BTC Digital Ltd
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
BTCT$0.62-6.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001213900-24-043645
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-068952
Item 2. 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 69 previous paragraphs and 89 current paragraphs.
47 unchanged; 19 reworded; 20 added; 3 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 8 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Our total revenue decreased by 63.5% from US$6.4 million in the three months ended of June 30, 2023 to US$2.3 million in the three months ended of June 30, 2024. This decrease was primarily due to a drop in both bitcoin mining and mining machines resale revenue compared to the same period last year. The decline in mining revenue was partly because the Group used more of its existing bitcoin mining machines for rentals in the second quarter, while newly purchased bitcoin mining machines had not yet been deployed. Additionally, mining revenue was also affected to some extent by the bitcoin halving event. The decrease in mining machines resale was mainly due to the bitcoin mining reward halving event, which temporarily reduced market demand for mining machines.
Current report
Our total cost of revenues decreased by 58.6% from US$6.1 million in the three months ended of June 30, 2023 to US$2.5 million in the three months ended of June 30, 2024. This decrease is largely consistent with the decline in bitcoin mining and mining machines resale, as the reduction in operations of our owned bitcoin mining machines and resale business led to a corresponding decrease in operational costs.
Current report
Gross Profitand Gross ProfitMargin
Current report
Our selling and marketing expenses decreased from US$70 thousand in the three months ended of June 30, 2023 to US$61 thousand in the three months ended of June 30, 2024. This decrease was mainly due to the decrease in the volume of mining machine resales during this period, which led to a corresponding reduction in sales expenses.
Current report
Our general and administrative expenses increased by 34.7% from US$0.3 million in the three months ended of June 30, 2023 to US$0.4 million in the three months ended of June 30, 2024. This increase was primarily due to the increase in the number of employees and daily office expenses resulting from business development.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Revenues
Current report
Our total revenue decreased by 31.6% from US$7.3 million in the six months ended of June 30, 2023 to US$5.0 million in the six months ended of June 30, 2024. This decrease was primarily due to a drop in both bitcoin mining and mining machines resale revenue compared to the same period last year. The decline in mining revenue was partly because the Group used more of its existing bitcoin mining machines for rentals in the second quarter, while newly purchased bitcoin mining machines had not yet been deployed. Additionally, mining revenue was also affected to some extent by the bitcoin halving event. The decrease in mining machines resale was mainly due to the bitcoin mining reward halving event, which temporarily reduced market demand for mining machines.
Current report
Cost of Revenues
Current report
Our total cost of revenues decreased by 28.0% from US$7.4 million in the six months ended of June 30, 2023 to US$5.3 million in the six months ended of June 30, 2024. This decrease is largely consistent with the decline in bitcoin mining and mining machines resale, as the reduction in operations of our owned bitcoin mining machines and resale business led to a corresponding decrease in operational costs.
Current report
As a result of the foregoing, our gross loss increased by US$0.2 million, from US$0.1 million in the six months ended of June 30, 2023 to US$0.3 million in the six months ended of June 30, 2024. Our gross loss margin increased from 1.5% in the six months ended of June 30, 2023 to 6.9% in the six months ended of June 30, 2024.
Current report
Selling and Marketing Expenses
Current report
Our selling and marketing expenses decreased from US$198 thousand in the six months ended of June 30, 2023 to US$96 thousand in the six months ended of June 30, 2024. This decrease was mainly due to a 40% reduction in the volume of mining machine resales during this period, which led to a corresponding reduction in sales expenses.
Current report
General and Administrative Expenses
Current report
Interest Expenses
Current report
Our interest expenses decreased from US$50 thousand for the six months ended of June 30, 2023 to US$15 thousand for the six months ended of June 30, 2024. This reduction is consistent with the decrease in short-term loans.
Current report
Our gain on equity method investments was US$1 thousand and US$25 thousand for the six months ended of June 30, 2023 and 2024, respectively.
Current report
Loss Before Income Tax
Current report
Net Loss
Current report
As a result of the foregoing, we had a net loss of US$1,115 thousand for the six months ended of June 30, 2023, as compared to a net loss of US$1,435 thousand for the six months ended of June 30, 2024.
