As filed with the U.S. Securities and Exchange Commission on July 13, 2026

Registration No. 333-297125

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Ionic Digital Inc. 

(Exact Name of Registrant as Specified in Its Charter)

650 Massachusetts Avenue NW, 6th Floor
Washington, District of Columbia 20001

Tel.: (754) 273-6593 

(Address, including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Andy Stewart

Chief Executive Officer

Ionic Digital Inc.

650 Massachusetts Avenue NW, 6th Floor

Washington, District of Columbia 20001

Tel.: (754) 273-6593 

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒ 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐ 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.  

The information in this preliminary prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 13, 2026

PRELIMINARY PROSPECTUS

Ionic Digital Inc.

10,800,164 Shares of Class A Common Stock

This prospectus relates to the registration of the resale by the selling stockholders named in this prospectus, who we refer to as the Registered Stockholders, of up to 10,800,164 shares of our Class A common stock, par value $0.00001 per share, pursuant to a direct listing on the Nasdaq Global Select Market. Prior to the listing of our shares of Class A common stock, there has been no public market for our shares of Class A common stock and there has been a limited history of sales of shares of our Class A common stock in private transactions. The purchase price of our shares of Series A Preferred Stock and Warrants in the Private Placement (each as defined herein), the only historical private transaction relating to our securities, may have little or no relation to the opening public price of shares of our Class A common stock on Nasdaq or the subsequent trading price of shares of our Class A common stock on Nasdaq. See “Sale Price History of Our Securities” for more information. The resale of the shares of Class A common stock by the Registered Stockholders is not being underwritten by any investment bank, which makes this listing different from an underwritten initial public offering. The 10,800,164 shares of Class A common stock covered by this prospectus comprise all of the shares held by the Registered Stockholders. Following the effectiveness of the registration statement of which this prospectus forms a part, the Registered Stockholders may elect to sell these shares, as and to the extent they may determine, through brokerage transactions on the Nasdaq Global Select Market at prevailing market prices, subject to the Lock-Up under the Securities Purchase Agreements (each as defined herein). In addition, the remaining 37,214,869 outstanding shares of our Class A common stock may be freely sold in the public market in reliance upon exemptions from registration under the Securities Act. If the Registered Stockholders choose to sell their shares of Class A common stock, we will not receive any proceeds from the sale of such shares. For more information, see the section titled “Plan of Distribution.” 

The direct listing of our Class A common stock on the Nasdaq Global Select Market without underwriters is a relatively novel method for commencing public trading in shares of our Class A common stock, and consequently, the trading volume and price of shares of our Class A common stock may be more volatile than if shares of our Class A common stock were initially listed in connection with an underwritten initial public offering.

J.P. Morgan Securities LLC, or J.P. Morgan, is serving as our designated financial advisor to perform the functions under Nasdaq Rule 4120(c)(8) for our first day of trading on the Nasdaq Global Select Market. Jefferies LLC, or Jefferies, and BTIG, LLC, or BTIG, are also serving as our financial advisors. We have engaged such financial advisors to advise and assist us with respect to certain matters relating to our listing. 

On the day that our shares of Class A common stock are initially listed for trading on the Nasdaq Global Select Market, the Nasdaq Stock Market LLC, or Nasdaq, will begin accepting, but not executing, pre-opening buy and sell orders and Nasdaq will begin to continuously generate the indicative current reference price (as defined below) for our Class A common stock on the basis of such accepted orders.

During a 10-minute “Display Only” period, market participants may enter quotes and orders for our Class A common stock in Nasdaq’s systems and Nasdaq will disseminate such information, along with other indicative imbalance information, to J.P. Morgan and certain other market participants (including our other financial advisors) on Nasdaq’s NOII and BookViewer tools.

Following such 10-minute “Display Only” period, a “Pre-Launch” period will begin, during which J.P. Morgan, in its capacity as our designated financial advisor, must notify Nasdaq that our shares of Class A common stock are “ready to trade.” Once J.P. Morgan has notified Nasdaq that our shares of Class A common stock are ready to trade, Nasdaq will calculate the current reference price for our shares of Class A common stock, in accordance with Nasdaq’s rules. If J.P. Morgan then approves proceeding at the current reference price, Nasdaq will conduct price validation checks in accordance with Nasdaq rules. As part of conducting its price validation checks, Nasdaq may consult with J.P. Morgan and certain other market participants (including our other financial advisors).

Upon completion of such price validation checks, the applicable orders for our Class A common stock that have been entered will then be executed at such price and regular trading of our shares of Class A common stock on the Nasdaq Global Select Market will commence.

Under Nasdaq rules, the current reference price means: (i) the single price at which the maximum number of orders to buy or sell our shares of Class A common stock can be matched; (ii) if more than one price exists under clause (i), then the price that minimizes the number of our shares of Class A common stock for which orders cannot be matched; (iii) if more than one price exists under clause (ii), then the entered price (i.e., the specified price entered in an order by a customer to buy or sell) at which our shares of Class A common stock will remain unmatched (i.e., will not be bought or sold); and (iv) if more than one price exists under clause (iii), a price determined by Nasdaq after consultation with J.P. Morgan, Jefferies and BTIG, in their capacities as our financial advisors. J.P. Morgan, Jefferies and BTIG will exercise any consultation rights only to the extent that they may do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M (to the extent applicable), or applicable relief granted thereunder. 

The Registered Stockholders will not be involved in Nasdaq’s price-setting mechanism, including any decision to delay or proceed with trading, nor will they control or influence J.P. Morgan, Jefferies and BTIG in carrying out their roles as our financial advisors. We will not be involved in the price-setting process. 

J.P. Morgan will determine when our shares of Class A common stock are ready to trade and approve proceeding at the current reference price primarily based on consideration of trading volume, timing and share price. In particular, J.P. Morgan will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the current reference price. For more information, see the section titled “Plan of Distribution.”

We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol “IOND.” We expect our Class A common stock to begin trading on or about                  , 2026.

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012. As such, in this prospectus we have taken advantage of certain reduced disclosure obligations that apply to emerging growth companies.

Investing in our Class A common stock involves risks. See the section titled “Risk Factors” beginning on page 11 of this prospectus to read about factors you should consider before buying our Class A common stock.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                  , 2026

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

This prospectus is a part of a registration statement on Form S-1 that we filed with the SEC using a “shelf” registration or continuous offering process. Under this process, the Registered Stockholders may, from time to time, sell the Class A common stock covered by this prospectus in the manner described in the section titled “Plan of Distribution.” Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in, this prospectus (except for the section titled “Plan of Distribution,” which additions, updates, or changes that are material shall only be made pursuant to a post-effective amendment). You may obtain this information without charge by following the instructions under the section titled “Where You Can Find More Information” appearing elsewhere in this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the sections of this prospectus titled “Where You Can Find More Information.”

As used in this prospectus, the term “Registered Stockholders” refers to the stockholders with shares registered hereunder pursuant to the table appearing in the section titled “Registered Stockholders” and their pledgees, donees, transferees, assignees, or other successors-in-interest.

You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission, or SEC. Neither we nor the Registered Stockholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the Registered Stockholders take responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. The Registered Stockholders are offering to sell, and seeking offers to buy, shares of their Class A common stock only in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common stock. Our business, financial condition, operating results, and prospects may have changed since that date.

For investors outside of the United States: Neither we nor any of the Registered Stockholders have done anything that would permit the use or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of Class A common stock by the Registered Stockholders and the distribution of this prospectus outside of the United States.

Unless the context otherwise requires, references in this prospectus to “Ionic Digital,” “we,” “our,” “us” and the “Company” refers to Ionic Digital Inc., a Delaware corporation, and its consolidated subsidiaries, and “Ionic Digital Inc.” or the “Parent” refer only to Ionic Digital Inc.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements that reflect our plans, beliefs, expectations and current views with respect to, among other things, future events and financial performance. These forward-looking statements are based on the historical financial information and our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Forward-looking statements made in this prospectus speak only as of its date, and we undertake no obligation to update them in light of new information or future events, except as required by law.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often characterized by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “plans,” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. Some of the risks, uncertainties and other important factors that could cause results to differ from those currently expected, or that otherwise could impact us, include, but are not limited to:

The factors identified above should not be construed as an exhaustive list of factors that could affect our future results and should be read in conjunction with the other cautionary statements that are included in this prospectus. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” If any of these trends, risks or uncertainties actually occurs or continues, our business, revenue and financial results could be harmed, and the trading prices of our Class A common stock could decline. All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary note.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

RISK FACTORS

Investing in our securities involves risks. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before deciding whether to purchase any of our securities. Our business, prospects, results of operations and financial condition could also be harmed by risks and uncertainties that are not presently known to us or that we currently believe are not material. If any of these risks actually occur, our business, prospects, results of operations and financial condition could be materially and adversely affected.

Risks Related to Our Company

Due to our limited operating and financial history, our historical financial information may not be indicative of our future results of operations.

Ionic Digital was formed in January 2024 and has a limited operating and financial history. Although we acquired the bitcoin mining assets and assumed certain liabilities of Celsius Mining, we operate our business in a different manner than the Predecessor entity. In addition, after terminating our relationship with U.S. Data Management Group, LLC (“Hut 8”) in December 2024, we have eliminated certain hosted sites and now manage our owned and leased sites operations. See the section titled “Business – Company History” for more information. Moreover, in 2025 we began a shift from a pure-play bitcoin mining company to a company principally focused on providing digital infrastructure solutions. 

Accordingly, our future financial condition and results of operations may not be comparable to Celsius Mining’s or our historical financial condition and results of operations.

As a result of our limited operating and financial history, our ability to accurately forecast the future results of our operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. The historical financial information contained in this prospectus may not be indicative of our future results of operations. Our ability to generate revenues is principally dependent on our ability to generate rental revenues on our Ward County property and any future facilities that we may lease to third parties for HPC, AI, or other purposes, and to successfully execute our bitcoin mining operations, which we have been undertaking with our current management for a limited period of time. We may be unable to successfully execute on differentiation strategies beyond bitcoin mining, and we cannot assure you that our facilities leasing strategy will be successful.

We also face the types of risks and uncertainties experienced by new and growing companies in rapidly changing industries. If our assumptions regarding these risks, uncertainties, and future growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.

We have an evolving business model and are at an early stage of development for our digital infrastructure business.

We were founded as a pure-play cryptocurrency mining company, but we are evolving our business model to better leverage our digital infrastructure assets. In October 2025, we entered into our first arrangement to lease our Ward County property to a third party for HPC use. Other than a $45.6 million advance payment in November 2025, monthly fixed lease payments to be received under that agreement do not commence until August 2026. Accordingly, we have no history upon which an evaluation of our prospects and future performance in this sector can be made. To stay current with the industry, our business model may continue to evolve as well. From time to time, we may modify aspects of our business model. We are subject to the risks and uncertainties of a new business, including the risk that we may never further develop, complete development of, or successfully market any of our proposed services. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results.

Our intent in growing and developing this business is to reduce the impact of variability on our revenue and hosting costs by entering into long-term lease arrangements with leading tenants in the AI, HPC and enterprise sector. However, we cannot provide assurance that we will successfully enter into arrangements on acceptable terms or that our tenants will perform their obligations to us. Our ability to achieve our diversified capital strategy depends on a variety of factors, including, but not limited to, our ability to identify suitable tenants and strategic partnership opportunities, optimize our mining capabilities, and obtain rights to additional sites or the capital to develop additional facilities for other leases or for use in our own bitcoin mining operations. We also cannot provide any assurance that our diversified capital strategy will be realized or result in the benefit we hope to achieve. If one or more of our underlying assumptions regarding these initiatives prove to have been incorrect, we may not be able to realize fully, or realize in the anticipated timeframe, the expected benefits from our future growth plans which could, in turn, have a material adverse effect on our business, prospects, results of operations or financial condition.

As a recently formed company with a high degree of executive turnover since we began our operations, there is significant uncertainty regarding our ability to effectively operate our business and implement our strategy.

Ionic Digital is a recently formed company with a small number of executive officers and employees. Since we began our operations, we experienced frequent turnover among our executive officers and have enlisted multiple interim senior executives. A number of budgeted management and operational roles in accounting, finance, and operations that we intend to fill over time are currently vacant. Our success in executing our business strategy is dependent, to a significant degree, on our ability to hire and retain highly qualified personnel with relevant expertise. Competition for qualified employees in the digital infrastructure and cryptocurrency industries in general, and in the bitcoin mining sector in particular, is intense. There can be no assurance we will be able to attract and hire qualified individuals to fill these roles or to fill them within an appropriate time frame, or that we will be able to retain those individuals key to operating our business. 

Our limited staff and the short tenure of our management team indicates there is uncertainty regarding our ability to, among other things:

If our management and employees are unable to effectively achieve or respond to any of the above-mentioned key areas, it could have a material adverse effect on our business, prospects, results of operations, and financial condition.

Risks Related to Our Operations

Risks Related to Our Digital Infrastructure Solutions Business

Our digital infrastructure business has and is expected to continue to have significant customer concentration.

We currently have only one customer in our digital infrastructure business, and we expect to generate a large portion of our digital infrastructure solutions from a small number of customers for the foreseeable future. If we were to lose one or more of our large customers, our operating results could suffer dramatically.

In October 2025, we entered into an agreement with Nscale for a 126-month “triple-net” lease of our Ward County property. Rental payments under the Nscale Agreement are scheduled to commence on August 1, 2026. After an initial 18-month ramp up period, annual fixed rent payable under the lease at 234 MW capacity is $182.5 million (or $250.5 million with the additional 89 MW of capacity secured), with 3% annual increases scheduled to occur after the fifth year of the lease term.

As of the date of this prospectus, this is our only material facility lease. As a result of the risks our customer faces, it is not possible for us to predict the future level of demand for our services that will be generated by this customer or the future demand for the products and services of this customer. Should this customer suffer from harm or loss, its business could be negatively impacted. If our customer failed to perform under the lease for any reason, and we are not able to timely replace this customer with one or more comparable revenue-generating customers or to collect on guarantees from the customers’ partners, our ability to generate any revenue from our Ward County property could be materially adversely affected, which in turn would have a material adverse effect on our financial condition, results of operations and cash flows.

Furthermore, we expect that the limited number of customers will continue to account for a high percentage of our digital infrastructure solutions for the foreseeable future. The concentration of our customer base increases risks related to the financial condition of our customers, and the deterioration in financial condition of a single customer or the failure of a single customer to perform its obligations could have a material adverse effect on our results of operations and cash flow.

As we further pursue a strategy of monetizing our digital infrastructure assets, failure to attract, grow and retain a diverse and balanced customer base, including key anchor customers, could harm our business and operating results.

Our ability to attract, grow and retain a diverse and balanced customer base, some of which we hope to be anchor customers that attract other customers, may affect our ability to maximize our revenues. Our ability to attract customers to our data centers will depend on a variety of factors, including our ability to secure power, the presence of carriers, the data center’s operating reliability and security and our ability to effectively market our product offerings. Our inability to develop, provide, or effectively execute any of these factors may hinder the development, growth, and retention of a diverse and balanced customer base and adversely affect our business, financial condition, and results of operations.

It may take significant time and expenditure to develop our digital infrastructure solutions through continued development at our existing and planned sites, and our efforts may not be successful.

The continued development of our existing and any future facilities is subject to various factors beyond our control. There may be difficulties in integrating new equipment into existing infrastructure, constraints on our ability to connect to or procure the expected electricity supply capacity at our facilities, defects in design, construction or installed equipment, diversion of management resources, insufficient funding or other resource constraints. Actual costs for development may exceed our planned budget.

We intend to expand by acquiring and developing additional sites, taking into account a number of important characteristics such as availability of renewable energy, electrical infrastructure and related costs, geographic location and the local regulatory environment. We may have difficulty finding sites that satisfy our requirements at a commercially viable price or our timing requirements. Furthermore, there may be significant competition for suitable data center sites, and government regulators, including local permitting officials, which may restrict our ability to set up data center operations in certain locations.

Leveraging sites that we have contractually secured may ultimately fail to complete due to factors beyond our control. In addition, the ability to secure connection agreements to access power sources and permits, approvals and/or licenses to construct and operate our facilities could be delayed in regulatory processes, may not be successful or may be cost prohibitive. Actions by government regulators, or the issuance of any new regulations, that restrict our ability to operate HPC/AI data centers or bitcoin mining data centers may reduce the availability and/or increase the cost of electricity in the geographic locations in which our operating facilities are located or could otherwise adversely impact our business.

Development and construction delays, cost overruns, changes in market circumstances, environmental or community constraints, an inability to continue to find suitable data center locations as part of our expansion and other factors may adversely affect our business, prospects, results of operations and financial condition. We will continue to review our expansion plans in light of evolving market conditions. Any such delays, and any failure to increase our energy or hashrate capacity in the future, could adversely impact our business, prospects, results of operations and financial condition.

Our digital infrastructure development business depends upon the demand for data centers.

We are pursuing a strategy of owning, developing and operating data centers. A reduction in the demand for data center space, power or connectivity would have a greater adverse effect on our leasing or business and financial condition than if we owned a portfolio with a less specialized use. These development activities make us particularly susceptible to general economic slowdowns as well as adverse developments in the data center, internet and data communications and broader technology industries, including to any decline in investment in AI. Any such slowdown or adverse development could lead to reduced corporate IT spending or reduced demand for data center space. Reduced demand could also result from business relocations, including to areas that we do not currently serve. Changes in industry practice or in technology could also reduce demand for the physical data center space we provide. Our financial condition, results of operations, cash flow, cash available for distribution, and ability to satisfy any future debt service obligations could be materially adversely affected as a result of any or all of these factors.

Any delays or unexpected costs developing our existing space, developable land or newly acquired properties may delay and harm our growth prospects, future operating results and financial condition.

We are currently in the process of repurposing our Ward County property and we may in the future continue to build out additional HPC/AI, enterprise, or other data center facilities on a speculative basis at significant cost. Our successful development of this and future projects is subject to many risks, including those associated with:

Development activities, regardless of whether they are ultimately successful, also typically require a substantial portion of our management’s time and attention. This may distract our management from focusing on other operational activities of our business. If we are unable to complete development projects successfully, our business may be adversely affected.

We may be unable to purchase or lease vacant or development space, renew leases, or re-lease space as leases expire.

We may continue to add new space to our development inventory and to continue to develop additional space from this inventory. A portion of the space that we develop may be developed on a speculative basis, meaning that we do not have a signed customer agreement for the space when we begin the development process. We cannot assure you that once we have developed space or land we will be able to successfully lease it at all, or at rates we consider favorable or expected at the time we commenced development. Further, once development of a data center facility is complete, we incur certain operating expenses even if there are no customers occupying any space. If we are not able to complete development in a timely manner or successfully lease the space that we develop, if development costs are higher than we currently estimate, or if rental rates are lower than expected when we began the project or are otherwise undesirable, our financial condition, results of operations, cash flow, cash available for distribution and ability to satisfy our debt service obligations could be materially adversely affected.

We may also develop space specifically for customers pursuant to agreements signed prior to beginning of the development process. In those cases, if we fail to meet our development obligations under those agreements, these customers may be able to terminate the agreements and we would be required to find a new customer for this space. In addition, in certain circumstances we may lease data center facilities prior to their completion. If we fail to complete the facilities in a timely manner, the customer may be entitled to terminate its agreement, seek damages or penalties against us or pursue other remedies and we may be required to find a new customer for the space.

