BTC Digital Ltd
For the period ended Sep 30, 2024. Filed Nov 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.
Sep 30, 2024 · Filed Nov 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 2024-06-30; filed 2024-08-14.
0001213900-24-068952
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001213900-24-098381
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 89 previous paragraphs and 89 current paragraphs.
57 unchanged; 27 reworded; 3 added; 5 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Our total cost of revenues increased by 103.46% from US$1.4 million in the three months ended of September 30, 2023 to US$2.8 million in the three months ended of September 30, 2024. This increase was primarily driven by the expansion of our mining machine resale business, which incurred additional procurement costs to support higher sales volumes. Additionally, the miner rental business added further operational costs, contributing to the overall rise in expenses. Together, these factors reflect our strategic growth in new business segments, although they have led to a substantial increase in the cost of revenues compared to the same period last year.
Current report
Our selling and marketing expenses increased from nil in the three months ended of September 30, 2023 to US$63 thousand in the three months ended of September 30, 2024. The increase in selling expenses this quarter was primarily due to the addition of our mining machine resale business.
Current report
Our total revenue decreased by 7.3% from US$8.1 million in the nine months ended of September 30, 2023 to US$7.5 million in the nine months ended of September 30, 2024. Revenue from our Bitcoin mining business decreased by US$1.1 million, a decline of 52%, primarily due to the following factors. First, the Group allocated more of its existing Bitcoin mining machines for rentals in the third quarter, impacting direct mining revenue. Second, the recent Bitcoin halving event led to a reduction in Bitcoin production. Lastly, a batch of newly acquired T21 mining machines remains in customs clearance and has not yet been deployed, further affecting our mining output for the quarter. Revenue from miner rental and other mining-related businesses increased by US$0.5 million, an increase of 116%, primarily due to the Group’s increase in Bitcoin mining machine rentals during the period, which led to a corresponding rise in rental income.
Removed paragraphs (5)
Previous report
Gross Profitand Gross ProfitMargin
Previous 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.
Previous 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.
Previous 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.
Previous report
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.
Reworded paragraphs (27)
Previous 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.
Current wording
For the nine months ended September 30, 2024, we generated a substantial majority of our revenue from mining machines resale and 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 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.
Current wording
As of September 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 nine months ended September 30, 2024, we mined a total of 18.26 bitcoins, generating US$1.05 million in revenue. As of now, all of the Company’s mining machines have been relocated to the newly acquired mining facility in Arkansas.
Previous wording
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 wording
Our total revenue increased by 202.84% from US$0.8 million in the three months ended of September 30, 2023 to US$2.6 million in the three months ended of September 30, 2024. This increase was primarily driven by gains in our mining machine resale and miner rental businesses, which contributed an additional US$2.1 million and US$0.4 million, respectively. However, revenue from Bitcoin mining declined by US$0.7 million this quarter compared to the same period last year, a decrease of 86.9%, primarily due to the following factors. First, the Group allocated more of its existing Bitcoin mining machines for rentals in the third quarter, impacting direct mining revenue. Second, the recent Bitcoin halving event led to a reduction in Bitcoin production. Lastly, a batch of newly acquired T21 mining machines remains in customs clearance and has not yet been deployed, further affecting our mining output for the quarter.
Previous wording
Gross Loss and Gross Loss Margin
Current wording
Gross Loss and Gross Profit Margin
Previous 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.
Current wording
As a result of the foregoing, our gross loss decreased by US$280 thousand, from US$541 thousand in the three months ended of September 30, 2023 to US$261 thousand in the three months ended of September 30, 2024. Our gross loss margin improved from 64% in the three months ended of September 30, 2023 to 10.2 % in the three months ended of September 30, 2024.
Previous wording
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 wording
Our general and administrative expenses increased by 42.48% from US$153 thousand in the three months ended of September 30, 2023 to US$218 thousand in the three months ended of September 30, 2024. This increase was primarily due to the increase in the number of employees and daily office expenses resulting from business development.
Previous wording
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 wording
Our interest expenses was US$11 thousand and US$2 thousand for the three months ended of September 30, 2023 and 2024. This reduction is consistent with the decrease in short-term loans.
Previous 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.
Current wording
Our gain on equity method investments was US$5 thousand and US$50 thousand for the three months ended of September 30, 2023 and 2024, respectively.
Previous 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.
Current wording
As a result of the foregoing, we had a loss before income tax of US$1,007 thousand for the three months ended of September 30, 2023, as compared to a loss before income tax of US$571 thousand for the three months ended of September 30, 2024.