Removed paragraphs (3)
Previous report
Our total revenue increased by 192.2% from US$0.9 million for the three months ended of March 31, 2023 to US$2.7 million for the three months ended of March 31, 2024. This increase was primarily due to significant growth in both the resale of mining machines and bitcoin mining revenue compared to the same period last year. Notably, the resale revenue from mining machines for the three months ended March 31, 2024, amounted to US$1.7 million.
Previous report
Our total cost of revenues increased by 122.2% from US$1.3 million for the three months ended of March 31, 2023 to US$2.8 million for the three months ended of March 31, 2024. This increase was primarily due to the addition of resale costs for mining machines compared to the same period last year.
Previous report
Our selling and marketing expenses decreased from US$128 thousand for the three months ended of March 31, 2023 to US$35 thousand for the three months ended of March 31, 2024, mainly due to the optimization of sales strategies and the reduction of inefficient sales activities or channels.
Reworded paragraphs (19)
Previous wording
For the three months ended March 31, 2024, we generated a substantial majority of our revenue from bitcoin mining. We store all of our bitcoins mined in hot wallets, or cryptocurrency wallets connected to the Internet, and may from time to time exchange bitcoins mined for fiat currency to generate cash flow to fund our business operations. We attribute our growth since we launched our crypto asset business in 2022 to our competitive strengths in diversified revenue streams, dedicated team and efforts towards regulatory compliance, and our experienced and visionary management team.
Current wording
For the six months ended June 30, 2024, we generated a substantial majority of our revenue from mining machines resale. For the six months ended June 30, 2024, we generated a substantial majority of our revenue from bitcoin mining. We store all of our bitcoins mined in hot wallets, or cryptocurrency wallets connected to the Internet, and may from time to time exchange bitcoins mined for fiat currency to generate cash flow to fund our business operations. We attribute our growth since we launched our crypto asset business in 2022 to our competitive strengths in diversified revenue streams, dedicated team and efforts towards regulatory compliance, and our experienced and visionary management team.
Previous wording
As of March 31, 2024, we owned a total of 2,021 mining machines under operation with a total hash rate of 213PH/S. We manage and operate our mining machines at one hosting facility operated by a hosting facility owner in New Tazewell, Tennessee. For the three months ended March 31, 2024, we mined a total of 12.407 bitcoins, generating US$0.7 million in revenue.
Current wording
As of June 30, 2024, we owned a total of 2021 mining machines under operation with a total hash rate of 213PH/S. We manage and operate our mining machines at one hosting facility operated by a hosting facility owner in New Tazewell, Tennessee. For the six months ended June 30, 2024, we mined a total of 16.45 bitcoins, generating US$0.94 million in revenue.
Previous wording
The following table sets forth a summary of our consolidated results of operations, both in absolute amounts and as a percentage of total net revenue, for the period indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in our annual report on Form 10-K. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Current wording
The following table sets forth a summary of our consolidated results of operations, both in absolute amounts and as a percentage of total net revenue, for the period indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in our annual report on Form 10-K and quarterly reports on Form 10-Q. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Previous wording
As a result of the foregoing, our gross profit increased by US$0.2 million, from negative US$0.3 million for the three months ended of March 31, 2023 to negative US$0.1 million for the three months ended of March 31, 2024. Our gross profit margin increased from negative 37.8% for the three months ended of March 31, 2023 to negative 4.8% for the three months ended of March 31, 2024.
Current wording
As a result of the foregoing, our gross profit decreased by US$0.4 million, from US$0.2 million in the three months ended of June 30, 2023 to negative US$0.2 million in the three months ended of June 30, 2024. Our gross profit margin decreased from 3.7% in the three months ended of June 30, 2023 to negative 9.2% in the three months ended of June 30, 2024.
Previous wording
Our interest expenses decreased from US$30 thousand for the three months ended of March 31, 2023 to US$6 thousand for the three months ended of March 31,2024. This reduction is consistent with the decrease in short-term loans.
Current wording
Our interest expenses decreased from US$20 thousand for the three months ended of June 30, 2023 to US$9 thousand for the three months ended of June 30, 2024. This reduction is consistent with the decrease in short-term loans.
Previous wording
Our gain on equity method investments was nil and US$15 thousand for the three months ended of March 31, 2023 and 2024, respectively.
Current wording
Our gain on equity method investments was US$1 thousand and US$10 thousand for the three months ended of June 30, 2023 and 2024, respectively.