As we continue to pursue expansion efforts and invest in our digital infrastructure assets, there may not be sufficient customer demand in the future to realize expected returns on these investments.

We expect to seek to expand our digital infrastructure footprint. In connection with our expansion plans, we may be required to commit significant operational and financial resources, but there can be no guarantee we will have sufficient customer demand in those markets to support these assets once they are built. This risk may be greater in a market where we have not operated previously. Consequently, if any of our properties have significant vacancies for an extended period of time, our results of operations and business and financial condition will be adversely affected, the impact of which could be material. In addition, unanticipated technological changes could affect customer requirements for data centers, and we may not have built such requirements into our new facilities. If any of these developments or contingencies were to occur, it could make it difficult for us to realize expected or acceptable returns on our investments.

Our new services and changes to existing services could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect our business.

Our ability to retain, increase, and engage our customer base and to increase our revenue depends heavily on our ability to continue to evolve our existing services and to create successful new services, both independently and in conjunction with developers or other third parties. We may introduce significant changes to our existing services or acquire or introduce new and unproven services, including using technologies with which we have little or no prior development or operating experience. These efforts, including the introduction of new services or changes to existing services, may result in new or enhanced governmental or regulatory scrutiny, litigation, ethical concerns, or other complications that could adversely affect our business, reputation, or financial results. If our new services fail to engage users or developers, or if our business plans are unsuccessful, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be adversely affected.

If we incorrectly estimate our capacity requirements and related capital expenditures, our results of operations could be adversely affected.

We are continuously evaluating our capacity requirements in order to effectively manage our capital expenditures and operating results. However, we may be unable to accurately project our future capacity needs or sufficiently allocate resources to address such needs. If we underestimate these requirements, we may not be able to provide sufficient service to existing customers or may be required to limit new customer acquisition, both of which may materially and adversely impair our results of operations.

Even if we have additional space available for lease at any one of our data centers, our ability to lease this space to existing or new customers could be constrained by our ability to provide sufficient electrical power.

As current and future customers increase their power footprint in our data centers over time, the corresponding reduction in available power could limit our ability to increase occupancy rates or network density within our existing data centers. Furthermore, our aggregate maximum contractual obligation to provide power and cooling to our customers may exceed the physical capacity at such data centers if customers were to quickly increase their demand for power and cooling. If we are not able to increase the available power and/or cooling or move the customer to another location within our data centers with sufficient power and cooling to meet such demand, we could lose the customer as well as be exposed to liability under our customer agreements. In addition, our power and cooling systems are difficult and expensive to upgrade. Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs that we may not be able to pass on to our customers. Any such material loss of customers, liability or additional costs could adversely affect our business, financial condition and results of operations.

Risks Related to Our Cryptocurrency Mining Business

We may be unable to purchase miners at scale or face delays or difficulty in obtaining new miners at scale, which could materially and adversely affect our business, financial condition, and results of operations.

In some historical periods the industry has experienced, and we expect may experience again in the future, a scarcity of advanced mining machines, as few manufacturers are capable of producing a sufficient number of mining machines of adequate quality to meet demand. We also face competition in acquiring miners from major manufacturers, and at any given time, miners may only be available for pre-order months in advance. There may be periods of shortage in new miners available for purchase or delays in delivery schedules for new miner purchases. There is no assurance that manufacturers of miners or other equipment necessary for our business or our growth will be able to keep pace with demand, or potential surges in demand, for mining equipment. It is uncertain how manufacturers will respond to increased global demand and whether they will be able to fulfill purchase orders fully and in a timely manner. In the event that manufacturers of miners or other suppliers are not able to keep pace with, or fail to satisfy, demand, we may not be able to purchase miners or other equipment in sufficient quantities or on the delivery schedules required to meet our business needs. Similarly, ongoing challenges to the global supply chain, coupled with increased demand for computer chips and semiconductors and resulting shortages, have resulted in production cost increases affecting the miners we employ in our bitcoin mining operations and other digital infrastructure equipment for our data centers, and their manufacturers have passed on increased production costs to purchasers like us. Additionally, should any suppliers default on purchase agreements with us, we may need to pursue recourse under international jurisdictions, which could be costly and time-consuming, with outcomes that are uncertain. Furthermore, there is no guarantee that we would succeed in recovering any deposits paid for such purchases (including advance deposits that may be required), which could have a material adverse effect on our business, prospects, results of operations or financial condition.

We depend on third party manufacturers of miners, who in turn rely on components and raw materials that may be subject to price fluctuations or shortages, including application-specific integrated circuits (“ASICs”) that have been subject to periods of significant shortage and where innovation has made certain models outdated or obsolete.

We depend on third parties for equipment necessary to the operation of our business, including for new miners. There continue to be rapid advances (and announcements of coming future advances) in the power, speed, reliability and/or energy efficiency of miners, with the same or lower operating costs than older model miners, from various manufacturers. Some of these advances are in turn being driven by major advances in ASICs which are manufactured by a small number of global companies.

The volatility of ASIC prices has increased in recent years because of the global chip shortage, which began in 2020 and was exacerbated by the COVID-19 pandemic and subsequent supply chain issues, causing ASICs to be in short supply during this same period, according to various press reports. The ASIC is the key component of a mining machine as it determines the efficiency of the device. The production of ASICs typically requires highly sophisticated silicon wafers, which currently only a small number of fabrication facilities in the world are capable of producing. Since we have limited operating history, we may not be able to order ASICs or other equipment or services without advance payments because ASIC manufacturers and suppliers typically do not guarantee reserve capacity or supplies without substantial order deposits. Ongoing or future chip shortages could have a material adverse effect on our business, prospects, results of operations or financial condition.

Our ability to source new miners, ASICs, or other critical components for our facilities in a timely manner and at acceptable prices and quality levels is critical to our potential expansion. We are exposed to the risk of disruptions or other failures in the overall global supply chain for bitcoin mining and related data center hardware. This is particularly relevant to the ASIC production since there is only a small number of fabrication facilities capable of such production, which increases our risk exposure to manufacturing disruptions or other supply chain failures, but it also applies to other infrastructure hardware necessary for operating our facilities, such as transformers, cables, and switch gear.

Our reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on our operations. For example, should the mining pool operator be subject to cyber-attacks, we may have limited recourse against the mining pool operator with respect to rewards to be paid to us.

We receive bitcoin mining rewards by contributing our computing power to a third-party mining pool operator, which uses this computing power to operate nodes and validate blocks on the blockchain. Mining pools allow miners to combine processing power, increasing their chances of solving a block and getting paid by the network. We currently utilize a mining pool that pays us bitcoin rewards based on a contractual “Full-Pay-Per-Share” (“FPPS”) formula, which calculates payouts primarily based on the hashrate (i.e., the computing power) we contribute to the mining pool as a percentage of total network hashrate, along with other inputs. Under the FPPS formula, we are entitled to compensation with respect to each block that is mined on the Bitcoin network, even if that block is not successfully validated by the mining pool in which we participate. This payout formula is designed to provide a more predictable stream of income as opposed to a payout formula based only on blocks mined by the pool.

Should a mining pool operator’s systems suffer downtime due to a cyber-attack, software malfunction, or other similar issues, these events will negatively impact our ability to mine and receive mining rewards.

Furthermore, we are dependent on the accuracy of the mining pool operator’s record-keeping to accurately record the total processing power provided by us and other mining pool participants in order to assess the proportion of that total processing power we provide. While we have internal methods of tracking our contributed processing power, the mining pool operator uses its own recordkeeping to determine our proportion of a given reward. We have little means of recourse against mining pool operators if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect, other than leaving the pool. If we are unable to consistently obtain accurate proportionate rewards from mining pool operators, we may experience reduced reward for our efforts, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

Because our miners are designed specifically to mine bitcoin and may not be readily adaptable to other uses, a sustained decline in bitcoin’s value could adversely affect our business and results of operations.

We have invested substantial capital in acquiring miners using ASIC chips designed specifically to mine bitcoin using the 256-bit secure hashing algorithm (“SHA-256”) as efficiently and as rapidly as possible on our assumption that we will be able to use them to mine bitcoin and generate revenue from our operations. Therefore, our mining operations focus exclusively on mining bitcoin, and our mining revenue is based on the value of the bitcoin we mine. The value of bitcoin could potentially decline due to the development and acceptance of competing blockchain platforms or technologies, including competing cryptocurrencies which our miners may not be able to mine. Accordingly, if the value of bitcoin declines and fails to recover, the revenue we generate from our bitcoin mining operations will likewise decline. Moreover, because our miners use these highly specialized ASIC chips, we may not be able to successfully repurpose them in a timely manner, if at all, to other uses following a sustained decline in bitcoin’s value or if the bitcoin blockchain stops using SHA-256 for solving blocks. This would result in a material adverse effect on our business.

Bitcoin mining algorithms may transition to proof of stake validation or other alternative validation methods over proof of work, which could make us less competitive and ultimately adversely affect our business.

Proof of stake is a possible alternative method for validating blockchain transactions. Should bitcoin’s algorithm shift from a proof of work validation method to a proof of stake method, mining would require less energy and may render any company that maintains advantages in the current climate (for example, resulting from lower priced electricity, better mining equipment, or location of facilities) less competitive. Like proof of stake, other alternative consensus algorithms such as delegated proof of stake, proof of space time and proof of capacity are validation methods that require less energy consumption than proof of work. Furthermore, blockchain technologies are rapidly developing resulting in the possibility of innovation and the development of new validation methods. If the method by which bitcoin transactions are validated changes in a way that results in our losing our competitive advantage, we would lose the benefit of our capital investments. The occurrence of any such risk could have a material adverse effect on our business, prospects, results of operations or financial condition.

We may not adequately respond to rapidly changing technology, which may negatively affect our business.

Competitive conditions within the bitcoin mining industry require that we use sophisticated technology in the operation of our business. Blockchain technology generally, and bitcoin mining specifically, is characterized by rapid technological changes, new product introductions, enhancements, and evolving industry standards. New technologies, techniques, or products could emerge that might offer better performance than the software and other technologies that we currently utilize, and we may have to manage transitions to these new technologies to remain competitive. We may not be successful, generally or relative to our competitors in the bitcoin mining industry, in timely implementing new technology into our systems, or doing so in a cost-effective manner. During the course of implementing any such new technology into our operations, we may experience system interruptions and failures during such implementation. Furthermore, there can be no assurances that we will recognize, in a timely manner or at all, the benefits that we may expect as a result of implementing new technology into our operations. Failure to respond to any such rapidly changing technology could have a material adverse effect on our business, prospects, results of operations or financial condition.

Bitcoin mining equipment is subject to malfunction, technological obsolescence, and physical degradation.

Our miners are subject to malfunctions and normal wear and tear. At any point in time, a certain number of our miners are typically off-line for maintenance or repair. The physical degradation of our miners will require us to replace miners that are no longer functional. Because we utilize many units of the same miner models, if there is a model-wide component malfunction, whether in the hardware or the software that operates these miners, the percentage of offline miners could increase substantially, thereby disrupting our operations. Any major bitcoin miner malfunction out of the typical range of downtime for normal maintenance and repair could cause a significant disruption in our ability to continue mining, which could result in lower yields and harm our reputation and business.

A hardware replacement or upgrading process may require substantial capital investment and we may face challenges in doing so on a timely and cost-effective basis, which could put us at a competitive disadvantage. We may also be impacted by disruptions in the supply chain for cryptocurrency hardware. See “—We may be unable to purchase miners at scale or face delays or difficulty in obtaining new miners at scale, which could materially and adversely affect our business, financial condition, and results of operations.” Any of the risks above could have a material adverse effect on our business, prospects, financial condition, and operating results.

Any long-term outage or limitation of the internet connection at our sites could materially impact our operations and financial performance.

Our ability to validate and verify bitcoin transactions, either directly or through a mining pool, is dependent on our ability to connect to the Bitcoin network or mining pools through the internet. Any extended downtime, limitations in bandwidth, or other constraints may affect our ability to contribute some or all of our computing power to the network or mining pools. We have backup internet connections at our operations, but any backup internet connections may not be sufficient to support all of our mining equipment in an affected location for the duration of the outage under certain network configurations. The effects of any such events could have a material adverse effect on our operating results and financial condition.

The bitcoin reward for successfully solving a block is expected to halve several times in the future and bitcoin market value may not adjust to compensate us for the reduction in the reward we receive from our mining effort.

Halving is a process incorporated into many proof of work consensus algorithms that reduces the reward paid to miners over time according to a pre-determined schedule. This reduction in reward spreads out the release of bitcoin over a long period of time resulting in an even smaller number of bitcoin being mined. At a predetermined block, the mining reward is cut in half, hence the term “halving.” For bitcoin, the reward was initially set at 50 bitcoin per block. This was cut in half to 25 on November 28, 2012 at block 210,000, then again to 12.5 on July 9, 2016 at block 420,000, and again to 6.25 on May 11, 2020 at block 630,000, and most recently to 3.125 on April 19, 2024 at block 840,000. This process will recur until the total amount of bitcoin in existence reaches 21 million, which is presently expected to occur around 2140, but could happen before that date. While the price of bitcoin has had a history of price fluctuations around the halving of its rewards, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining reward. If a corresponding and proportionate increase in the trading price of bitcoin or proportionate technological advances making bitcoin mining more efficient does not follow these anticipated halving events, the revenue that we would earn from our bitcoin mining operations would see a corresponding decrease, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

If the bitcoin reward for solving blocks and the related transaction fees are not sufficiently high, we may not have an adequate incentive to continue mining and may cease mining operations, which would likely result in our failure to achieve profitability.

As the number of bitcoin awarded for solving a block in a blockchain decreases and/or if transaction fees for bitcoin mining are not sufficiently high, the ability of miners like us to achieve profitability would be adversely affected. Decreased bitcoin rewards for solving blocks may adversely affect our and other miners’ incentive to expend processing power to solve blocks, and ultimately may cause us and other miners to cease mining operations. Mining operators ceasing operations would reduce the collective processing power on the network, which would adversely affect the confirmation process for transactions (i.e., temporarily decreasing the speed at which blocks are added to a blockchain until the next scheduled adjustment in difficulty for block solutions) and make the Bitcoin network more vulnerable to a malicious actor or botnet obtaining control in excess of 50% of the processing power active on a blockchain, potentially permitting such actor or botnet to manipulate a blockchain in a manner that adversely affects our activities or the market value of bitcoin. A reduction in confidence in the confirmation process or processing power of the network could result and might be irreversible. Such events could have a material adverse effect on our ability to continue to pursue our strategy at all, which in turn could have a material adverse effect on our business, prospects, results of operations or financial condition.

Our bitcoin holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Historically, the bitcoin market has been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our bitcoin at favorable prices or at all. For example, a number of bitcoin trading venues temporarily halted deposits and withdrawals in 2022. As a result, our bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. If we are unable to sell our bitcoin, enter into capital raising transactions, or otherwise generate funds using our bitcoin holdings, or if we are forced to sell our bitcoin at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted. 

Our cryptocurrency assets may be subject to loss, damage, theft, or restriction on access. Additionally, incorrect or fraudulent cryptocurrency asset transactions may be irreversible.

We currently hold custody of our bitcoin with regulated financial institutions that act as qualified custodians under U.S. federal or state banking oversight. We do not hold or control the private keys that control our bitcoin. Instead, our custodians are responsible for generating, securing, and controlling those keys, and they do so using different methods. Anchorage Digital Bank, a federally chartered digital asset trust bank, does not use a traditional cold storage model in which a single, complete private key is generated and stored offline. Instead, Anchorage secures assets using a technique known as multi-party computation. Under this approach, no single, complete private key is ever created or held in any one location. The ability to authorize a transaction is instead divided into multiple independent cryptographic components that are generated and stored separately within tamper-resistant hardware devices called hardware security modules, and a transaction can be authorized only when a required number of those components are combined under defined approval controls. All of our bitcoin assets held at Anchorage are protected using this multi-party computation technique and no private keys are created or held under our custody arrangements with Anchorage. Fidelity Digital Assets, a New York State-chartered limited purpose trust company, holds our bitcoin in omnibus wallets, in which our bitcoin is held together with bitcoin of its other customers rather than in a wallet dedicated solely to us. Fidelity, and not Ionic Digital, controls the private keys associated with these accounts. Based on our custody arrangement with Fidelity, Fidelity has discretion in how it maintains our bitcoin assets in such omnibus wallets, which is primarily in offline, or “cold,” storage. We do not dictate how much of our bitcoin assets Fidelity maintains in “cold” storage at any particular time. These architectures are designed to eliminate single points of failure. While these systems are intended to mitigate many of the risks associated with traditional cold wallet storage and single-operator key control, they do not eliminate all risks, and the fact that we do not control the private keys to our bitcoin means we are dependent on the continued solvency, competence, and integrity of our custodians to access and transact in our bitcoin.

Our cryptocurrency assets may be an appealing target to hackers or malware distributors seeking to destroy, damage, or steal such cryptocurrency assets. Hackers or malicious actors may attempt to steal bitcoin, such as by attacking the Bitcoin network’s source code, exchange miners, nodes, third-party platforms, storage locations or software, our general computer systems or networks, by means of phishing or other human-based attacks, or by other means. We may be unable to prevent loss, damage, or theft, whether caused intentionally, accidentally, or by act of God. Access to our cryptocurrency assets could also be restricted by natural events (such as an earthquake or flood causing an outage in connectivity) or human actions (such as a terrorist attack). Any of these events could have a material adverse effect on our business, prospects, results of operations or financial condition. Further, it is possible that, through computer or human error, theft, or criminal action, our digital assets could be transferred in incorrect amounts or to unauthorized third parties or accounts. In general, bitcoin transactions are irrevocable; stolen or incorrectly transferred cryptocurrency assets may be irretrievable, and we may have extremely limited or no effective means of recovering such bitcoin. As a result, any incorrectly executed or fraudulent bitcoin transactions could have a material adverse effect on our business, prospects, results of operations or financial condition.

The loss of access to any bitcoin held in custody for our own account may be irreversible. If our custodians lose the ability to access our bitcoin or if they experience a hack or other data loss relating to their ability to access any bitcoin, it could cause regulatory scrutiny, reputational harm, and other losses.

Bitcoin is generally controllable only by the party that controls the cryptographic key material associated with the digital wallet in which the bitcoin is held. While blockchain protocols make public key addresses publicly available, private key material must be safeguarded and kept secure to prevent a third party from accessing the associated bitcoin. To the extent that any of the private key material relating to any of the wallets containing our bitcoin is lost, destroyed, or otherwise compromised or unavailable, and no backup of that private key material is accessible, our custodians will be unable to access our bitcoin held in the related wallet. Further, we cannot provide assurance that wallets containing our bitcoin will not be hacked or compromised. Cryptocurrency assets and blockchain technologies have been, and may in the future be, subject to security breaches, hacking, or other malicious activities. Any loss of private key material, hack or other compromise of digital wallets used to store our bitcoin could adversely affect our ability to access or sell our bitcoin and subject us to significant financial losses. As such, any loss of private keys due to a hack, employee or service provider misconduct or error, or other compromise by third parties could result in significant losses and could have a material adverse effect on our business, prospects, results of operations or financial condition. The insurance or indemnity provisions of our custody agreements, or other agreements, with a custodian who holds our bitcoin may not cover any such losses.