Previous 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.
Current wording
As a result of the foregoing, we had a net loss of US$1,007 thousand for the three months ended of September 30, 2023, as compared to a net loss of US$571 thousand for the three months ended of September 30, 2024.
Previous wording
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current wording
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous wording
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 wording
Our total cost of revenues decreased by 7.28% from US$8.8 million in the nine months ended of September 30, 2023 to US$8.1 million in the nine months ended of September 30, 2024. Overall, the decrease in cost of revenues was largely in line with the decline in revenue.
Previous wording
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 wording
As a result of the foregoing, our gross loss decreased by US$48 thousand, from US$651 thousand in the nine months ended of September 30, 2023 to US$603 thousand in the nine months ended of September 30, 2024. Our gross profit margin improved from -8.6% in the three months ended of September 30, 2023 to -8.0% in the three months ended of September 30, 2024.
Previous wording
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 wording
Our selling and marketing expenses decreased from US$198 thousand in the nine months ended of September 30, 2023 to US$159 thousand in the nine months ended of September 30, 2024, primarily due to the Group’s strengthened control over selling expenses and optimization of expenditures.
Previous 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.
Current wording
Our general and administrative expenses increased by 56.46% from US$1.0 million in the nine months ended of September 30, 2023 to US$1.5 million in the nine months ended of September 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 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.
Current wording
Our interest expenses decreased from US$61 thousand for the nine months ended of September 30, 2023 to US$17 thousand for the nine months ended of September 30, 2024. This reduction is consistent with the decrease in short-term loans.
Previous wording
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 wording
Our gain on equity method investments was US$6 thousand and US$75 thousand for the nine months ended of September 30, 2023 and 2024, respectively.
Previous wording
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 wording
As a result of the foregoing, we had a loss before income tax of US$2,122 thousand for the nine months ended of September 30, 2023, as compared to a loss before income tax of US$2,006 thousand for the nine months ended of September 30, 2024.
Previous wording
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.
Current wording
As a result of the foregoing, we had a net loss of US$2,122 thousand for the nine months ended of September 30, 2023, as compared to a net loss of US$2,006 thousand for the nine months ended of September 30, 2024.
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 six months ended of June 30, 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 nine months ended of September 30, 2024.
Previous 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.
Current wording
Our principal sources of liquidity have been from cash generated from operating activities. As of December 31, 2023 and September 30, 2024, we had US$43,000 and US$27,000, 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 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.
Current wording
Net cash generated from operating activities amounted to US$2.0 million for the nine months ended September 30, 2023. The difference between our net loss of US$2.1 million and the net cash used in operating activities was primarily due to (i) depreciation of US$2.3 million; (ii) net loss on disposal of property and equipment of US$0.3 million; (iii) increase in accounts receivable of US$3.4 million; and (iv) decrease in prepayments and other current assets of US$1.1 million; partially offset by decrease in accounts payable of US$3.2 million.
Previous 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.
Current wording
Net cash generated from operating activities amounted to US$3.4 million for the nine months ended of September 30, 2024. The difference between our net loss of US$2.0 million and the net cash used in operating activities was primarily due to (i) depreciation and amortization of US$2.7 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$1.2 million, mainly due to an increase in advance payments for purchases.
Previous 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.
Current wording
Net cash used in investing activities amounted to US$3.1 million for the nine months ended September 30, 2023. This was primarily attributable to purchases of property and equipment of US$1.8 million, repayment of advances to related parties of US$1.3 million.
Previous 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.
Current wording
Net cash used in investing activities amounted to US$4.3 million for the nine months ended of September 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$0.7 million and advances from related parties of US$0.4 million.
Previous 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.
Current wording
Net cash flow generated from financing activities amounted to US$0.9 million for the nine months ended of September 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$0.8 million; partially offset by (i) repayment of short term loans of US$0.3 million.
Previous 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.
Current wording
Our capital expenditures amounted to nil and US$0.1 million in for the three months ended of September 30, 2023 and 2024, respectively. Our capital expenditures amounted to US$1.8 million and US$4.1 million in for the nine months ended of September 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 (2)
Current report — wording carried from elsewhere
Gross Loss and Gross profit Margin
Current report — wording carried from elsewhere
Net cash generated from financing activities amounted to US$1.4 million for the nine months ended September 30, 2023. This was primarily attributable to (i) the proceeds from issuance of ordinary shares for private placement of US$1.9 million, (ii) proceeds from short term loans of US$0.6 million; partially offset by (i) repayment of short term loans of US$0.01 million.