Previous wording
As a result of the foregoing, we had a loss before income tax of US$980 thousand for the three months ended of March 31, 2023, as compared to a loss before income tax of US$731 thousand for the three months ended of March 31, 2024.
Current wording
As a result of the foregoing, we had a loss before income tax of US$135 thousand for the three months ended of June 30, 2023, as compared to a loss before income tax of US$704 thousand for the three months ended of June 30, 2024.
Previous wording
As a result of the foregoing, we had a net loss of US$980 thousand for the three months ended of March 31, 2023, as compared to a net loss of US$731 thousand for the three months ended of March 31, 2024.
Current wording
As a result of the foregoing, we had a net loss of US$135 thousand for the three months ended of June 30, 2023, as compared to a net loss of US$704 thousand for the three months ended of June 30, 2024.
Previous wording
Gross Loss and Gross Profit Margin
Current wording
Gross Loss and Gross Loss Margin
Previous wording
Our general and administrative expenses increased by 71.3% from US$0.5 million for the three months ended of March 31, 2023 to US$0.9 million for the three months ended of March 31, 2024. This increase was primarily due to the rise in expenses related to the Employee Stock Option Plan, which amounted to US$0.57 million.
Current wording
Our general and administrative expenses increased by 59.1% from US$0.8 million in the six months ended of June 30, 2023 to US$1.3 million in the six months ended of June 30, 2024. This increase was primarily due to the rise in expenses related to the Employee Stock Option Plan, which amounted to US$0.57 million.
Previous wording
Our two wholly-owned subsidiaries in Hong Kong, Meten Education (Hong Kong) Limited and Likeshuo Education (Hong Kong) Limited, are subject to an income tax rate of 16.5% for taxable income earned in Hong Kong. No Hong Kong profit tax has been levied in our consolidated financial statements as Meten Education (Hong Kong) Limited and Likeshuo Education (Hong Kong) Limited had no assessable income for the years ended December 31, 2023 and for the three months ended of March 31,2024.
Current wording
Our two wholly-owned subsidiaries in Hong Kong, Meten Education (Hong Kong) Limited and Likeshuo Education (Hong Kong) Limited, are subject to an income tax rate of 16.5% for taxable income earned in Hong Kong. No Hong Kong profit tax has been levied in our consolidated financial statements as Meten Education (Hong Kong) Limited and Likeshuo Education (Hong Kong) Limited had no assessable income for the years ended December 31, 2023 and for the three months ended of June 30, 2024.
Previous wording
Our principal sources of liquidity have been from cash generated from operating activities. As of December 31, 2023 and March 31, 2024, we had US$43,000 and US$32,000, respectively, in cash and cash equivalents. Cash and cash equivalents consist of cash on hand placed with banks or other financial institutions and highly liquid investment which are unrestricted as to withdrawal and use and have original maturities of three months or less when purchased.
Current wording
Our principal sources of liquidity have been from cash generated from operating activities. As of December 31, 2023 and June 30, 2024, we had US$43,000 and US$287,000, respectively, in cash and cash equivalents. Cash and cash equivalents consist of cash on hand placed with banks or other financial institutions and highly liquid investment which are unrestricted as to withdrawal and use and have original maturities of three months or less when purchased.
Previous wording
Net cash flow generated from operating activities amounted to US$6.2 million for the three months ended of March 31, 2023. The difference between our net loss of US$7.2 million and the net cash used in operating activities was primarily due to (i) depreciation and amortization of US$0.8 million; (ii) decrease in accounts receivable of US$8.9 million, primarily due to the collection of receivables from mining machines resale; (iii) increase in prepayments and other current assets of US$1.8 million, mainly due to an increase in advance payments for purchases; (iv) increase in accounts payable of US$0.8 million, mainly for outstanding purchase payments.
Current wording
Net cash generated from operating activities amounted to US$2.4 million for the six months ended June 30, 2023. The difference between our net loss of US$1.1 million and the net cash used in operating activities was primarily due to (i) depreciation of US$1.7 million; (ii) share-based compensation expenses of US$0.1 million; (iii) increase in accounts receivable of US$3.4 million; and (iv) decrease in prepayments and other current assets of US$1.5 million; partially offset by (i) decrease in accounts payable of US$3.3 million.