We may be subject to various additional risks associated with our bitcoin held by third-party custodians.

We have implemented various measures that are designed to secure the bitcoin we hold, including storing substantially all of the bitcoin we own in custody accounts at Anchorage Digital Bank and Fidelity Digital Assets, and negotiating contractual arrangements intended to safeguard our bitcoin and establish that our property interest in custodially-held bitcoin is not subject to claims of our custodians’ creditors.

However, it is possible that bitcoin stored with even the most qualified custodians and exchanges may be subject to hacking and thefts. See “—Our cryptocurrency assets may be subject to loss, damage, theft, or restriction on access. Additionally, incorrect or fraudulent cryptocurrency asset transactions may be irreversible.” For example, in March 2025 the cryptocurrency asset exchange ByBit was the subject of a hack in which over $1.5 billion of customer cryptocurrency assets were lost. While we do not use ByBit as a custodian or hold our bitcoin on an exchange, and ByBit was ultimately able to make its customers whole through use of reserves and insurance policies, there is no contractual guarantee that our custodians will do the same. The insurance policies of our third-party custodians, which cover losses of bitcoin up to an aggregate amount of $200 million across all of its custodial arrangements may cover only a fraction of the value of the entirety of our cryptocurrency holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our bitcoin.

In addition, we believe that existing law and the terms and conditions of our contractual arrangements with our custodians would not result in the bitcoin held by our custodians being considered part of the custodian’s bankruptcy estate were the custodian to file for bankruptcy. Applicable insolvency law is not fully developed with respect to the holding of cryptocurrencies in custodial accounts, but it is possible that a bankruptcy court or trustee could take the view that we are a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such cryptocurrency assets. For example, a bankruptcy court in Delaware ruled on July 18, 2025 that the cryptocurrencies held by Prime Trust LLC, a Nevada trust company and a subsidiary of Prime Core Technologies Inc., on behalf of users would be distributed proportionately to all unsecured creditors as such assets were part of the debtors’ bankruptcy estate because of commingling between customer accounts and those of debtors. Any such outcome could have a material adverse effect on our business, prospects, results of operations or financial condition.

Cryptocurrency assets held by us are not subject to FDIC or SIPC protections.

Bitcoin we hold with our custodians and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Thus, in the event of an insolvency of one of our custodians, we will not be protected by these schemes.

Our bitcoin strategy may subject us to regulatory and other risks.

Our bitcoin holdings do not serve as collateral for any indebtedness as of the date of this prospectus. We may also consider pursuing strategies to create income streams or otherwise generate funds using our bitcoin holdings. These types of bitcoin-related transactions are the subject of enhanced regulatory oversight. These and any other bitcoin-related transactions we may enter into, beyond simply mining, acquiring and holding bitcoin, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations. 

On March 17, 2026, the SEC and Commodities Futures Trading Commission (“CFTC”) issued a new interpretive release (SEC Interpretive Rel. 33-11412) entitled Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets (the “Interpretive Release”). In the Interpretive Release, the SEC significantly clarified its views on the application of the federal securities laws to certain types of crypto assets and transactions involving crypto assets. The Interpretive Release classifies crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities. Applying the traditional Howey test, the Interpretive Release explains that, in the SEC’s interpretation, digital commodities, digital collectibles, digital tools, and stablecoins will generally not be considered securities so long as they are not the subject of an “investment contract,” which is defined as any contract, transaction, or scheme whereby a person invests money in a common enterprise and reasonably expects profits to be derived from the efforts of others.

Under the Interpretive Release, a digital commodity is a crypto asset that is intrinsically linked to and derives its value from the programmatic operation of a crypto system that is functional, as well as supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others. Specific examples of digital commodities named by the SEC in the Interpretive Release include Bitcoin, Litecoin, and Dogecoin, among several others. The Interpretive Release also addresses several types of digital asset activities, including protocol mining and staking. Protocol mining on a proof-of-work network, either individually or as part of a pool, will generally not require the registration of transactions under the Securities Act, as the miners contribute their own computational resources in exchange for crypto asset rewards.

While the Interpretive Release provides comfort that the SEC does not view Bitcoin and certain other digital assets we hold or plan to hold as securities in and of themselves, certain transactions in such digital assets may nonetheless be considered investment contracts, and thus securities for purposes of the federal securities laws. The Interpretive Release provides further comfort that specific transactions in non-securities digital assets, such as certain staking and mining services, would not be considered investment contracts. However, the Interpretive Release does not discuss all digital asset-related activities and transactions that we may undertake, and it is possible that certain of those activities or transactions could be determined to involve an investment contract, and thus, the holding, offer or sale of a security by us for purposes of federal securities laws. Moreover, the Interpretive Release represents the interpretation of the SEC only, and thus is not binding on any other person (including private litigants) nor dispositive of how a court applying the U.S. federal securities may evaluate the regulatory characterization of any particular digital asset. Accordingly, although it provides improved comfort and clarity, the Interpretive Release is not dispositive and there remains regulatory risk and uncertainty regarding the U.S. regulatory treatment of digital assets, including Bitcoin.

Risks Related to All of Our Operations

We may be harmed by increased costs to procure power, prolonged power outages, shortages or capacity constraints as well as insufficient access to power (including as a result of failure to obtain necessary approvals).

Any power outages, shortages, capacity constraints or significant increases in the cost of power may have an adverse effect on our business, prospectus, results of operations and financial condition.

We rely on third parties, third party infrastructure, governments, and global supplies to provide a sufficient amount of power to maintain our digital infrastructure solutions and bitcoin mining operations to meet the needs of our current and future digital infrastructure solutions customers. Any limitation on the delivered energy supply could limit our ability to operate our bitcoin mining and HPC/AI data centers. These limitations could have a negative impact or limit our ability to grow our business, which could negatively affect our financial performance and results of operations. HPC/AI data centers require access to significant quantities of electricity. Limitations on generation, transmission and distribution may limit our ability to obtain sufficient power capacity for potential expansion sites or existing markets. Utility companies may impose onerous operating conditions to any approval or provision of power or we may experience significant delays and substantial increased costs to provide the level of electrical service required by our current or future data center designs.

Failure of critical systems at the facilities operated by us or third parties could have a material adverse effect on our business, prospects, financial condition, and results of operations.

The critical systems at the facilities where our miners are located, whether operated by us or third parties, are subject to failure. Any such failure, including a breakdown in critical plant, equipment or services, routers, switches or other equipment, power supplies or network connectivity, power loss, equipment failure, human error and accidents, network connectivity downtime and fiber cuts, security breaches, animal incursions, water damage, extreme temperatures, public health emergencies, terrorism, fire, earthquake, hurricane, tornado, flood and other natural disasters, whether or not within our control, could result in damaged equipment, significant business disruption, and reduced revenue. Frequent or persistent interruptions in our facilities could cause current or potential partners to believe that our systems are unreliable, leading them to switch to our competitors or to avoid or reduce the use of our services, and could permanently harm our reputation and brand. Moreover, to the extent that any system failure or similar event results in damage to our business partners, these partners could seek significant compensation or contractual penalties from us for their losses. Those claims, even if unsuccessful, would likely be time-consuming and costly for us to address. Problems with the reliability or security of our systems would harm our reputation, and damage to our reputation and the cost of remedying these problems could negatively affect our business, prospects, results of operations or financial condition. The destruction or severe impairment of any of the facilities operated by us or third parties could have a material adverse effect on our business, prospects, results of operations or financial condition.

We depend on third parties, including electric grid operators, and electric utility providers and may be harmed by increased costs to procure power, prolonged power outages, shortages or capacity constraints as well as insufficient access to power.

Any power outages, shortages, capacity constraints or significant increases in the cost of power may have an adverse effect on our business and our results of operations. We may be harmed by increased costs to procure power, prolonged power outages shortages or capacity constraints as well as insufficient access to power. Any power outages, shortages, capacity constraints or significant increases in the cost of power may have a material adverse effect on our business, prospects, our results of operations or financial condition.

We depend on third parties, including electric grid operators and electric utility providers, third party infrastructure, governments and global supplies to provide a sufficient amount of power to maintain our HPC data center and bitcoin mining operations to meet the needs of our current and future HPC data center customers. Any limitation on the delivered energy supply could limit our ability to operate our bitcoin mining and HPC data centers. HPC data centers require access to significant quantities of electricity. Limitations on generation, transmission and distribution may limit our ability to obtain sufficient power capacity for potential expansion sites or existing markets. Utility companies may impose onerous operating conditions to any approval or provision of power or we may experience significant delays and substantial increased costs to provide the level of electrical service required by our current or future data center designs. A significant concentration of our current operations are in Texas where ERCOT, a non-profit corporation subject to oversight by the Public Utility Commission of Texas and the Texas Legislature, manages the electric utility grid and therefore, determines the prices of electricity in Texas. Oncor Electric Delivery Company LLC (“Oncor”), and TNMP, for-profit electricity transmission and distribution businesses regulated by the Public Utility Commission of Texas, physically deliver electricity to our sites in Texas. We require approvals from ERCOT, Oncor, and/or TMNP to expand our operations in Texas, which can be onerous to obtain. If either of them were to delay or deny required approvals, our business plans could be disrupted (including to increase the capacity of our Ward County property). We also require approvals from both ERCOT and Oncor to continue to operate our current bitcoin mining operations. If either of them were to change their policies or contracts required to operate bitcoin mining facilities, our operations could be disrupted. Any of these risks could have a material adverse effect on our business, prospects, results of operations or financial condition.

We have a significant concentration of our operations in Texas and, thus, are particularly exposed to changes in the competitive landscape, regulatory environment, market conditions and natural disasters in that state.

We currently operate all of our digital infrastructure site and owned and leased facilities in Texas, which represents a significant concentration of our operations. Consequently, we are particularly exposed to changes in the competitive landscape, regulatory environment, market conditions, and natural disasters in that state. Texas, through its regulatory and economic incentives, has encouraged Bitcoin mining companies to locate their operations in the state. As such, we may face increased competition in Texas for suitable Bitcoin mining data center sites and skilled workers. Additionally, if the regulatory and economic environment in Texas were to become less favorable to bitcoin mining companies, including by way of increased taxes, our heavy concentration of sites in Texas means our business, prospects, financial condition, or operating results could be materially adversely affected. Finally, Texas is not connected to a power grid outside of the state. If Texas faces other unforeseen events, such as severe weather, natural disasters, or environmental-related issues, that cause extended periods of disrupted power (as happened during an ice storm in February 2021), our operations may be significantly disrupted. These natural disasters and weather-related disturbances could have a material adverse effect on our business, prospects, results of operations or financial condition. 

Our property insurance may cover all or a portion of the replacement cost of any loss or damage to our facilities, including miners, up to a $50 million policy limit but does not cover any business interruption of our activities. Our insurance therefore may not be adequate to cover the losses we suffer as a result of any of these events. In the event of an uninsured loss or a loss in excess of insured limits at any of our facilities, such facilities may not be adequately repaired in a timely manner, or at all, and we may lose some or all of the future revenues anticipated to be derived from such facilities.

We participate in energy demand response programs in Texas and may be required to temporarily suspend mining operations prior to or during periods of high energy grid strain, which could materially harm our business.

In our bitcoin mining operations, we are a non-mission critical operation under the current rules and policies of ERCOT, TNMP and Oncor and we therefore are eligible to, and do, participate in demand response programs. As a result, we may be required to temporarily shut off operations to reduce demand and stabilize the electrical grid for mission critical operations, when necessary, such as in extreme weather events. The State of Texas currently distributes funds to offset foregone operational revenue to bitcoin miners required to shut off operations as part of demand response programs. Payments or credits from demand response programs are included as a reduction to our cost of revenues in our income statement. If the State of Texas were to restrict benefits to bitcoin miners required to temporarily suspend operations, the resulting periods of lost revenue could have a material adverse effect on our business, prospects, results of operations or financial condition.

We may not be able to compete with other companies, many of whom have greater resources and experience.

We may not be able to compete successfully against present or future competitors as our resources may be limited in comparison with larger providers of similar services. The digital infrastructure and cryptocurrency mining industries have attracted various high-profile and well-established operators, some of which have substantially greater liquidity and financial resources than we may have.

Additionally, the number of digital infrastructure and bitcoin and other cryptocurrency mining companies has increased in recent years. With the limited resources that we have available, we may experience difficulties in expanding and improving our network of computers to remain competitive. Competition from existing and future competitors, particularly those that have access to competitively priced energy, including energy providers themselves, could result in our inability to secure acquisitions and partnerships that we may need to expand our business in the future. For example, competitors could offshore their business to, or commence operations in, countries where energy may be significantly less expensive, such as in the Middle East. This competition from other entities with greater resources, experience, and reputations may result in our failure to maintain or expand our business, as we may never be able to successfully execute our business plan. If we are unable to acquire new miners, or if our cost for new miners is excessively high, we may not be able to keep up with our competitors. If we are unable to expand and remain competitive, our business could be negatively affected, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

Our operations and strategic goals are capital-intensive. We may be unable to access sufficient additional capital for future strategic growth initiatives.

Investments in digital infrastructure development and leasing and the expansion of our miner fleet and our existing facilities are capital-intensive projects, and we anticipate that future strategic growth initiatives will likewise continue to be capital-intensive. We expect to be able to raise additional capital to fund these and other future strategic growth initiatives; however, we may be unable to do so in a timely manner, in sufficient quantities, or on terms acceptable to us, if at all. If we are unable to raise the additional capital needed to execute our future strategic growth initiatives, we may be less competitive in our industry and the results of our operations and financial condition may suffer, which may, in turn, materially and adversely affect the market price for our securities.

Our operations may be adversely affected by energy shortages and rising energy prices.

Our mining operations require significant amounts of energy. Increasing regional, national and global demand for energy and the limited growth of new energy sources are affecting the available supply of energy. A variety of factors, including the proliferation of hyperscale facilities and data centers and the widespread adoption of energy intensive technologies like AI, electric vehicles and industrial or manufacturing operations, could result in a limited supply of energy, intensive competition for scarce resources (including renewable sources) of energy and/or sharply escalating energy prices. Additionally, changes in energy laws and regulations in various jurisdictions may impact energy allocation rules and the ability to access energy. These limitations on energy supply and increased energy prices may increase our cost to earn bitcoin to a point that our revenues, cost of doing business, results of operations, and operating cash flows are negatively impacted.

Our financial performance may be affected by price fluctuations in the power market, as well as other market factors that are beyond our control.

Our revenues, cost of doing business, results of operations, and operating cash flows generally may be impacted by price fluctuations in the power market and other market factors beyond our control. Market prices for power, capacity, and other ancillary services are unpredictable and tend to fluctuate substantially. Unlike most other commodities, electric power can only be stored on a very limited basis and for a very limited time, and generally must be produced concurrently with its consumption. As a result, power prices are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets.

Long- and short-term power prices may also fluctuate substantially due to other factors outside of our control, including:

Such factors and the associated fluctuations in power and prices could affect wholesale power generation profitability and the cost of power for our bitcoin mining.

Cyber-attacks, data breaches or malware may disrupt our operations and trigger significant liability for us, which could harm our operating results and financial condition, damage our reputation, or otherwise materially harm our business.

We rely on our own and third party computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”). We experience cyber-attacks, such as phishing, and other attempts to gain unauthorized access to our systems on a regular basis, and we anticipate continuing to be subject to such attempts. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and confidential information. The volume and sophistication of cyber-attacks may increase, including if AI capabilities are implemented by malicious actors that can circumvent security controls, evade detection and remove forensic evidence, and there is an ongoing risk that some or all of our bitcoin could be lost or stolen as a result of one or more of these incursions.

Any integration of AI in our or any third party’s operations, products or services is expected to pose new or unknown cybersecurity risks and challenges. As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks, or other security threats, and, despite our implementation of strict security measures and frequent security audits, it is impossible to eliminate all vulnerabilities. For instance, we may not be able to ensure the adequacy of the security measures employed by third parties, such as our service providers. Likewise, our IT Systems and confidential information are vulnerable to a range of cybersecurity risks and threats, including malicious code embedded in open-source software, or misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our service providers’) IT systems, products or services. Additionally, though we provide cybersecurity training for employees, we cannot guarantee that we will not be affected by further phishing attempts. Efforts to limit the ability of malicious actors to disrupt the operations of the internet or undermine our own security efforts may be costly to implement and may not be successful. Such breaches, whether attributable to a vulnerability in our systems or otherwise, could result in claims of liability against us, damage our reputation, and materially harm our business.

As with any computer code generally, flaws in digital asset cryptographic primitives such as hash functions, Merkle trees, and digital signatures or similar cryptographic methods, and the implementations of any digital asset protocol software, including those used by Bitcoin, have been and may be vulnerable to exploitation by malicious actors. Several such errors and defects have been found in multiple cryptocurrency networks, including Bitcoin, previously, including those that would have allowed attackers to shut down a cryptocurrency network through denial of service, disable functionality for users and expose users’ information, or take or create cryptocurrency balances. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and confidential information. Our devices, as well as our miners, computer systems, and those of third parties that we use in our operations, may be vulnerable to cyber-security risks, including cyber-attacks such as viruses and worms, phishing attacks, denial-of-service attacks, physical or electronic break-ins, employee theft or misuse, and similar disruptions from unauthorized tampering with our miners and computer systems or those of third parties that we use in our operations. We could be hacked and certain of our assets, including bitcoin, could be stolen. Any adverse impact to the availability, integrity, or confidentiality of our IT Systems or confidential information can result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs. Such events could have a material adverse effect on our business, prospects, results of operations or financial condition and potentially the value of any bitcoin that we mine or otherwise acquire or hold.

We have in the past, and may in the future, engage in derivatives transactions, including for the purpose of hedging our exposure to bitcoin prices, and such transactions may expose us to material risks that could adversely impact our business, operating results, and financial condition.

Derivative transactions are financial contracts whose value depends on, or is derived from, the price or level of some other underlying product, asset, rate, or index, such as the value of a particular commodity. Derivatives transactions include, but are not limited to, swaps, options, and futures. Derivatives may be employed both for the purpose of obtaining investment exposure and for the purpose of hedging or mitigating exposure to a particular asset or risk. Derivative transactions are complex, carry their own special risks, and may expose us to significant risk of loss.

We have in the past, and may in the future, engage in derivative transactions. For example, we may, but are not obligated to, enter into derivative transactions to seek to protect against reductions in the market price of bitcoin. Where derivative transactions are entered into with the intention of reducing or mitigating our exposure to a particular asset or risk, there is no guarantee that such transactions will be effective to eliminate or reduce our exposure to the risks being hedged, including due to potential imperfect correlation between the derivative instrument and the relevant risk or underlying asset. Moreover, if we do engage in derivative transactions for hedging purposes, such transactions may also limit the opportunity for gain if the risk being hedged does not materialize. Our success in utilizing derivative transactions for hedging purposes will be subject to our ability to correctly predict market fluctuations and movements and our ability to monitor any such transactions that we enter into. Therefore, while we may enter into such transactions to seek to reduce risks, unanticipated market movements and fluctuations may result in a poorer overall performance than if we had not entered into such transactions.

