025 and 2024, respectively, or our (Loss) gain on bitcoin collateral totaling a loss of $103,620 and a gain of $42,493 in the three months ended December 31, 2025 and 2024, respectively, which we record in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income as provided in ASC 350-60 and discussed in the Form 10-K.

Previous wording

As of June 30, 2025, we had total current assets of $1,210,140, 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 $3,101,817. Our total current liabilities and total liabilities as of June 30, 2025 were $276,819 and $954,929, respectively. We had working capital of $933,321 as of June 30, 2025. With the recent launch of our bitcoin treasury function in April 2025, we have begun to use a portion of the bitcoin we mine to fund operations and to fund capital expenditures. In addition, we have $635,295 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.

Current wording

As of December 31, 2025, we had total current assets of $1,470,646, consisting of cash and cash equivalents, prepaid expenses and other current assets, and bitcoin. Our total current liabilities and total liabilities as of December 31, 2025 were $139,497 and $1,943,923, respectively. We had working capital of $1,331,149 as of December 31, 2025. We use a portion of the bitcoin we mine to fund operations and to fund capital expenditures. In addition, we have a total outstanding balance of $1,767,861 zero-coupon convertible notes outstanding and unused lines of credit balances totaling $400,000 with Coinbase and Two Prime as discussed in Note 9 - Indebtedness.

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 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 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 bitcoin 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 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

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the condensed consolidated balance sheets as of June 30, 2025, while others are considered future commitments. Our contractual obligations primarily consist of cancelable purchase commitments with various parties to purchase goods or services, primarily miners and equipment, entered into in the normal course of business and operating leases. For information regarding our other contractual obligations, refer to Note 14 - Commitments and Contingencies in this Quarterly Report on Form 10-Q for the period ended June 30, 2025, and Note 18 - Commitments and Contingencies included in our Annual Report on Form 10-K as filed with the SEC on December 3, 2024.

Current wording

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the Condensed Consolidated Balance Sheets as of December 31, 2025, while others are considered future commitments. Our contractual obligations primarily consist of cancelable purchase commitments with various parties to purchase goods or services, primarily miners and equipment, entered into in the normal course of business and operating leases. For information regarding our other contractual obligations, refer to Note 15 - Commitments and Contingencies in this Quarterly Report on Form 10-Q for the period ended December 31, 2025, and Note 19 - Commitments and Contingencies included in our Form 10-K as filed with the SEC on November 25, 2025.

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 nine months ended June 30, 2025 was $341,623 primarily due to cost of revenues of $245,842, payroll expenses of $52,522 and general and administrative expenses of $38,356, in spite of a net income of $365,389, 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 $8,833 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 three months ended December 31, 2025 was $161,135 primarily due to cost of revenues of $95,621, payroll expenses of $23,785 and general and administrative expenses of $15,442, in spite of a net loss of $378,711, due to the decrease in the price of bitcoin during the three months ended December 31, 2025. Changes in operating assets and liabilities used a net total of $30,905 of cash.