Previous wording
Net cash generated from operating activities amounted to US$0.2 million for the three months ended of March 31, 2024. The difference between our net loss of US$0.9 million and the net cash used in operating activities was primarily due to (i) depreciation and amortization of US$0.9 million; (ii) decrease in accounts receivable of US$3.8 million, , primarily due to the collection of receivables from mining machines resale; and (iii) increase in prepayments and other current assets of US$3.8 million, mainly due to an increase in advance payments for purchases.
Current wording
Net cash generated from operating activities amounted to US$3.7 million for the six months ended of June 30, 2024. The difference between our net loss of US$1.4 million and the net cash used in operating activities was primarily due to (i) depreciation and amortization of US$1.8 million; (ii) decrease in accounts receivable of US$5.0 million, primarily due to the collection of receivables from mining machines resale; and (iii) increase in prepayments and other current assets of US$2.3 million, mainly due to an increase in advance payments for purchases.
Previous wording
Net cash used in investing activities amounted to US$2.3 million for the three months ended of March 31, 2023, which was primarily attributable to the purchases of property and equipment of US$2.3 million.
Current wording
Net cash used in investing activities amounted to US$1.8 million for the six months ended June 30, 2023. This was primarily attributable to purchases of property and equipment of US$1.8 million.
Previous wording
Net cash used in investing activities amounted to US$0.8 million for the three months ended of March 31, 2024. This was primarily attributable to the purchases of property and equipment of US$0.6 million, repayment of advances to related parties of US$0.2 million.
Current wording
Net cash used in investing activities amounted to US$4.3 million for the six months ended of June 30, 2024. This was primarily attributable to the purchases of property and equipment of US$4.0 million, repayment of advances to related parties of US$0.6 million and advances from related parties of US$0.4 million.
Previous wording
Net cash flow used in financing activities amounted to US$0.3 million for the three months ended of March 31, 2023, which was attributable to the repayment of short term loans of US$0.3 million.
Current wording
Net cash used in financing activities amounted to US$0.4 million for the six months ended June 30, 2023. This was primarily attributable to repayment of short term loans of US$0.4 million.
Previous wording
Net cash flow generated from financing activities amounted to US$0.7 million for the three months ended of March 31, 2024. This was primarily attributable to the proceeds from issuance of ordinary shares for private placement of US$0.5 million, and proceeds from short term loans of US$0.2 million.
Current wording
Net cash flow generated from financing activities amounted to US$857,000 for the six months ended of June 30, 2024. This was primarily attributable to (i) the proceeds from issuance of ordinary shares for private placement of US$0.5 million, (ii) proceeds from short term loans of US$0.7 million; partially offset by (i) repayment of short term loans of US$0.3 million.
Previous wording
Our capital expenditures amounted to US$2.3 million and US$0.6 million in for the three months ended of March 31, 2023 and 2024, respectively. We will continue to make capital expenditures to meet the expected growth of our business and expect that cash generated from our operating activities and financing activities will meet our capital expenditure needs in the foreseeable future.
Current wording
Our capital expenditures amounted to US$0.5 million and US$3.4 million in for the three months ended of June 30, 2023 and 2024, respectively. Our capital expenditures amounted to US$1.8 million and US$4.0 million in for the six months ended of June 30, 2023 and 2024, respectively. We will continue to make capital expenditures to meet the expected growth of our business and expect that cash generated from our operating activities and financing activities will meet our capital expenditure needs in the foreseeable future.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Equity in Income on Equity Method Investments
Current report — wording carried from elsewhere
As a result of the foregoing, we had a loss before income tax of US$1,115 thousand for the six months ended of June 30, 2023, as compared to a loss before income tax of US$1,435 thousand for the six months ended of June 30, 2024.
Current report — wording carried from elsewhere
Our two wholly-owned subsidiaries in Hong Kong, Meten Education (Hong Kong) Limited and Likeshuo Education (Hong Kong) Limited, are subject to an income tax rate of 16.5% for taxable income earned in Hong Kong. No Hong Kong profit tax has been levied in our consolidated financial statements as Meten Education (Hong Kong) Limited and Likeshuo Education (Hong Kong) Limited had no assessable income for the years ended December 31, 2023 and for the six months ended of June 30, 2024.