In addition, derivatives may carry a high degree of embedded leverage and consequently, are highly price sensitive to changes in interest rates, government policies, economic forecasts, and other factors which generally have a much less direct impact on the price levels of the underlying instruments. The risks generally associated with derivatives include the risk that: (1) the value of the derivative will change in a detrimental manner; (2) before purchasing a derivative, we will not have the opportunity to observe its performance under all market conditions; (3) counterparty credit risk, in that another party to the derivative (especially where the derivative is entered into on a bilateral or over-the-counter basis) may fail to comply with the terms of the derivative contract; (4) liquidity risk, in that the derivative may be difficult to purchase or sell or we may otherwise encounter difficulties exiting or closing a position; and (5) the derivative may involve leverage, such that adverse changes in the value of the underlying asset could result in a loss substantially greater than the amount invested in the derivative itself or in heightened price sensitivity to market fluctuations. Moreover, derivatives transactions are subject to a range of regulatory requirements which may, in certain circumstances, require the Company to comply with mandatory central clearing and/or margin obligations. Such regulatory requirements may result in additional costs or otherwise affect the viability of Company’s use of derivatives, whether for purposes of hedging or monetization strategies, and there can be no assurance that such derivatives activities will not be subject to additional or more stringent regulations in the future.

Risks Related to the Bitcoin Industry

Our success depends on external factors affecting the Bitcoin industry.

The Bitcoin industry has historically been subject to various risks relating to bitcoin, as an asset, which have adversely affected the market price of bitcoin. Ownership of bitcoin has, historically, been concentrated in a relatively small number of persons or entities that, collectively, hold a significant number of bitcoin (referred to as “whales” in the Bitcoin industry). While ownership of bitcoin has diversified significantly in recent years, whales continue to exist whose market activity (for example, sales of large numbers of bitcoin) could have an adverse effect on the demand for, and market price of, bitcoin, which could have an adverse effect on our business and results of operation. In addition, there has been an increase in the number of bitcoin treasury initiatives, where companies hold bitcoin on their balance sheet on a long-term basis in anticipation of price increases and as a reserve asset, and of bitcoin exchange-traded products which hold bitcoin and provide investors with exposure to it without requiring them to hold the bitcoin themselves. The rise of these vehicles, which hold bitcoin on a long-term basis, has reduced the supply of liquid bitcoin in the markets. Further, while larger, increasingly regulated exchanges with greater transparency and oversight have begun to proliferate, the bitcoin economy remains nascent and largely opaque. The venues for bitcoin transactions may experience greater operational problems and be exposed to a greater risk of facilitating unethical, fraudulent or illicit transactions (such as “wash trading”), than traditional financial markets and securities exchanges. Cryptocurrency trading platforms may also be susceptible to “front-running” activity, which is the process by which someone uses technology or market advantage to obtain prior knowledge of upcoming transactions allowing bad actors to take advantage of forthcoming price movement and make economic gains at the cost of those who introduced the transactions. Front-running is a frequent activity on centralized and decentralized cryptocurrency trading platforms. Further, venues for bitcoin transactions do not typically make complete information regarding their ownership structure, management teams, corporate practices, and regulatory compliance available to the public, who are, therefore, unable to verify the impartiality of such venues in respect of the bitcoin transactions they facilitate. As a result of such lack of regulation and transparency, as well as the risk posed by bitcoin whales, wash trading and front-running, the public may lose confidence in bitcoin transactions and the price integrity of the cryptocurrency, which could adversely affect the market price of bitcoin, perhaps materially, which would have an adverse impact on our business and results of operations.

Additional bitcoin mining capacity from competing bitcoin miners will trigger increases in mining difficulty, and if we are unable to grow our hashrate at pace with the global network hashrate, our chance of earning bitcoin from our mining operations will decline.

The barriers to entry for new bitcoin miners are relatively low, which can give rise to additional network capacity from competing bitcoin miners. Generally, a bitcoin miner’s chance of solving a block on the bitcoin blockchain and earning a bitcoin reward is a function of the miner’s hashrate, relative to the global network hashrate. As greater adoption of bitcoin occurs, we expect that the demand for bitcoin will continue to increase, drawing more mining companies into the industry and thereby increasing the global network hashrate. The bitcoin protocol responds to increasing total hashrate by increasing the difficulty of bitcoin mining. If this difficulty increases at a significantly higher rate than we expect, we would need to increase our hashrate at the higher rate to maintain our market share and generate equivalent block rewards. Accordingly, to maintain our chances of earning new bitcoin rewards and remaining competitive in our industry, we must seek to continually add new miners to grow our hashrate at pace with the growth in the bitcoin global network hashrate. However, as demand has increased and scarcity in the supply of new miners has resulted, the price of new miners has increased sharply, and we expect this process to continue in the future as demand for bitcoin increases. Therefore, if the price of bitcoin is not sufficiently high to allow us to fund our hashrate growth through new miner acquisitions and if we are otherwise unable to access additional capital to acquire these miners, our hashrate may stagnate and we may fall behind our competitors. A decrease in our effective network hashrate market share would result in a reduction in our share of block rewards and transaction fees, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

The impact of geopolitical and economic events, such as armed conflicts and changes in international trade policies, on macroeconomic conditions and our business, including the supply and demand for cryptocurrencies and volatility in energy prices, is uncertain.

Geopolitical crises may motivate large-scale purchases of bitcoin and other cryptocurrencies, which could increase the price of bitcoin and other cryptocurrencies rapidly. Our business and the infrastructure on which our business relies is vulnerable to damage or interruption from geopolitical crises and economic downturns such as recessions, rising inflation, tariffs, social, political and economic risks, conflicts and acts of war, sanctions and other restrictive actions by the United States and/or other countries. Changes in legal, regulatory and trade policies and priorities from the U.S. government could increase market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior dissipates, adversely affecting the value of our inventory following such downward adjustment. Such risks are similar to the risks of purchasing commodities in general uncertain times, such as the risk of purchasing, holding or selling gold. Alternatively, as an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment in bitcoin as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.

In addition, armed conflicts, wars, acts of terrorism, and other geopolitical instability may cause significant disruption to global energy markets, resulting in high volatility in fuel and other commodity prices, disruptions in energy supply chains, and constraints on the availability and delivery of fuels and other inputs necessary for electricity generation. The ongoing conflicts in Ukraine and the Middle East could adversely affect the price and availability of the fuels and other commodities we rely upon, as well as the infrastructure through which such fuels are delivered. Disruptions in energy supply or significant increases in energy costs resulting from such conflicts could increase our operating costs, reduce our margins, and impair our ability to deliver electricity to our customers on commercially acceptable terms. Instability and unrest arising from armed conflicts may also lead to economic sanctions, embargoes, and other restrictive measures that could further disrupt commodity markets and supply chains.

Global trade conditions and consumer trends that originated during the COVID-19 pandemic continue to persist and may also have long-lasting adverse impact on us and our industry. There are continued risks arising from new pandemics, epidemics or outbreaks of disease which may exacerbate port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of new miners, as well as critical materials needed for our expansion plans. Further, miner manufacturers have been impacted by the constrained supply of the semiconductors used in the production of the highly specialized ASIC chips miners we rely on, and by increased labor costs to manufacture new miners as workforces and global supply chains may further be impacted by global outbreaks of various epidemics or disease, ultimately leading to continually higher prices for new miners. The global supply chain may also be materially impacted by recent significant changes to international trade policies and tariffs affecting imports and exports. A significant majority of the ASIC chips, processors and other advanced computing hardware necessary for our industries and the industries of our business partners are primarily manufactured in Taiwan, South Korea, Japan, and other jurisdictions that are subject to evolving U.S. trade policy. Tariffs or other trade restrictions can be announced with little or no advance notice, making it difficult to anticipate or mitigate their effects. Furthermore, retaliatory measures imposed by other countries in response to U.S. trade actions could further disrupt global supply chains. Thus, until the global supply chain crisis is resolved, and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners, and we may face difficulties obtaining the new miners we need at prices or in quantities we find acceptable, if at all, and our business and results of operations may suffer as a result.

As an alternative to fiat currencies that are backed by central governments, bitcoin, which is relatively new, is subject to supply and demand forces. How such supply and demand will be impacted by geopolitical and macroeconomic events is largely uncertain but could be harmful to us and investors in our Class A common stock. Political or economic crises may motivate large-scale acquisitions or sales of bitcoin either globally or locally. Such events could have a material adverse effect on our business, prospects, results of operations or financial condition and potentially the value of any bitcoin we mine or otherwise acquire or hold.

Enhanced tariff, import/export restrictions, or other trade barriers may have an adverse impact on global economic conditions.

There have been, and continue to be, uncertainties with respect to the global economy and trade relations between the United States and other countries globally, including trade policies, treaties, tariffs, and customs duties and taxes. Implementation of more restrictive trade policies or the renegotiation of existing U.S. trade agreements or trade agreements of other countries where we procure supplies and materials for our digital infrastructure could negatively impact our business results of operations, cash flows, and financial condition. Tariffs, sanctions and other barriers to trade could adversely affect the business of our customers and suppliers, which could in turn negatively impact our net revenue and results of operations. If tariffs, trade restrictions or trade barriers are expanded or increased, then our exposure to future taxes and duties on imported products and components could be significant and could have a material effect on our financial results.

We cannot predict the extent to which the United States or other countries will impose new or additional quotas, duties, tariffs, taxes, or other similar restrictions upon the import of goods and services in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The continuing adoption or expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our HPC data centers, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, prospects, results of operations or financial condition.

Banks and financial institutions vary in the services they provide to businesses that engage in blockchain technology or that accept cryptocurrencies as payment.

Although a number of significant U.S. banks and financial institutions allow customers to carry and invest in bitcoin, the acceptance and use by banks and other institutions of cryptocurrencies, including bitcoin, varies. This risk may be further exacerbated in the current environment in light of several high-profile bankruptcies in the cryptocurrencies industry, as well as recent bank failures, which have disrupted investor confidence in cryptocurrencies and led to a rapid escalation of oversight of the cryptocurrency industry. For example, certain banks have implemented enhanced know-your-customer and anti-money laundering requirements in connection with potential cryptocurrency customers. These enhanced requirements may make it more difficult or impossible for cryptocurrency-related companies to find banking or financial services. If we are unable to engage in traditional banking and custody arrangements with banking institutions, it would experience increased operating costs which could have a material adverse effect on our business, prospects, results of operations or financial condition.

Additionally, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing banking services discontinued with financial institutions in response to government action, particularly in China, where regulatory response to cryptocurrencies has been to exclude their use for ordinary consumer transactions. In May 2021, the Chinese government called for a crackdown on bitcoin mining and trading. In September 2021, Chinese regulators instituted the China Ban, which banned all cryptocurrency transactions. In January 2023, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a joint statement on risks associated with cryptocurrency businesses, which, among other regulatory statements, led many U.S. banks to decline to provide banking services to cryptocurrency-related businesses. Although this and other limiting statements have been withdrawn in 2025, there is no guarantee that subsequent administrations could issue similar guidance, or that banks and other financial institutions could determine on their own that cryptocurrency-related businesses pose unsustainable risks.

The usefulness of bitcoin, the only cryptocurrency that we currently mine, as a payment system and the public perception of bitcoin could be damaged if banks or financial institutions were to close the accounts of businesses engaging in bitcoin and/or other cryptocurrency-related activities. This could occur as a result of compliance risk, cost, government regulation or public pressure. The risk applies to securities firms, clearance and settlement firms, national stock and derivatives on commodities exchanges, the over-the-counter market, and The Depository Trust Company, which, if any of such entities adopts or implements similar policies, rules or regulations, could negatively affect its relationships with financial institutions and impede our ability to convert bitcoin to fiat currencies. Such factors could have a material adverse effect on our ability to continue as a going concern or to pursue its strategy at all, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

The further development and acceptance of cryptocurrencies including bitcoin, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of cryptocurrencies may adversely affect an investment in us.

The use of cryptocurrencies to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs cryptocurrencies, including bitcoin, based upon a computer-generated mathematical or cryptographic protocol. Large-scale acceptance of bitcoin as a means of payment has not, and may never, occur. The growth of this industry in general, and the use of bitcoin in particular, is subject to a high degree of uncertainty, and the acceptance of developing protocols may occur unpredictably and contribute to price volatility that could have a material adverse effect on our business, prospects, results of operations or financial condition.

Banks and other established financial institutions may refuse to process funds for bitcoin transactions, process wire transfers to or from bitcoin miners, bitcoin-related companies or service providers, or maintain accounts for persons or entities transacting in bitcoin or other cryptocurrencies. Conversely, a significant portion of bitcoin demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Price volatility undermines the role of bitcoin as a medium of exchange, as retailers are much less likely to accept such a volatile asset as a form of payment. Market capitalization for bitcoin as a medium of exchange and payment method may always remain low. The relative lack of acceptance of bitcoin in the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use bitcoin to pay for goods and services. Such lack of acceptance or decline in acceptances could have a material adverse effect on our ability to pursue our business plan, which in turn could have a material adverse effect on our business, prospects, results of operations or financial condition.

To the extent that we hold bitcoin on our balance sheet, a reduction in the value of that bitcoin could have a material adverse effect on our business, prospects, results of operations or financial condition.

Furthermore, between 2022 and 2023, some of the well-known cryptocurrency market participants, including Celsius Network LLC, Voyager Digital Ltd., Three Arrows Capital, Genesis Global Holdco, LLC, FTX Trading Ltd. (“FTX”), BlockFi Inc., Prime Trust and certain of their affiliates declared bankruptcy, which may over time have a significant impact on further development and acceptance of bitcoin and other cryptocurrencies as those bankruptcies exposed how unpredictable and turbulent the cryptocurrencies industry can be. These failures of important institutions in the cryptocurrency and bitcoin asset industry highlight the risk of systemic interconnectedness between major market participants and the effect it could have on the industry as a whole.

The closure or temporary shutdown of major cryptocurrency exchanges and trading platforms due to fraud or business failure, could disrupt investor confidence in bitcoin and other cryptocurrencies and lead to further regulation of bitcoin and/or bitcoin mining. All this in turn could have a negative impact on further development and acceptance of cryptocurrencies and cryptocurrencies, including bitcoin. Other factors that could affect further development and acceptance of cryptocurrencies and bitcoin include, but are not limited to:

Our operations, investment strategies and profitability may be adversely affected by competition from other methods of investing in bitcoin.

We compete with other users and companies that are mining bitcoin and other potential financial vehicles, including securities backed by or linked to bitcoin through entities similar to us. Market and financial conditions, and other conditions beyond our control, may make it more attractive to invest in other financial vehicles, or to invest in bitcoin directly, which could limit the market for our shares and reduce our liquidity. The emergence of other financial vehicles such as exchange traded products (“ETPs”) and cryptocurrency treasury companies have been scrutinized by regulators and such scrutiny and the negative impressions or conclusions resulting from such scrutiny could be applicable to us and impact our ability to successfully pursue our strategy or operate at all, or to establish or maintain a public market for our securities. Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects, results of operations or financial condition and potentially the value of any bitcoin we mine, or bitcoin we otherwise acquire or hold for our own account.

The rise of cryptocurrency treasury companies and cryptocurrency ETPs could increase price volatility in cryptocurrencies.

Due to the recent increase in the number of other companies pursuing a cryptocurrency strategy in bitcoin as well as the rise of cryptocurrency ETPs, ownership of bitcoin may become more concentrated. The abandonment of cryptocurrency treasury strategies, the failure by such other companies to satisfy their debt or other financial obligations, market concerns as to the viability or creditworthiness of such companies, the loss or disposition of substantial bitcoin by such other companies, regulatory or legal judgments or actions against such other companies due to their adoption of a cryptocurrency treasury strategy, or any other similar actions or negative outcomes impacting such other companies, whether due to any of the various risk factors described herein or for any other reason, could cause a significant decrease in the price of bitcoin. In addition, cryptocurrency ETPs may be required to sell their holdings of bitcoin in order to fund redemptions. Any sales of large numbers of bitcoin by these other parties could have an adverse effect on the demand for, and market price of, bitcoin, which could have an adverse effect on our business, prospects, results of operations or financial condition.

Forks in the bitcoin blockchain may occur in the future, which may affect the value of bitcoin held by us.

To the extent that a significant majority of users and miners on a cryptocurrency network install software that changes the cryptocurrency network or properties of a cryptocurrency, including the irreversibility of transactions and limitations on the mining of new cryptocurrencies, the cryptocurrency network would be subject to new protocols and software. However, if less than a significant majority of users and miners on the cryptocurrency network consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” of the network, with one prong running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the cryptocurrency running in parallel that lack interchangeability and necessitate an exchange-type transaction to convert currencies between the two forks. Additionally, it may be unclear following a fork which fork represents the original asset and which is the new asset. Different metrics adopted by industry participants to determine which is the original asset may include: referring to the wishes of the core developers of a cryptocurrency, which blockchains have the greatest amount of hashing power contributed by miners or validators; or which blockchains have the longest chain.

The Ethereum network, another blockchain, previously forked in 2016 as a consequence of a hack by a decentralized autonomous organization. Hard forks can lead to new security concerns. For instance, when the Bitcoin Cash and Bitcoin Cash SV network split in November 2018, “replay” attacks, in which transactions from one network were rebroadcast on the other network to achieve “double-spending,” plagued platforms that traded bitcoin, resulting in significant losses to some cryptocurrency trading platforms. Another possible result of a hard fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to exceed 50% of the mining power of that network, thereby making cryptocurrency networks that rely on proof-of-work more susceptible to attack in the wake of a fork. A fork in the Bitcoin network could adversely affect our ability to operate or the market value of bitcoin and therefore, an investment in our securities. The mining pools to which we contribute hashrate would need to decide which fork of the blockchain to support, which may result in interruptions to our rewards and may also decrease the value of these rewards as value is attributed to the other fork. We may not be able to realize the economic benefit of a fork, either immediately or ever, which could have a material adverse effect on our business, prospects, results of operations or financial condition. If we hold bitcoin at the time of a hard fork of bitcoin into two cryptocurrencies, our custodians may not support both assets, and so we may not be able, or it may not be practical, however, to secure or realize the economic benefit of the new asset for various reasons. Additionally, laws, regulation or other factors may prevent us from benefiting from the new asset even if there is a safe and practical way to custody and secure the new asset.

Intellectual property rights claims may adversely affect the operation of some or all cryptocurrency networks.

Third parties have asserted and may assert intellectual property claims relating to the holding and transfer of cryptocurrencies and their source code. Regardless of the merit of any intellectual property or other legal action, any threatened action that reduces confidence in some or all cryptocurrency networks’ long-term viability or the ability of end-users to hold and transfer cryptocurrencies could have a material adverse effect on our business, prospects, results of operations or financial condition.

Additionally, a meritorious intellectual property claim could prevent us and other end-users from accessing some or all cryptocurrency networks or holding or transferring their cryptocurrencies. As a result, any intellectual property claims against us or other large cryptocurrency network participants could have a material adverse effect on our business, prospects, results of operations or financial condition.

To the extent that the profit margins of bitcoin mining operations are not sufficiently high, bitcoin mining operators are more likely to immediately sell bitcoins earned by mining or previously held on the balance sheet into the bitcoin exchange markets, resulting in a reduction in the price of bitcoin that could adversely affect us.

Bitcoin mining operations have evolved away from individual users mining with computer processors, graphics processing units and first-generation ASIC servers. Currently, new processing power brought onto the Bitcoin network is predominantly added by “professionalized” mining operations. Many professionalized mining operations use proprietary hardware or sophisticated ASIC machines acquired directly from manufacturers of miners. As a result, professionalized mining operations are of a greater scale than prior Bitcoin network miners and have in some cases raised debt capital. Some of these professionalized mining operations immediately sell bitcoins they earn from mining operations into a bitcoin exchange market.

The immediate selling of newly mined bitcoins increases the supply of bitcoins on the bitcoin exchange market (the “float”), which may create downward pressure on the price of bitcoin. The extent to which the value of bitcoin mined by a professionalized mining operation exceeds that operation’s cost of capital and operating costs determines the profit margin of such an operation. A professionalized mining operation may be more likely to sell a higher percentage of its newly acquired bitcoin rapidly if it is operating at a low profit margin, and it may partially or completely cease operations if its profit margin is negative. In a low profit margin environment, a higher percentage of output could be sold into the bitcoin exchange markets more rapidly, thereby potentially reducing bitcoin prices. Lower bitcoin prices could result in further tightening of profit margins, particularly for professionalized mining operations with higher costs and more limited access to capital, creating a negative effect that could further reduce the price of bitcoin until mining operations with higher operating costs become unprofitable and remove mining power from the Bitcoin network. The network effect of reduced profit margins resulting in greater sales of newly mined bitcoin could result in a reduction in the price of bitcoin. The occurrence of any such risk could have a material adverse effect on our business, prospects, results of operations or financial condition.

Increased scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance (ESG) practices and the impacts of climate change may result in additional costs or risks.

Companies across many industries are facing increasing scrutiny related to their ESG practices. Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments. Furthermore, increased public awareness and concern regarding environmental risks, including global climate change, has resulted and may continue to result in increased public scrutiny of our business and our industry, and our management team may divert significant time and energy away from our operations and towards responding to such scrutiny and reassuring our employees.

In addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supply of energy, demand for bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our operations, or if our operations are disrupted due to the physical impacts of climate change, our business, capital expenditures, results of operations, financial condition and competitive position could be negatively impacted.

We may face risks of internet disruptions, which could have an adverse effect on our ability to operate our business.

Our business of mining cryptocurrencies is dependent upon the internet. A significant disruption in internet connectivity could disrupt a cryptocurrency network’s operations until the disruption is resolved and have an adverse effect on the price of cryptocurrencies and our ability to mine bitcoins. A broadly accepted and widely adopted decentralized network is necessary for most cryptocurrencies networks, including bitcoin, to function as intended. Features of cryptocurrency networks, such as decentralization, open source protocol, and reliance on peer-to-peer connectivity, are essential to preserve the stability of the network and decrease the risk of fraud or cyber-attacks. A disruption of the internet or a cryptocurrency network would affect our ability to mine cryptocurrencies.

Our miners may mechanically fail before the end of their expected useful life.

Our miners are exposed to extreme environmental conditions and temperature fluctuations. None of our fleet is covered by a manufacturers’ warranty, and we routinely purchase previously used, refurbished miners. Widespread fleet failures, even if repairable, will reduce our ability to mine bitcoin at levels and efficiencies we expect. 

The book value of our miners presented in our financials may exceed the value at which they could be sold in a deliberate arms-length transaction (their “fair value”).

The fair value of a bitcoin miner fluctuates based on market factors such as the price of bitcoin and the global hashrate. As such, there are likely times the Company could not sell its miners for the amount shown on the balance sheet, even factoring in recorded depreciation.

Risks Related to the Bitcoin Network

If a malicious actor or botnet obtains control in excess of 50% of the processing power active on the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects our business.

If a malicious actor or botnet obtains a majority of the processing power dedicated to mining on the Bitcoin network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks. In such alternate blocks, the malicious actor or botnet could control, exclude or modify the ordering of transactions. Using alternate blocks, the malicious actor could “double-spend” its own cryptocurrencies (i.e., spend the same cryptocurrencies in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control. To the extent that such malicious actor or botnet does not yield its majority control of the processing power or the cryptocurrency community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down confirmations of transactions on the Bitcoin network. Such changes could have a material adverse effect on our business, prospects, results of operations or financial condition.

Although there have been no reports of such activity on the Bitcoin network, certain mining pools may have exceeded the 50% threshold on the Bitcoin network in the past. The possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of cryptocurrency transactions, and this risk is heightened if over 50% of the processing power on the Bitcoin network falls within the jurisdiction of a single governmental authority. To the extent that the bitcoin ecosystem, including the core developers and the administrators of mining pools, does not act to ensure greater decentralization of mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin network will increase, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

Flaws in the source code of bitcoin or the underlying cryptography could leave the Bitcoin network vulnerable to a multitude of attack vectors.

If the source code or cryptography underlying bitcoin proves to be flawed or ineffective, malicious actors may be able to steal bitcoin held by others, which could negatively impact the demand for bitcoin and therefore adversely impact the price of bitcoin. In the past, flaws in the source code for bitcoin have been discovered. Several errors and defects have been publicly found and corrected, including those that disabled some functionality for users and exposed users’ personal information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create money in contravention of known network rules have occurred. In addition, the cryptography underlying bitcoin could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry, and quantum computing, could result in such cryptography becoming ineffective and could allow a malicious actor to obtain control in excess of 50% of the processing power on the Bitcoin network, as further described herein. In any of these circumstances, a malicious actor may be able to steal bitcoin held by others, which could adversely affect the demand for bitcoin and therefore adversely impact the price of bitcoin. Even if the affected cryptocurrency is not bitcoin, any reduction in confidence in the source code or cryptography underlying cryptocurrencies generally could negatively impact the demand for bitcoin and therefore could have a material adverse effect on our business, prospects, results of operations or financial condition.

Furthermore, a malicious actor may also obtain control over the Bitcoin network through its influence over core or influential developers. For example, this could allow the malicious actor to stymie legitimate network development efforts or attempt to introduce malicious code to the network under the guise of a software improvement proposal by such a developer, which could adversely impact the bitcoin ecosystem and subject us to risks of malicious action, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

Demand for bitcoin is driven, in part, by it being generally recognized as the most prominent and secure cryptocurrency. Cryptocurrencies other than bitcoin could have features that make them more desirable to a material portion of the cryptocurrency user base, resulting in a reduction in demand for bitcoin, which could have a negative effect on the price of bitcoin and adversely affect an investment in us.

Bitcoin, as an asset, holds “first-to-market” advantages over other cryptocurrencies. This first-to-market advantage is driven in large part by having the largest market capitalization and the largest mining power in use to secure its blockchain and transaction verification system. Having a large mining network results in greater user confidence regarding the security and long-term stability of a cryptocurrency’s network and its blockchain; as a result, the advantage of more users and miners makes a cryptocurrency more secure, which makes it more attractive to new users and miners, resulting in a network effect that strengthens the first-to-market advantage. Despite the first-mover advantage of the Bitcoin network over other cryptocurrency networks, it is possible that another cryptocurrency could become materially more popular due to either a perceived or exposed shortcoming of the Bitcoin network protocol that is not immediately addressed by the bitcoin contributor community or a perceived advantage of another cryptocurrency that includes features not incorporated into bitcoin. If a cryptocurrency obtains significant market share (either in market capitalization, mining power or use as a payment technology), this could reduce bitcoin’s market share and have a negative effect on the demand for, and price of, bitcoin and could have a material adverse effect on our business, prospects, results of operations or financial condition. It is possible that we could mine alternative cryptocurrencies in the future, but we may not have as much experience mining such assets, which may put us at a competitive disadvantage.

The open-source structure of many cryptocurrency network protocols, including bitcoin, means that the contributors to the protocol are generally not directly compensated for their contributions in maintaining and developing the protocol. A failure to properly monitor and upgrade the protocol could damage the Bitcoin network and our value.

The Bitcoin network operates based on an open-source protocol maintained by contributors, largely on the bitcoin Core project on GitHub. As an open-source project, bitcoin is not represented by an official organization or authority and its software is available free of charge in accordance with the terms of open-source licenses, such as the MIT License. As the Bitcoin network protocol is not commercially licensed and its use does not generate revenues for contributors, contributors are generally not compensated for maintaining and updating the Bitcoin network protocol. The lack of guaranteed financial incentives for contributors to maintain or develop the Bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the Bitcoin network may reduce incentives to address the issues adequately or in a timely manner. Changes to the Bitcoin network could have a material adverse effect on our business, prospects, results of operations or financial condition.

Significant Bitcoin network contributors could propose amendments to the Bitcoin network’s protocols and software that, if accepted and authorized by the Bitcoin network, could adversely affect us.

Significant Bitcoin network contributors could propose refinements, improvements or other changes to the Bitcoin network’s source code through one or more software upgrades that alter the protocols and software that govern the Bitcoin network and the properties of bitcoin, including the irreversibility of transactions and limitations on the mining of new bitcoin. Proposals for upgrades and discussions relating thereto take place on online forums. For example, there is an ongoing debate regarding altering the bitcoin blockchain by increasing the size of blocks to accommodate a larger volume of transactions. Although some proponents support an increase, other market participants oppose an increase to the block size as it may deter miners from confirming transactions and concentrate power into a smaller group of miners. Additionally, the Bitcoin network could change its mining algorithm in a fashion which could render our mining equipment obsolete. To the extent that a significant majority of the users and miners on the Bitcoin network install such software upgrade(s), the Bitcoin network would be subject to new protocols and software that could have a material adverse effect on our business, prospects, results of operations or financial condition. See “Risk Factors—Risks Related to the Bitcoin Industry—Forks in the bitcoin blockchain may occur in the future which may affect the value of bitcoin held by Ionic Digital.”

Competition from central bank digital currencies (“CBDCs”) and stablecoins could adversely affect the value of bitcoin.

Central banks in some countries have started to introduce digital forms of legal tender. For example, China’s CBDC project was made available to consumers in January 2022, and governments from Russia to the European Union have been discussing potential creation of new digital currencies. A 2021 survey of central banks by the Bank for International Settlements found that 86% are actively researching the potential for CBDCs, 60% were experimenting with the technology and 14% were deploying pilot projects. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could have an advantage in competing with, or replacing, bitcoin and other cryptocurrencies as a medium of exchange or store of value.

Other alternative cryptocurrencies that compete with bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price related to or based on some other asset or traditional currency because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. On July 18, 2025, President Trump signed into law the Guiding and Establishing National Innovation for US Stablecoins Act (the “GENIUS Act”), establishing a legislative framework for the regulation of payment stablecoins and marking the first federal legislation for the regulation of cryptocurrencies in the U.S. Stablecoins have grown rapidly as an alternative to other cryptocurrencies as a medium of exchange and store of value, particularly on decentralized applications, and their use as an alternative to bitcoin could expand further.

As a result of increased competition from new types of cryptocurrencies such as CBDCs and stablecoins, the value of bitcoin could decrease, which could have a material adverse effect on our business, prospects, results of operations or financial condition.

The decentralized nature of cryptocurrency systems may lead to slow or inadequate responses to crises, which may negatively affect our business.

The decentralized nature of the governance and administration of cryptocurrency systems may lead to ineffective decision making that slows development or prevents a network from overcoming emergent obstacles. Governance of many cryptocurrency systems is by voluntary consensus and open competition with no clear leadership structure or authority. To the extent lack of clarity in governance of the Bitcoin network leads to ineffective decision making that slows development and growth of bitcoin or slows a response to a problem such as addressing a critical vulnerability in the cryptographic primitives or software implementation of bitcoin, these events could have a material adverse effect on our business, prospects, results of operations or financial condition.

The development and market acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives.

The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or an alternative to distributed ledgers altogether. Our business utilizes presently existing digital ledgers and blockchains, and we could face difficulty adapting to emergent digital ledgers, blockchains, or alternatives thereto. This may adversely affect us and our exposure to various blockchain technologies and prevent us from realizing the anticipated profits from our investments. Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects, results of operations or financial condition and potentially the value of any bitcoin we mine, or bitcoin we otherwise acquire or hold for our own account.

Risks Related to the Price of Bitcoin

A material decline in the value of bitcoin could have an adverse effect on our results of operations, our liquidity and the strength of our balance sheet.

Our operating results depend on the value of bitcoin as it is presently the only cryptocurrency that we mine. This means that our operating results will be subject to swings based upon increases or decreases in the value of bitcoin (which has ranged from a high of approximately $124,720 to a low of approximately $39,524 between January 1, 2024 and March 31, 2026, based on the daily quoted spot price of bitcoin at 00:00:00 UTC per Coinbase). These changes in the value of bitcoin will also cause the value assigned to the bitcoin we hold on our balance sheet to fluctuate. Furthermore, any negative impacts on our liquidity as a result of changes in the value of bitcoin may affect our business plans to expand into the digital infrastructure industry and could have a material adverse effect on our business, prospects, results of operations or financial position. 

If other cryptocurrencies were to achieve acceptance at the expense of bitcoin causing the value of bitcoin to decline, or if bitcoin were to switch its proof of work encryption to an algorithm for which our miners are not specialized, or if the value of bitcoin were to decline for other reasons, particularly if such decline were significant or over an extended period of time, our operating results and financial statement presentation would be adversely affected. In such circumstances, there could be balance sheet impairments, a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects, results of operations or financial condition. The market price of bitcoin, which has historically been volatile and is impacted by a variety of factors (including those discussed herein), is determined primarily using data from various exchanges, over-the-counter markets and derivative platforms. Furthermore, such prices may be subject to factors such as those that impact commodities, more so than business activities, which could be subjected to additional influence from fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions. Pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of bitcoin, or our share price, inflating and making their market prices more volatile or creating “bubble” type risks for bitcoin and holders of shares of our Class A common stock.

Transaction fees may decrease demand for bitcoin which could adversely affect our business.

As the number of bitcoin rewards awarded for solving a block in a blockchain decreases, the incentive for miners to continue to contribute to the Bitcoin network may transition from a set reward per block to transaction fees. This transition might be accomplished by certain miners independently electing to record in the blocks they solve only those transactions that include payment of a transaction fee. In the event that transaction fees paid for bitcoin transactions become too high, the marketplace might become reluctant to accept bitcoin as a means of payment and existing users may be motivated to switch from bitcoin to another cryptocurrency or to fiat currency. Either the requirement from certain miners of higher transaction fees in exchange for recording transactions in a blockchain or a software upgrade that automatically charges fees for all transactions might decrease demand for bitcoin and prevent the expansion of the Bitcoin network to retail merchants and commercial businesses, resulting in a reduction in the use cases and demand for bitcoin, which might result in a decrease in the price of bitcoin. The occurrence of any such risk could have a material adverse effect on our business, prospects, results of operations or financial condition.

Bitcoin faces significant scaling obstacles that can lead to high fees or slow transaction settlement times.

Bitcoin (and cryptocurrencies, generally) face significant scaling obstacles that can lead to high fees or slow transaction settlement times and attempts to increase the volume of transactions may not be effective. Scaling cryptocurrencies is essential to the widespread acceptance of cryptocurrencies as a means of payment, including bitcoin. Many cryptocurrency networks face significant scaling challenges. For example, cryptocurrencies are limited with respect to how many transactions can occur per second. Participants in the cryptocurrency ecosystem debate potential approaches to increasing the average number of transactions per second that a network can handle and have implemented mechanisms or are researching ways to increase scale, such as increasing the allowable sizes of blocks, and therefore the number of transactions per block, and sharding (a horizontal partition of data in a database or search engine), which would not require every single transaction to be included in every single miner’s or validator’s block. There is, however, no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of cryptocurrency transactions will be effective.

If adoption of bitcoin (and cryptocurrencies, generally) as a means of payment does not occur on the schedule or scale we anticipate, the demand for bitcoin may stagnate or decrease, which could adversely affect future bitcoin prices, and our results of operations and financial condition, which could have a material adverse effect on the market price for our securities.

Bitcoin holdings are insufficiently decentralized so that individuals can substantially reduce the price of bitcoin in the short term.

A significant portion of bitcoin is held by a small number of holders sometimes referred to as “whales.” Transactions of these holders may influence the price of bitcoin. For example, in August 2025, a transaction by a single whale to sell 24,000 bitcoin worth approximately $2.7 billion over a weekend triggered a flash crash that erased $200 billion of crypto market capitalization across multiple digital currencies and resulted in forced liquidations over $550 million in leveraged positions. The concentration of bitcoin among whales can make it more susceptible to rapid and significant price swings and market manipulation. Such concentration may also affect bitcoin liquidity.

Risks Related to Regulatory Framework

We are required to obtain, and to comply with, government and utility company permits and approvals.

We are required to obtain, and to comply with, numerous permits and licenses from federal, state and local governmental agencies and our electricity providers. The process of obtaining and renewing necessary permits and licenses can be lengthy and complex and can sometimes result in the establishment of conditions that make the project or activity for which the permit or license was sought unprofitable or otherwise unattractive. In addition, such permits or licenses may be subject to denial, revocation or modification under various circumstances. The regulatory environment surrounding such permits and approvals is rapidly evolving, in part due to the power demand from the rapid expansion of demand for data centers and related political considerations. Failure to obtain or comply with the conditions of permits or licenses, or failure to comply with applicable laws or regulations, may result in the delay or temporary suspension of our operations.

We are subject to a rapidly evolving regulatory landscape and any adverse changes to our or our customers’ failure to comply with any laws or regulations could adversely affect our business, prospects or operations.

Our and our customers’ businesses are subject to extensive laws, rules, regulations, policies and legal and regulatory guidance, including those governing securities, commodities, cryptocurrency custody, exchange and transfer, data governance, data protection, cybersecurity and tax. These legal and regulatory regimes vary widely across U.S. federal, state and local and international jurisdictions and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. In addition, the legal and regulatory regimes related to cryptocurrencies continue to evolve, with laws enacted at the federal level to address specific segments of the digital asset ecosystem, such as payment stablecoins, as well more comprehensive laws and regulations at the state level. Congress is also considering broader market structure legislation intended to clarify regulatory oversight responsibilities with respect to the digital asset markets. U.S. regulatory agencies have continued to evaluate the application of existing securities, commodities, and banking regulations to digital asset activities, including custody, trading, and settlement functions.

Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the crypto economy requires us to exercise our judgment as to whether certain laws, rules and regulations apply to us or our customers, and it is possible that governmental bodies and regulators may disagree with our or our customers’ conclusions. To the extent we or our customers have not complied with such laws, rules and regulations, we could be subject to significant fines and other regulatory consequences, which could adversely affect our business, prospects or operations. As cryptocurrency has grown in popularity and in market size, the Federal Reserve Board, U.S. Congress and certain U.S. agencies (for example, the Commodity Futures Trading Commission, the SEC, the Financial Crimes Enforcement Network and the Federal Bureau of Investigation) have begun to examine the operations of cryptocurrency networks, cryptocurrency users and cryptocurrency exchange markets.

Our customers in our HPC segment may also be subject to laws and regulations relating to artificial intelligence technologies (“AI”). Several jurisdictions around the globe, including Europe and China have already proposed or enacted laws and regulations governing AI, including the EU Artificial Intelligence Act that was enacted in 2024, each of which may impose significant operational costs on our customers. A number of U.S. states have also adopted laws or are considering the passage of laws related to the use and deployment of AI and/or require disclosures in connection with the usage of AI. For example, California enacted more than a dozen new laws that regulate use of AI and automated decision systems and provide consumers with additional protections around companies’ use of AI, Texas enacted the Texas Responsible AI Governance Act that prohibits specified harmful uses of AI, Colorado passed the Colorado Artificial Intelligence Act, which will require disclosures and compliance efforts associated with different uses of AI, and Utah passed the Utah Artificial Intelligence Policy Act, which requires certain disclosures to customers and confirms companies’ responsibility for legal violations caused by their AI applications. However, the federal government may seek to preempt state laws purporting to regulate AI, as evidenced by the Trump administration’s “Ensuring a National Policy Framework for Artificial Intelligence” Executive Order which calls for federal standards and legislation that would preempt conflicting state AI regulations and create a federal litigation task force focused on challenging state AI laws in court. These differing laws and policy objectives would require our HPC customers to expend significant resources to modify their products, services, or operations to ensure compliance or remain competitive.

Ongoing and future regulatory actions could effectively prevent our and our customers’ mining operations and our ongoing or planned co-hosting operations, limiting or preventing future revenue generation by us or rendering our operations obsolete. Such actions could severely impact our ability to continue to operate and our ability to continue as a going concern or to pursue our strategy at all, which would have a material adverse effect on our business, prospects or operations.

If we were deemed to be an investment company under the Investment Company Act, applicable restrictions could make it impractical or impossible for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Under Sections 3(a)(1)(A) and (C) of the Investment Company Act, a company generally will be deemed to be an “investment company” for purposes of the Investment Company Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the Investment Company Act. We conduct our operations so that we will not be deemed an investment company, including by managing our security holdings to comply with applicable limitations under the Investment Company Act. However, to the extent that bitcoin is determined by regulators to be a security for purposes of the Investment Company Act, we may be subject to additional regulatory requirements and/or additional limitations on our portfolio which could make it impractical or impossible for us to continue our business as contemplated and could have a material adverse effect on our business, prospects, results of operations or financial condition.

We do not believe we are, and do not intend to be, engaged in the business of investing, reinvesting, or trading in securities, and we will not hold ourselves out as being engaged in those activities. Furthermore, we monitor our holdings to ensure continuing and ongoing compliance with the 40% limit described above (or similar limits available under other Investment Company Act exceptions and safe harbors). However, depending on its characteristics, a cryptocurrency may be considered a “security” under the Investment Company Act. If the SEC or its staff were to disagree with our treatment of certain assets (namely bitcoin), we would need to adjust our strategy and our assets in order to continue to comply with such limits. Any such adjustment in our strategy or assets could have a material adverse effect on our business, prospects, results of operations or financial condition. To date, the SEC staff have treated bitcoin as a commodity, and in March 2025, the SEC’s Division of Corporation Finance issued guidance clarifying that the Division does not take the view that cryptocurrencies generated through proof-of-work mining are securities for purposes of the Securities Act and the Exchange Act. However, this statement does not apply to the Investment Company Act, and it is possible that the SEC may deem bitcoin and other cryptocurrencies an investment security in the future. We do not believe any of the bitcoin we own, acquire or mine are securities. As a result of our investments and cryptocurrency mining activities, it is possible that the investment securities we hold in the future could exceed applicable limits under the Investment Company Act, particularly if such SEC treatment of bitcoin changes, and, accordingly, we could determine that we have become an inadvertent investment company and do not qualify for any exemption from registration under the Investment Company Act. As of the date hereof, we do not believe that we are an inadvertent investment company. If we do become an inadvertent investment company in the future, we may take actions to cause the investment securities held by us to be less than 40% of our total assets, which may include acquiring assets with the cash or bitcoin on hand or liquidating investment securities or bitcoin or seeking a no-action letter from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner. Liquidating investment securities or bitcoin could result in losses. This may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings. In any event, we do not intend to become an investment company engaged in the business of investing and trading securities.

In general, as a consequence of our seeking to avoid the need to register under the Investment Company Act on an ongoing basis, we may be restricted from acquiring certain assets or may structure investments in a manner that would be less advantageous to us than would be the case in the absence of such requirements. No assurance can be given that the SEC or its staff will concur with our classification of our assets or that the SEC staff will not, in the future, issue further guidance that may require us to reclassify those assets for purposes of qualifying for an exclusion or exemption from registration under the Investment Company Act. Additional guidance from the SEC staff could provide additional flexibility to us, or it could further inhibit our ability to pursue the business strategies we have chosen. If the SEC or its staff take a position contrary to our view with respect to the characterization of any of the assets we hold, we may be deemed an unregistered investment company. Therefore, in order not to be required to register as an investment company, we may need to dispose of a significant portion of our assets or acquire significant other additional assets that may have lower returns than our expected portfolio, or we may need to modify our business plan to register as an investment company, which would result in significantly increased operating expenses. We cannot assure you that we would be able to complete these dispositions or acquisitions of assets on favorable terms, or at all. Consequently, any modification of our business plan could have a material adverse effect on our business, prospects, results of operations or financial condition.

There can be no assurance that we will be able to successfully avoid operating as an unregistered investment company. If the SEC determined that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would potentially be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period for which it was established that we were an unregistered investment company. Any of these results could have a material adverse effect on our business, prospects, results of operations or financial condition.

Ultimately, classification as an investment company under the Investment Company Act requires registration with the SEC. If an investment company fails to register, it would have to stop doing almost all business, and its contracts would become voidable. Registration is time-consuming, expensive and restrictive and would require a restructuring of our operations, and we would be very constrained in the kind of business we could do as a registered investment company. Further, we would become subject to substantial regulation concerning management, operations, transactions with affiliated persons and portfolio composition, and would need to file reports under the Investment Company Act regime. The cost of such compliance would result in us incurring substantial additional expenses, and the failure to register if required could have a material adverse effect on our business, prospects, results of operations or financial condition. Furthermore, our classification as an investment company could adversely affect our ability to engage in future combinations, acquisitions or other transactions on a tax-free basis. Finally, there is no guarantee that we would be able to register under the Investment Company Act at such time or take such other actions as may be necessary to ensure our activities comply with applicable law, which could force the us to cease operations and liquidate.

Since we will not be subject to the Investment Company Act, we will not be subject to its substantive provisions, including but not limited to, provisions requiring diversification of investments, limiting leverage and restricting investments in illiquid assets.

We are not registered, and do not intend to register, as an investment company under the Investment Company Act or the similar laws of any other country or jurisdiction and, accordingly, the provisions of the Investment Company Act will not be applicable to us. These provisions require investment companies to have a majority of disinterested directors, require securities held in custody to be individually segregated at all times from the securities of any other person and to be clearly marked to identify such securities as the property of such investment company and regulate the relationship between the advisor and the investment company.

Blockchain technology may expose us to sanctioned or blocked persons or may result in unintentional or inadvertent violations of trade compliance and economic sanctions laws and regulations.

We are subject to economic and trade sanctions laws and regulations, including the rules enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S. Department of State, the United Nations Security Council, the U.S. Department of Commerce, and other relevant sanctions and export controls authorities. These rules and regulations include prohibitions on conducting direct or indirect business with persons named on, or owned by persons named on, OFAC’s various sanctions lists, including the Specially Designated Nationals and Blocked Persons list. We are also prohibited from direct or indirect dealings with persons located in, organized in, or nationals of, jurisdictions subject to U.S. embargos (as of the date of this prospectus, Cuba, Iran, North Korea, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, and the Crimea region of Ukraine), and may be prohibited from dealing with persons in other jurisdictions subject to targeted U.S. sanctions such as Venezuela, Russia, and Belarus.

U.S. sanctions compliance obligations apply to transactions in cryptocurrencies and U.S. sanctions authorities have in recent years directed significant attention to sanctions compliance among the cryptocurrency industry. Because of the pseudonymous nature of blockchain transactions, we may inadvertently and without knowledge, directly or indirectly engage in transactions with or for the benefit of prohibited persons. The mining pools to which we contribute power do not screen transactions for sanctioned persons or wallets before including them in a block, and we do not have visibility into the transactions selected by the pool operator for inclusion. Although no regulator has affirmatively stated that such screening is required, OFAC or another regulator may take the view that such screening is required in order to avoid dealing with or facilitating transactions by sanctioned persons. Civil liability for OFAC sanctions violations are typically regarded as “strict liability” violations, meaning we may be held responsible for transacting with prohibited parties even if we have no knowledge that a particular counterparty is a prohibited person under the OFAC sanctions regulations. In addition, we may be subject to non-U.S. economic sanctions laws and regulations to the extent we conduct activity within the jurisdiction of other sanctions regimes, including those of the European Union and United Kingdom. Screening transactions for sanctions concerns may increase the compliance costs associated with the operation of a mining pool, which costs would likely be passed on to the miners themselves by the pool operator.

Although we currently have a Code of Conduct and Ethics that includes policies and procedures to promote compliance with economic sanctions, OFAC and other governmental authorities have significant discretion in the interpretation and enforcement of economic and trade sanctions laws and regulations. Moreover, economic and trade sanctions laws and regulations continue to evolve, often with little or no notice, which could raise operational or compliance challenges. If it is determined that we have transacted with prohibited persons or otherwise violated economic and trade sanctions laws and regulations, even inadvertently, this could result in substantial reputational harm, fines or penalties, and costs associated with governmental inquiries and investigations. Any or all of the foregoing could have a material adverse effect on our business, prospects, results of operations or financial condition. Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.

Bitcoin’s and other cryptocurrencies’ status as a “security” or other regulated financial instrument in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a cryptocurrency, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, prospects, results of operations or financial condition.

In the United States, the SEC and its staff have taken the position that certain cryptocurrencies fall within the definition of a “security” under the U.S. federal securities laws. The legal tests that are commonly employed for determining whether any given cryptocurrency is a security are established under U.S. Supreme Court case law and require a highly complex and heavily fact-driven analysis. The application of such tests is therefore highly uncertain and the SEC Staff has indicated that the determination of whether or not a cryptocurrency is a security depends on the specific characteristics and use of that particular asset. Moreover, the SEC and its staff generally do not provide advance guidance or confirmation on the status of any particular cryptocurrency as a security, although the SEC’s Division of Corporation Finance has recently begun to provide informal guidance on its position regarding whether certain cryptocurrencies (like meme coins and stablecoins) and certain digital asset related activities implicate the offer or sale of a security. For example, the Division of Corporation Finance stated in its March 20, 2025, “Statement on Certain Proof-of-Work Mining Activities” that certain self-mining and mining pool activities, under the circumstances described in the statement, do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933 and Section 3(a)(10) of the Securities Exchange Act of 1934. Some courts have found that certain cryptocurrencies are securities, while other courts have found that certain other cryptocurrencies under specified circumstances are not securities. Further, the SEC and its staff have taken positions that certain cryptocurrencies are “securities” — often in the context of enforcement actions.

We do not currently hold any cryptocurrencies for which the SEC or its staff has taken the position that such assets are securities and currently only intend to mine, invest in or transact in bitcoin. Prior public statements by senior officials at the SEC indicate that the SEC does not intend to take the position that bitcoin, on its own and in its current form, is a security. However, such statements are not official policy statements by the SEC and reflect only the speakers’ personal views, which are not binding on the SEC or any other agency or court, and cannot be generalized to any other cryptocurrency and may evolve. Because we currently only intend to mine, invest in and transact in bitcoin, we do not have processes in place at this time to evaluate whether cryptocurrencies other than bitcoin are “securities” within the meaning of the U.S. federal securities laws. Any such processes, if developed in the future, would be risk-based assessments that do not constitute legal determinations binding on regulators or courts and would not preclude legal or regulatory action. While we believe our holdings are not securities, we cannot assure you that future legislation or regulation could not have a material adverse effect on our business, prospects, results of operations or financial condition.

To the extent that the SEC, another relevant regulatory agency, court or foreign authority determines that any cryptocurrencies we hold, or choose to hold in the future, constitute a “security” or other form of regulated financial instrument, that determination could prevent us from continuing to hold or mine those cryptocurrencies or subject us to additional regulatory burdens in order to be permitted to do so, which could include costly or onerous registration or reporting requirements. Such a determination could also result in regulatory or enforcement sanctions, penalties and financial losses in the event we are unable to comply with, or are determined not to have previously complied with, relevant regulatory requirements or that we have incurred liability to our customers and need to compensate them for any losses or damages. For example, we could be subject to judicial or administrative sanctions for failing to offer or sell the cryptocurrency in compliance with securities registration requirements. Such an action could result in injunctions and cease and desist orders, as well as civil monetary penalties, fines, disgorgement, criminal liability, and reputational harm.

Moreover, as a result of any such determination, all transactions in such cryptocurrencies may have to be registered with the SEC or other relevant regulatory authority, or conducted in accordance with an exemption from registration, which could severely limit the liquidity, usability and transactability of the relevant cryptocurrencies. The networks on which such cryptocurrencies are used might be required to be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable for its existing purposes. Further, any determination that bitcoin is a security or another form of regulated financial instrument could draw negative publicity and cause a decline in the general acceptance of cryptocurrencies. Also, it would make it more difficult for bitcoin to be traded, cleared, and custodied as compared to other cryptocurrencies that are not considered to be securities. Lastly, any determination that a cryptocurrency we hold, or choose to hold in the future, is a “security” may require us to register as an investment company under the Investment Company Act.

The nature of our business requires the application of complex financial accounting rules. Because there has been limited guidance provided and precedent set for financial accounting of bitcoin and other cryptocurrencies, the determination that we have made for how to account for cryptocurrencies transactions may be subject to change.

The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and may even affect the reporting of transactions completed before the announcement or effectiveness of a change.

In December 2023, FASB issued Accounting Standards Update (“ASU”) No. 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. Under the guidance, an entity is required to: measure cryptocurrencies at fair value with changes recognized in net income each reporting period, present cryptocurrencies and related fair value changes separately in the balance sheet and income statement and include various disclosures in interim and annual periods. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2024, with early adoption permitted in any interim or annual period after the issuance of the ASU. The updated guidance is effective January 1, 2025, however, we have chosen to early adopt the amendments as of January 1, 2024.

Many companies’ accounting policies are subject to heightened scrutiny by regulators and the public. Further, there has been limited precedents for the financial accounting of cryptocurrencies and related valuation and revenue recognition, and limited interpretative guidance has been provided by the FASB and no official guidance by the SEC. As such, there remains significant uncertainty on how companies can account for cryptocurrency transactions, cryptocurrencies, and related revenue.

Uncertainties in or changes to regulatory or financial accounting standards could result in the need to change our accounting methods and restate our financial statements and impair our ability to provide timely and accurate financial information. Such a restatement could adversely affect the accounting for our newly earned bitcoin and more generally negatively impact our business, prospects, financial condition and results of operations. Such circumstances would have a material adverse effect on our ability to continue as a going concern, which would have a material adverse effect on our business, prospects or results of operations as well as and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

Future developments regarding the treatment of cryptocurrencies for U.S. federal, state, local and foreign tax purposes could have a material adverse effect on our business, prospects, results of operations or financial condition.

Due to the new and evolving nature of cryptocurrencies and the absence of comprehensive legal guidance with respect to cryptocurrency products and transactions, many significant aspects of the U.S. federal, state, local and foreign tax treatment of transactions involving cryptocurrencies, such as bitcoin, are uncertain, and it is unclear what guidance may be issued in the future regarding the treatment of cryptocurrency transactions, including mining, for such tax purposes. Current U.S. Internal Revenue Service (“IRS”) guidance indicates that cryptocurrencies such as bitcoin should be treated and taxed as property, and that transactions involving the payment of cryptocurrencies such as bitcoin for goods and services should be treated as barter transactions. This treatment creates the potential for the recognition of taxable income or gain (and potential information reporting obligations) whenever a bitcoin passes from one person to another (including in off-blockchain transactions).

There can be no assurance that the IRS or any other tax authority will not alter its existing position with respect to cryptocurrencies in the future or that a court would uphold the treatment of bitcoin or other cryptocurrencies as property, rather than currency. Any such alteration of existing U.S. federal, state, local, or foreign tax authority positions or additional guidance regarding cryptocurrency products and transactions could result in adverse tax consequences for holders of cryptocurrencies and could have an adverse effect on the value of cryptocurrencies and the broader cryptocurrencies markets. Future technological and operational developments that may arise with respect to cryptocurrencies may increase the uncertainty of the treatment of cryptocurrencies for U.S. federal, state, local and foreign tax purposes. The uncertainty regarding the tax treatment of cryptocurrency transactions, as well as the potential promulgation of new U.S. federal income, state or foreign tax laws or guidance relating to cryptocurrency transactions, or changes to existing laws or guidance, could have a material adverse effect on our business, prospects, results of operations or financial condition.

Regulatory developments regarding cryptocurrencies and cryptocurrency markets could have a material adverse effect on our business, prospects, results of operations or financial condition.

Due to the new and evolving nature of cryptocurrencies, a number of governments or governmental bodies are contemplating legislative and regulatory changes with respect to the treatment of cryptocurrencies and transactions. For example, certain governments have deemed cryptocurrencies illegal or have curtailed the use of cryptocurrencies by prohibiting the acceptance of payment in bitcoin and other cryptocurrencies for consumer transactions and barring banking institutions from accepting deposits of cryptocurrencies. There is a risk that relevant authorities in any jurisdiction may impose more onerous regulation on bitcoin, for example banning its use, regulating its operation, or otherwise changing its regulatory treatment. It is also possible that regulators in the U.S. or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of bitcoin or the ability of individuals or institutions such as us to own or transfer bitcoin. Any such changes may introduce a cost of compliance and could have a material adverse effect on our business, prospects, results of operations or financial condition.

In the U.S. in particular, the regulation of bitcoin and other cryptocurrencies remains the subject of significant uncertainty and ongoing change. For example, on July 18, 2025, President Trump signed into law the GENIUS Act, establishing a legislative framework for the regulation of payment stablecoins and marking the first federal legislation for the regulation of cryptocurrencies in the U.S. On July 17, 2025, the U.S. House of Representatives passed the Digital Asset Market Clarity Act of 2025 (the “CLARITY Act”), a comprehensive cryptocurrency market structure and regulation bill. The CLARITY Act, and other cryptocurrency market structure and regulation bills, remain under consideration and continue to evolve in the U.S. Senate. It is not possible to predict whether or when new laws and regulations will be enacted or adopted that change the legal framework governing cryptocurrencies or provide additional authorities to the SEC, the CFTC, or other regulators, or whether or when any other federal, state or foreign legislative or regulatory bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of cryptocurrency markets to function, the willingness of financial and other institutions to continue to provide services to the cryptocurrencies industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of cryptocurrencies generally and bitcoin specifically. The consequences of any new law or regulation relating to cryptocurrencies and cryptocurrency activities could adversely affect the market price of bitcoin, as well as our ability to hold or transact in bitcoin, and in turn adversely affect the market price of our listed securities.

Our business may be subject to substantial energy regulation and may be adversely affected by legislative or regulatory changes, as well as liability under, or any future inability to comply with existing or future energy regulations or requirements. We are required to obtain, and to comply with, government permits and approvals.

Our business may be subject to extensive federal, state and local laws. Compliance with, or changes to, the requirements under these legal and regulatory regimes may cause us to incur significant additional costs or could have a material adverse effect on our business, prospects, results of operations or financial condition. Failure to comply with such requirements could result in the shutdown of a non-complying facility, the imposition of liens, fines, and/or civil or criminal liability and/or costly litigation before the agencies and/or in state or federal court.

The regulatory environment has undergone significant changes in the last several years due to state and federal policies affecting wholesale competition and the creation of incentives for the addition of large amounts of new renewable generation and, in some cases, transmission. These changes are ongoing, and we cannot predict the future design of the power markets or the ultimate effect that the changing regulatory environment will have on our business. If competitive restructuring of the electric power markets is reversed, discontinued, delayed or materially altered, our business, financial condition, results of operations and prospects could be negatively impacted.

We may become involved in legal proceedings from time to time, which could adversely affect us. We cannot predict the outcome of any legal proceedings with respect to our current and past business activities. 

From time to time, we may be a party to legal and regulatory proceedings, including matters involving governmental agencies or regulators, entities with whom we do business, actions by our stockholders and other proceedings, whether arising in the ordinary course of business or otherwise. We will evaluate our exposure to legal and regulatory proceedings and establish reserves, if required, for the estimated liabilities in accordance with generally accepted accounting principles. Assessing and predicting the outcome of these matters involves substantial uncertainties and contingencies. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liabilities, or require us to change our business practices. In addition, the expenses and liabilities of litigation and other proceedings, and the timing of these expenses from period to period, are difficult to estimate, subject to change, and could adversely affect our business, financial condition and results of operations.

Responding to lawsuits brought against us and governmental inquiries or legal actions that we may initiate, can often be expensive and time-consuming and disruptive to normal business operations. Moreover, the results of complex legal proceedings and governmental inquiries could adversely affect our business, prospects, results of operations or financial condition, and we could incur substantial monetary liability and/or be required to change our business practices.

We may be at a higher risk of litigation and other legal proceedings due to heightened regulatory scrutiny of the cryptocurrency industry, which could ultimately be resolved against us, requiring material future cash payments or charges, which could impair our financial condition and results of operations.

Our business may be susceptible to various claims, both in litigation and binding arbitration proceedings, legal proceedings, and government investigations, due to the heightened regulatory scrutiny following the disruptions in the cryptocurrency markets. We believe that since cryptocurrency mining, and the cryptocurrency industry generally, is a relatively new business sector, it is more likely subject to government investigation and regulatory determination, particularly following the recent cryptocurrency market participant bankruptcies described elsewhere herein. Any claims, regulatory proceedings or litigation that could arise in the course of our business could have a material adverse effect on our business, prospects, results of operations or financial condition.

Regulatory and legislative developments related to environmental concerns may materially adversely affect our brand, reputation, business, prospects, results of operations and financial position.

Given the very significant amount of electrical power required to operate bitcoin mining machines, as well as the environmental impact of mining for the rare earth metals used in the production of bitcoin mining servers, the crypto mining industry may become a target for future environmental and energy regulation. Specifically, imposition of a tax or regulatory fee in a jurisdiction where we operate or on electricity that we purchase could result in substantially higher energy costs, and due to the significant amount of electrical power required to operate mining machines, could in turn put our facilities at a competitive disadvantage.

In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the bitcoin mining industry, with its energy demand, may become a target for future environmental and energy regulation. Legislation and increased regulation regarding climate change and other environmental concerns could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, costs to purchase renewable energy credits or allowances and other costs to comply with such regulations. Any future environmental regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

Moreover, in the State of Texas, we currently participate in energy demand response programs to curtail operations, return capacity to the electrical grid, and receive funds to offset foregone operational revenue when necessary, such as in extreme weather events. Furthermore, we, as well as other bitcoin miners operating primarily in the State of Texas, have recently received a mandatory survey from the U.S. Energy Information Administration (the “EIA”), seeking extensive information regarding our Facilities’ use of electricity, and certain information regarding our operations although such survey was successfully challenged in court and set aside. It is possible that mandatory surveys will be used by the EIA in the future to generate negative reports regarding the bitcoin mining industry’s use of power and other resources, which could spur additional negative public sentiment and adverse legislative and regulatory action against us or the bitcoin mining industry as a whole. Surveys and other regulatory actions could increase our cost of operations or otherwise make it more difficult for us to operate at our current locations.

Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change and the environment by us or other companies in the same industry could harm our reputation. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations or financial condition.

The cryptocurrencies exchanges on which bitcoin trades are relatively new and, in most cases, largely unregulated and have therefore experienced more fraud and failure compared to established, regulated exchanges for other assets. In the event that cryptocurrencies exchanges representing a substantial portion of the volume in bitcoin trading are involved in fraud or experience security failures or other operational issues, such cryptocurrencies exchanges’ failures may result in a reduction in the price of bitcoin and can adversely affect us.

Cryptocurrencies exchanges on which bitcoin trades are new and, in most cases, largely unregulated. Furthermore, many cryptocurrencies exchanges (including several of the most prominent U.S. dollar denominated exchanges) do not provide the public with significant information regarding their ownership structure, management teams, corporate practices, or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, cryptocurrency exchanges, including prominent exchanges handling a significant portion of the volume of bitcoin trading.

Some large cryptocurrency market participants have already experienced fraud and/or failure. The bankruptcies of FTX, and BlockFi were unexpected and significantly reduced confidence in the cryptocurrencies industry generally and bitcoin specifically. A lack of stability in the cryptocurrencies exchange market and the closure or temporary shutdown of bitcoin exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the Bitcoin network and result in greater volatility in bitcoin value. These potential consequences of a cryptocurrencies exchange’s failure could have a material adverse effect on our business, prospects, results of operations or financial condition.

The characteristics of cryptocurrencies have been, and may in the future continue to be, exploited to facilitate illegal activity including, but not limited to, fraud, money laundering, tax evasion and ransomware scams, which could negatively affect us.

Digital currencies and the cryptocurrency industry are relatively new and, in many cases, lightly regulated or largely unregulated. Some types of digital currency have characteristics, such as the speed with which digital currency transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain digital currency transactions and encryption technology that anonymizes these transactions, that make digital currency particularly susceptible to use in illegal activity including, but not limited to, fraud, money laundering, tax evasion and ransomware scams. Two prominent examples of marketplaces that accepted digital currency payments for illegal activities include Silk Road, an online marketplace on the dark web that, among other things, facilitated the sale of illegal drugs and forged legal documents using digital currencies, and AlphaBay, another darknet market that utilized digital currencies to hide the locations of its servers and identities of its users. Both of these marketplaces were investigated and closed by U.S. law enforcement authorities. U.S. regulators, including the SEC, CTFC, and Federal Trade Commission, as well as non-U.S. regulators, have taken legal action against persons alleged to be engaged in Ponzi schemes and other fraudulent schemes involving digital currencies. In addition, the FBI has noted the increasing use of digital currency in various ransomware scams.

While we believe that our risk management and compliance framework, which includes thorough due diligence reviews of our counterparties and reliance on qualified custodians subject to U.S. federal and state oversight, is reasonably designed to identify and mitigate potential illicit activity, we cannot ensure that we will be able to detect any such illegal activity in all instances. Our custodians maintain segregation of client entitlements and implement controls such as sanctions and anti-money laundering screening, blockchain-analytics monitoring of inbound transfers, address whitelisting and restricted lists, and protocols to quarantine unexpected or non-attributable deposits pending enhanced review. These safeguards are intended to reduce the risk that misdirected or illicit assets are commingled with our holdings. However, because the speed, irreversibility and anonymity of certain digital currency transactions make them more difficult to track, fraudulent transactions may be more likely to occur. We, or our custodians, may be specifically targeted by individuals seeking to conduct fraudulent transfers, and it may be difficult or impossible for us to detect and avoid such transactions in certain circumstances. If one of our counterparties (or in the case of digital currency exchanges, their customers) were to engage in or be accused of engaging in illegal activities using digital currency, we could be subject to various fines and sanctions, including limitations on our activities, which could also cause reputational damage and could have a material adverse effect on our business, prospects, results of operations or financial condition.

Regulatory actions in one or more countries could severely affect the right to acquire, own, hold, sell or use certain cryptocurrencies or to exchange them for fiat currency, or could be subject to additional regulatory costs and burdens, which may be material.

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while some jurisdictions, such as the United States, subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.

It is possible that state or federal regulators may seek to impose harsh restrictions or total bans on bitcoin mining which may make it impossible for us to do business without relocating our mining operations, which could be very costly and time consuming. Further, although bitcoin and bitcoin mining, as well as cryptocurrencies generally, are largely unregulated in most countries (including the United States), regulators could undertake new or intensify regulatory actions that could severely restrict the right to mine, acquire, own, hold, sell, or use cryptocurrency or to exchange it for traditional fiat currency such as the United States Dollar.

In 2021, the Chinese government declared that all digital currency-related business activities are illegal, effectively banning mining and trading in cryptocurrencies, such as bitcoin. Other countries, such as India or Russia, may take similar regulatory actions in the future that could severely restrict the right to acquire, own, hold, sell or use cryptocurrencies or to exchange them for fiat currency. In some nations, it is illegal to accept payment in bitcoin and other cryptocurrencies for consumer transactions and banking institutions are barred from accepting deposits of cryptocurrencies. Such restrictions may adversely affect us as the large-scale use of cryptocurrencies as a means of exchange is presently confined to certain regions.

In January 2025, U.S. President Donald Trump issued an executive order forming a presidential working group to establish a clear regulatory framework for cryptocurrencies, and leaders in both houses of the U.S. Congress have announced a bicameral working group with the objective of passing legislation to provide regulatory clarity for the industry. Committees in both houses of the U.S. Congress have held hearings to ensure fair access to financial services, including for companies operating in the cryptocurrency space. Additionally, President Trump and members of the U.S. Congress announced that they are studying the possibility of creating a national strategic cryptocurrency reserve to include bitcoin, and at least twelve states have introduced legislation to create strategic bitcoin reserves.

Furthermore, in the future, foreign governments may decide to subsidize or in some other way support certain large-scale cryptocurrency mining projects, thus adding hashrate to the overall network. Such circumstances could have a material adverse effect on the amount of bitcoin we may be able to mine, the value of bitcoin and any other cryptocurrencies we may potentially acquire or hold in the future and, consequently could have a material adverse effect on our business, prospects, results of operations or financial condition.

Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.

The Financial Crimes Enforcement Network, a division of the U.S. Treasury Department (“FinCEN”) regulates providers of certain services with respect to “convertible virtual currency,” including bitcoin. Businesses engaged in the transfer of convertible virtual currencies are subject to registration and licensure requirements at the U.S. federal level and also under U.S. state laws. While FinCEN has issued guidance that cryptocurrency mining on your own behalf, without engagement in other activities, does not require registration and licensure with FinCEN, this could be subject to change as FinCEN and other regulatory agencies continue their scrutiny of the Bitcoin network and cryptocurrencies generally.

If regulatory changes or interpretations require us to register as a money services business with FinCEN under the U.S. Bank Secrecy Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements, resulting in significant compliance costs and operational burdens. In such a case, we may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable. Furthermore, we may not be capable of complying with certain federal or state regulatory obligations applicable to “money services businesses” and “money transmitters”, such as monitoring transactions and blocking transactions, because of the nature of the bitcoin blockchain. If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate. If we decide to cease certain operations in response to new regulatory obligations, such actions could occur at a time that is unfavorable to investors.

Multiple states have implemented or proposed regulatory frameworks for cryptocurrency businesses. Compliance with such state-specific regulations may increase costs or impact our business operations. Furthermore, if we or our service providers are unable to comply with evolving federal or state regulations, we may be forced to dissolve or liquidate certain operations, which could materially impact our investors.

Legislative or regulatory change regarding the regulation of “commodities” by the CFTC and the regulation of bitcoin and other cryptocurrencies as “digital commodities” could subject us to additional regulatory burdens and oversight and could adversely affect the market price of bitcoin and the market price of our listed securities.

The CFTC has stated and judicial decisions involving CFTC enforcement actions have confirmed that at least some cryptocurrencies, including bitcoin, fall within the definition of a “commodity” under the U.S. Commodity Exchange Act of 1936 (the “CEA”) and the rules promulgated by the CFTC thereunder (“CFTC Rules”). While the CFTC has enforcement authority to police against fraud and manipulation in spot commodity markets (including the spot market for cryptocurrencies, such as bitcoin, that are commodities), the CFTC only has regulatory and supervisory jurisdiction with respect to “commodity interest” transactions, such as futures, options, and swaps on a commodity (including a cryptocurrency commodity) and certain leveraged, margined, or financed transactions in commodities involving retail customers. Accordingly, we are not currently regulated or supervised by the CFTC and are not subject to the legal and regulatory obligations that are applicable to CFTC-registered entities under the CEA and CFTC Rules.

As discussed above, the regulation of cryptocurrencies in the U.S. remains uncertain and subject to change, including as a result of the enactment and adoption of new laws and regulations and the pursuit of other regulatory, legislative, enforcement or judicial actions. For example, the proposed CLARITY Act recently passed by the U.S. House of Representatives and other draft cryptocurrency market structure and regulation bills have proposed granting the CFTC additional regulatory and supervisory powers with respect to spot cryptocurrencies as “digital commodities.” While it is not possible to predict whether and in what form such proposals will be adopted, changes to or expansion of the jurisdiction of the CFTC with respect to spot market activities in cryptocurrencies, including bitcoin, could result in the imposition of additional regulatory obligations and burdens, which could include registration requirements. Such additional regulatory burdens and oversight could adversely affect the market price of bitcoin and in turn adversely affect the market price of our listed securities.

Due to lack of clarity of application of commodities laws to digital asset treasury strategies, we may be deemed to be a “commodity pool” under CEA and CFTC Rules as a result of our commodity interest trading which could have a material adverse effect on our business, financial condition and results of operations.

Based on the current framework of the CEA and CFTC Rules, we do not believe our mining activities or the holding of spot bitcoin in our corporate treasury would, on its own, cause us to be considered a “commodity pool”. The CEA and CFTC Rules define a “commodity pool” as any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in “commodity interests,” such as swaps, futures, and options on a commodity underlying (including a digital asset that constitutes a commodity). Although as described above we may engage in certain derivatives transactions, we do not believe that we are a “commodity pool” as such term is defined. Accordingly, (i) no person is registered with the CFTC as a commodity pool operator (“CPO”) or a commodity trading adviser (“CTA”) with respect to our Company; and (ii) our shareholders will not have the regulatory protections provided to investors in a commodity pool operated or advised by a registered CPO or CTA, as applicable.

However, we note that the legal and regulatory landscape is evolving with respect to digital assets, and there is uncertainty regarding how commodity laws may be applied to operating companies that maintain significant bitcoin treasuries or engage in incidental hedging or financing transactions referencing digital commodities. For example, the CFTC has previously interpreted “for the purpose of trading” in the “commodity pool” definition as being triggered where only one swap is executed. In addition, it is possible that if the CLARITY Act were to become law as currently proposed, our holdings of bitcoin could cause us to be deemed a “commodity pool” under the Commodity Exchange Act, which would require us and certain of our associated persons to register with the Commodities Exchange Commission and comply with ongoing regulatory requirements such as reporting and supervisory requirements.

If our Company were determined to be a “commodity pool” as a result of any future change in legislation, regulation, or interpretation, we may be subject to additional regulatory requirements which may be burdensome or costly or that could make it impractical or impossible for us to continue our business as currently contemplated. For example, a commodity pool must generally be operated as a separately cognizable entity from its CPO and any person acting as a CPO or CTA with respect to a commodity pool must be registered with the CFTC and a member of the National Futures Association (“NFA”). Absent an applicable exemption, a registered CPO or CTA must generally provide investors with a “disclosure document” in compliance with the CFTC Rules and the requirements of the NFA and must comply with a range of ongoing reporting and recordkeeping requirements on registered and certain exempt commodity pool operators. Registration can be time-consuming, expensive and restrictive, and compliance with these additional regulatory requirements could result in substantial, non-recurring expenses adversely affecting an investment in our securities. If we determine not to comply with such regulations, we may be forced to cease or modify certain of our operations, which could negatively impact our investors.

In light of the unsettled application of commodity laws to digital asset treasury practices, we continuously monitor regulatory developments and seek to structure any risk management activity in a manner we believe is consistent with our status as an operating company, rather than as an enterprise operated for the purpose of trading in commodity interests. Nevertheless, the lack of clarity in this area presents regulatory risk that could adversely affect us if interpretations evolve in a manner that differs from our expectations.

Any actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security and processing of personal information could adversely affect our business, prospects, results of operations or financial condition.

In connection with running our business, we receive, store, use and otherwise process information that relates to individuals and/or constitutes “personal data,” “personal information,” “personally identifiable information,” or similar terms under applicable data privacy laws (collectively, “Personal Information”), including from and about actual and prospective users, as well as our employees and business contacts. We are therefore subject to federal, state and foreign laws, regulations and other requirements relating to the privacy, security and handling of Personal Information.

The application and interpretation of such requirements are constantly evolving and are subject to change, creating a complex compliance environment. In some cases, these requirements may be either unclear in their interpretation and application or they may have inconsistent or conflicting requirements with each other. Further, there has been a substantial increase in legislative activity and regulatory focus on data privacy and security in the United States and elsewhere, including in relation to cybersecurity incidents. In addition, some such requirements place restrictions on our ability to process Personal Information across our business or across country borders.

It is possible that new laws, regulations and other requirements, or amendments to or changes in interpretations of existing laws, regulations and other requirements, may require us to incur significant costs, implement new processes, or change our handling of information and business operations, which could ultimately hinder our ability to grow our business by extracting value from our data assets. In addition, any failure or perceived failure by us to comply with laws, regulations and other requirements relating to the privacy, security and handling of information could result in legal claims or proceedings (including class actions), regulatory investigations or enforcement actions. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. These proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, prospects, results of operations, and financial condition could be materially adversely affected.

Risks Related to Ownership of Our Class A Common Stock

We have identified material weaknesses in our internal controls over financial reporting. If we fail to remedy these material weaknesses, we may not be able to accurately report our financial condition or results of operations in the future.

Prior to the completion of this registration statement, we have been a private company with limited accounting personnel to adequately execute our accounting processes and limited supervisory resources with which to address our internal control over financial reporting. In connection with the preparation of our financial statements for the years ended December 31, 2025 and December 31, 2024, management identified material weaknesses in the design and operating effectiveness of our internal controls over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of our financial statements as of December 31, 2025, management and its independent registered public accounting firm identified material weaknesses in internal controls: (1) lack of effective controls related to the accounting for mining revenue, bitcoin held, and the related gains and losses, (2) lack of effective IT controls over user access reviews, administrative access, segregation of duties,  and change management in the our general ledger system; (3) lack of effective controls over the evaluation of goodwill impairment; and (4) lack of effective controls over the accounting for fixed assets held for use. 

We have not identified any material misstatements to our financial statements resulting from the material weaknesses described above. Nevertheless, we recognize that each of the material weaknesses described above could result in misstatements to financial statement accounts and disclosures that could result in a material misstatement to the annual or interim consolidated financial statements that may not be prevented or detected on a timely basis.

We are in the process of implementing a plan to remediate the material weaknesses. Our remediation plan includes implementing additional policies, procedures and controls, all of which have and will continue to cause us to incur additional costs. When we are satisfied that the internal control over financial reporting associated with the material weaknesses has been effectively designed and operated within our Company for a sufficient period of time, we will determine if we have remediated our material weaknesses. We have not been required to provide a management assessment of internal control over financial reporting under the rules and regulations of the SEC regarding compliance with Section 404(a) of the Sarbanes-Oxley Act (“Section 404(a)”). It is possible that if we had a Section 404(a) assessment, additional material weaknesses may have been identified. Additionally, our registered independent public accounting firm has not been engaged to perform an audit of our internal control over financial reporting.

In the future, it is possible that additional material weaknesses may be identified that we may be unable to remedy before the requisite deadline for those reports. Our ability to comply with the annual internal control over financial reporting requirements will depend on the effectiveness of our financial reporting and relevant information systems and controls across our Company. Any weaknesses or deficiencies or any failure to implement required new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our results of operations and cause us to fail to meet our financial reporting obligations or result in material misstatements in our consolidated financial statements, which could adversely affect our business and reduce our stock price.

If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

We have identified material weaknesses in our financial reporting. If we fail to remedy these material weaknesses, experience additional material weaknesses in the future or otherwise fail to continue to design, implement and maintain effective internal control over financial reporting, we may not be able to accurately report our financial condition or results of operations which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

As a result of becoming a public company, we will be required, under the rules and regulations of the SEC regarding compliance with Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting beginning with our second Annual Report on Form 10-K. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

To comply with the requirements of being a reporting company under the Exchange Act, including performing the evaluation needed to comply with Section 404, we will need to implement additional internal controls over financial reporting, including but not limited to controls over relevant information systems, and hire additional accounting and finance staff. This will require substantial additional professional fees and internal costs to expand our accounting and finance functions and significant management efforts. We have spent and expect to continue to spend significant time and resources designing, evaluating and testing our accounting procedures and internal controls. Prior to listing, we have never been required to test our internal control over financial reporting within a specified period. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.

If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to capital markets.

The registration and listing of our Class A common stock differ significantly from an underwritten initial public offering.

This listing is not an underwritten initial public offering of our Class A common stock. The registration and listing of our Class A common stock on Nasdaq differs from an underwritten initial public offering in several significant ways, which include the following:

Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation.

In addition to the potential market volatility in connection with our initial listing described immediately above, technology stocks have historically experienced high levels of volatility. The price of our Class A common stock also could be subject to wide fluctuations in response to the risk factors described in this prospectus and others beyond our control, including:

Furthermore, the stock market has recently experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies and financial services and technology companies in particular. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes, or international currency fluctuations, may negatively impact the market price of our Class A common stock. These fluctuations may be even more pronounced in the trading market for our Class A common stock shortly following the listing of our Class A common stock on Nasdaq as a result of the supply and demand forces described above. If the market price of our Class A common stock after our listing does not exceed the opening public price, you may not realize any return on your investment in us and may lose some or all of your investment. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business.

An active, liquid, and orderly market for our Class A common stock may not develop or be sustained. You may be unable to sell your shares of Class A common stock at or above the price you bought them for or for the value of the shares agreed upon by the creditors and debtors of the Celsius bankruptcy at the time the shares were issued.

We currently expect our Class A common stock to be listed and traded on Nasdaq. Prior to the listing of our Class A common stock on Nasdaq, there has been no public market for our Class A common stock and there has been a limited history of sales of shares of our Class A common stock in private transactions. The purchase price of our shares of Series A Preferred Stock and Warrants in the Private Placement, the only historical private transaction relating to our securities, may have little or no relation to the opening public price of shares of our Class A common stock on Nasdaq or the subsequent trading price of shares of our Class A common stock on Nasdaq. Moreover, consistent with Regulation M and other federal securities laws applicable to our listing, we have not consulted with Registered Stockholders or other existing stockholders regarding their desire or plans to sell shares in the public market following the listing or discussed with potential investors their intentions to buy our Class A common stock in the open market. While our Class A common stock may be sold after our listing of the Class A common stock on Nasdaq by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders (subject to the Lock-Up under the Securities Purchase Agreements), unlike an underwritten initial public offering, there can be no assurance that any Registered Stockholders or other existing stockholders will sell any of their shares of Class A common stock. As a result, there may initially be a lack of supply of, or demand for, Class A common stock on Nasdaq. In the case of a lack of supply of our Class A common stock, the trading price of our Class A common stock may rise to an unsustainable level. Further, institutional investors may be discouraged from purchasing our Class A common stock if they are unable to purchase a block of our Class A common stock in the open market due to a potential unwillingness of our existing stockholders to sell a sufficient amount of Class A common stock at the price offered by such institutional investors and the greater influence individual investors have in setting the trading price. If institutional investors are unable to purchase our Class A common stock, the market for our Class A common stock may be more volatile without the influence of long-term institutional investors holding significant amounts of our Class A common stock. Conversely, there can be no assurance that the Registered Stockholders and other existing stockholders will not sell all of their shares of Class A common stock, resulting in an oversupply of our Class A common stock on Nasdaq. As noted above, we may experience selling pressure from our existing stockholders as this listing process is the first opportunity any of our stockholders will have for liquidity in our shares of Class A common stock because the restrictions on transfer imposed in connection with the Plan as described under the heading “Description of Capital Stock—Common Stock—Transfer Restrictions” will expire and our stockholders are not subject to any contractual lock-ups other than the Lock-Up under the Securities Purchase Agreements. In the case of a lack of demand for our Class A common stock, the trading price of our Class A common stock could decline significantly and rapidly after the listing of our Class A common stock on Nasdaq. Therefore, an active, liquid, and orderly trading market for our Class A common stock may not initially develop or be sustained, which could significantly depress and result in significant volatility in the price of our Class A common stock. This could affect your ability to sell your shares of common stock. 

The public price of our shares of Class A common stock upon listing on Nasdaq may have little or no relationship to the historical sales prices of our securities in private transactions.

Prior to listing on Nasdaq, there has been no public market for our shares of Class A common stock. Our shares of Class A common stock have a limited history of sales in private transactions. Historical sale prices may have little or no relation to broader market demand for our shares of Class A common stock and thus the initial public price of our shares of Class A common stock on Nasdaq once trading begins (see “Sale Price History of Our Securities” for more information). As a result, you should not place undue reliance on these historical sales prices as they may differ materially from the opening public prices and subsequent public prices of our shares of Class A common stock on Nasdaq. For additional details about how the initial listing price on Nasdaq will be determined, see “Plan of Distribution.”

We are an emerging growth company and are able to take advantage of reduced disclosure requirements applicable to “emerging growth companies,” which could make our shares of Class A common stock less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the date of this listing; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules.

We expect that we will remain an emerging growth company for at least a couple of years but cannot retain our emerging growth company status indefinitely and will under current law no longer qualify as an emerging growth company no later than December 31, 2031. References herein to “emerging growth company” has the meaning associated with it in the JOBS Act.

For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

For as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations available to us as a result of that classification.

We currently do not intend to pay dividends on our Class A common stock.

We do not anticipate that we will pay any cash dividends on shares of our Class A common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend on results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

Our Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action, suit or proceeding brought on behalf of the Company; (b) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed or allegedly owed by, or other wrongdoing by, any director, officer, stockholder, employee or agent of the Company to the Company or the Company’s stockholders; (c) any action, suit or proceeding asserting a claim against the Company or any director, officer, stockholder, employee or agent of the Company arising pursuant to any provision of the DGCL, the amended and restated certificate of incorporation or the amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; (d) any action, suit or proceeding to interpret, apply, enforce or determine the validity of the amended and restated certificate of incorporation or the amended and restated bylaws; (e) any action asserting a claim against the Company or any director, officer, stockholder, employee or agent of the Company governed by the internal affairs doctrine; or (f) any other action, suit or proceeding asserting an “internal corporate claim” as defined in Section 115 of the DGCL.

Our amended and restated certificate of incorporation also provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by the DGCL, our amended and restated certificate of incorporation or our bylaws, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, there is uncertainty as to whether a court would enforce such an exclusive forum provision with respect to claims under the Securities Act.

Because the forum selection provision only applies to the extent permitted by law, the forum selection provision does not apply to any claim for which the federal courts have exclusive jurisdiction. In particular, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and therefore the forum selection provision does not apply to such suits.

We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. The provision may have the effect of discouraging lawsuits against our directors and officers.

This exclusive choice of forum provision in our amended and restated certificate of incorporation may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder finds favorable for disputes with us or any of our directors, officers or other employees, or could result in increased costs for a stockholder to bring a claim, particularly if the stockholder does not reside in or near Delaware, both of which may discourage such lawsuits against us and our directors, officers and employees. There is uncertainty as to the enforceability of exclusive forum provisions with respect to certain matters arising under the federal securities laws, and if a court were to find these provisions of our amended and restated certificate of incorporation or amended and restated bylaws, as amended, inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on our business, prospects, results of operations or financial condition. The exclusive forum provision in our amended and restated certificate of incorporation is limited to the extent permitted by law.

If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.

The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. We may not obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock could be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us publishes unfavorable research or reports or downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease, which could cause our stock price or trading volume to decline.

MARKET AND INDUSTRY DATA

This prospectus includes estimates regarding market and industry data, which are based on publicly available information, industry publications and surveys, reports from government agencies, reports by market research firms or other independent sources and our own estimates based on our management’s knowledge of and experience in the market sectors in which we compete.

In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate. While we believe the estimated market and industry data included in this prospectus is generally reliable, such information is inherently uncertain and imprecise. Market and industry data is subject to change and may be limited by the availability of raw data, the voluntary nature of the data gathering process and other limitations inherent in any statistical survey of such data. In addition, projections, assumptions and estimates of the future performance of the markets in which we operate are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Accordingly, you are cautioned not to place undue reliance on such market and industry data or any other such estimates.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

TRADEMARKS AND TRADE NAMES

This prospectus includes our trademarks and trade names, such as Ionic Digital, which are protected under applicable intellectual property laws and are our property. Solely for convenience, trademarks, service marks and trade names referred to in this prospectus may appear without the ^®, ™, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names. This prospectus may also contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

USE OF PROCEEDS

Registered Stockholders may elect to sell shares of our Class A common stock covered by this prospectus. All shares held by the Registered Stockholders may be freely sold upon effectiveness of this Registration Statement, subject to the Lock-Up under the Securities Purchase Agreements. To the extent any Registered Stockholder chooses to sell shares of our Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock.

DIVIDEND POLICY

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business, and therefore we do not anticipate paying any cash dividends in the foreseeable future.

Future cash dividends, if any, will be at the discretion of our Board, subject to applicable law, and will depend upon, among other things, our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors the Board may deem relevant.

CAPITALIZATION

The following table sets forth our actual cash and cash equivalents and capitalization as of March 31, 2026, as follows:

The pro forma information shown below is for illustrative purposes only. The information below should be read in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this prospectus, and with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company has not yet completed its accounting analysis of the Private Placement, including the final determination of the classification and measurement of the Series A Preferred Stock and the accounting for the conversion into Class A common stock. Accordingly, the pro forma adjustments reflected herein are based on management's preliminary estimates and are subject to revision as the Company's analysis is finalized. The actual amounts recorded in the Company's financial statements may differ from those presented, and such differences could be material.

As disclosed in “Prospectus Summary — Recent Developments,” the Company also sold Warrants as part of the Private Placement. The features of the warrants issued may create a warrant derivative liability that we would record in our financial statements. We have not yet finalized the accounting treatment for the issuance of such warrants. The stockholder's equity amount used to determine our pro forma capitalization shown in the table above does not give effect to such potentially material warrant derivative liabilities. Accordingly, the proceeds allocable to stockholder’s equity may be less than the amounts presented herein and such difference may be material.

In June 2026, we also issued 40,000 shares of Series Z Preferred Stock for an aggregate of $0.40 in proceeds. The shares of Series Z Preferred Stock have 1,000 votes per share of Series Z Preferred Stock, but do not have any economic rights with respect to dividends, liquidation or otherwise. The holder of the Series Z Preferred Stock has agreed that it will vote such stock in the same proportion as votes cast by holders of the Class A common stock on any matter submitted to stockholders at our 2026 annual meeting of stockholders. The shares of Series Z Preferred Stock are not included in the pro forma adjustments above due to immateriality. The shares of Series Z Preferred Stock were redeemed for $0.40 in the aggregate following the conclusion of our 2026 annual meeting of stockholders, which occurred on July 13, 2026. The Series Z Preferred Stock is intended to ensure the presence of a quorum to conduct an annual meeting of stockholders within the time period required by Delaware law.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with (a) our unaudited condensed consolidated financial statements and notes as of March 31, 2026 (Successor) and for the three month periods ended March 31, 2026 and 2025 (Successor) and (b) our audited consolidated financial statements and notes as of December 31, 2025 (Successor) and December 31, 2024 (Successor) and for the year ended December 31, 2025 (Successor), the eleven months ended December 31, 2024 (Successor) and one month ended January 31, 2024 (Predecessor), in each case appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to the Company’s plans and strategy for its business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Certain amounts may not foot due to rounding. 

In this section, references to “Ionic Digital” or the “Successor,” refer to Ionic Digital Inc., the Company that acquired substantially all of the assets and assumed certain liabilities from Celsius Mining LLC (the “Predecessor” or “Celsius Mining”) following the Chapter 11 bankruptcy filing of Celsius Network LLC and certain of its subsidiaries and affiliates, including the Predecessor (the “Debtors”). References to the “Company,” “we,” “us” and “our” refer to Ionic Digital for periods on or after January 31, 2024.

Overview

We are a digital infrastructure solutions and cryptocurrency mining company. We began as a pure-play cryptocurrency mining company when we were formed in January 2024 to acquire all of the cryptocurrency mining assets of Celsius Mining. From our inception, our core objective has been to monetize our portfolio of powered digital infrastructure assets. Historically, we have monetized these assets by efficiently mining bitcoin. More recently, we have sought to achieve this objective by primarily leasing our digital infrastructure assets to hyperscalers, enterprise customers and other businesses for high-performance computing (“HPC”) and artificial intelligence (“AI”) cloud infrastructure.  

In October 2025, we announced our inaugural participation in the HPC/AI sector with a 126-month “triple net” lease with Nscale Ward County LLC (together, with its affiliates, “Nscale”), a global hyperscaler engineered for sovereign-grade AI infrastructure at our Ward County property in West Texas. In February 2026, we amended the lease. We refer to the lease, as amended, as the “Nscale Agreement.” We received our first payment under the Nscale Agreement in November 2025, and monthly fixed lease payments will commence in August 2026, which represent estimated total contracted revenues of approximately $1.95 billion, increasing to a potential $2.6 billion under the provisions of the amendment. 

Entry into the Nscale Agreement is the culmination of a process we began in early 2025 to identify a strong counterparty and develop an attractive contract structure to better monetize our Ward County site. Although we began as a pure-play bitcoin mining operator, we have successfully demonstrated our ability to convert and optimize our infrastructure for use in the HPC/AI sector. We believe our agreement with Nscale represents a transformative transaction, significantly increasing the value of our company and accelerating our strategy to build a diversified digital infrastructure solutions platform with the flexibility to monetize our sites across data centers and other digital infrastructure applications, as market conditions evolve. Our strong balance sheet also gives us the ability to better monetize sites currently mining bitcoin, expand into other markets, and develop additional powered shell data centers. The combination of an existing cryptocurrency mining business, and the Nscale Agreement, provides us with a steady income stream that includes predictable, high-margin cash flows. We believe that those strengths, together with a strong balance sheet, should position us well as an emerging innovator at the intersection of energy, bitcoin mining, and advanced computing infrastructure. 

We are seeking to expand the energy capacity at the Ward County property to 700 MW, which we believe would advance the monetization of our owned powered digital infrastructure assets. In addition to the 234 MW currently leased to Nscale, the Nscale Agreement contractually obligates Nscale to lease an additional 89 MW, when such capacity becomes available, at the same price per MW as the current 234 MW. Since the expanded power capacity under the Nscale Agreement is subject to regulatory approval, we cannot guarantee that the power generation at our Ward County property will be expanded as currently contemplated, and there is no penalty under the Nscale Agreement if we are unable to provide Nscale with the additional 89 MW of capacity. However, we expect the Ward County property to energize the additional 89 MW during the second half of 2027.

At the current capacity of 234 MW and the increased capacity of 89 MW, our capital expenditures are currently expected to be approximately $40 million during 2026 and the first half of 2027. At the fully expanded capacity of 700 MW, our total capital expenditures are currently expected to be approximately $64 million incurred primarily during the last half of 2026 and the first half of 2027. We plan to fund these capital expenditures with cash on hand as well as with sales of our bitcoin held in treasury, as needed. We have granted Nscale a right of first refusal on additional capacity at the Ward County property, and we may also provide the expanded energy capacity to other AI, enterprise, or cloud infrastructure companies, or use that power capacity for our own cryptocurrency mining operations. 

Our cryptocurrency mining operation utilizes specialized computers, also known as “miners,” which use ASIC chips to solve complex cryptographic algorithms to support the bitcoin blockchain in a process known as “solving a block.” In exchange for solving the cryptographic problem required to create a new block on the bitcoin blockchain we receive block rewards, or compensation paid in bitcoin that is programmed into the bitcoin software and awarded to a miner, or a group of miners. Block rewards are fixed and the Bitcoin network is designed to reduce them periodically, approximately every four years, through halving. Most recently, in April 2024, the block reward was reduced from 6.25 to 3.125 bitcoin. The next halving event, which will reduce the block reward to 1.5625 bitcoin, is estimated to occur in April 2028.

Bitcoin miners also collect transaction fees for certain transactions they confirm. Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in the blockchain. Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid transactions as a means of collecting fees. Miners have historically accepted relatively low transaction fees, but transaction fees vary and it is difficult to predict what transaction fees will be in the future. Bitcoin miners also collect transaction fees for certain transactions they confirm.

We contribute our computing power, or hashrate, to a third-party mining pool in exchange for a proportionate share of the block rewards and transaction fees earned by the mining pool.

As of March 31, 2026, we have 112 MW available at our owned and leased sites. We acquired 15,000 refurbished miners during 2025 and, as of March 31, 2026, we owned approximately 120,600 miners with an aggregate hashrate capacity of approximately 12.2 EH/s. As of the date of this prospectus, none of our miners serve as collateral in any financing arrangement. 

After pivoting our Ward County facility to support digital infrastructure solutions, the volume of bitcoin mined has decreased in 2026. During the three months ended March 31, 2026, we mined 95.7 bitcoin, net of mining pool participation fees of 0.9 bitcoin and revenue share paid to our hosting partners of 0 bitcoin, an average of 1.1 net bitcoin mined per day. This net bitcoin mined equates to $7.4 million in cryptocurrency mining revenue during the three months ended March 31, 2026. We sold no bitcoin during this period, and as of March 31, 2026, we held a total of 2,815.6 bitcoin in treasury.

Costs of mining revenues primarily consist of energy and facilities management costs at our owned and leased sites. Operating costs for the three months ended March 31, 2026 were driven by (a) general and administrative expense; (b) changes in the fair value of our cryptocurrency held in treasury as the price of bitcoin dropped significantly in the first quarter of 2026. 

During the year ended December 31, 2025, after execution of the Company’s strategic transition from hosted sites to owned mining operations in West Texas, including Ward County, we mined 1,331.0 bitcoin, net of mining pool participation fees of 6.1 bitcoin and revenue share paid to our hosting partners of 6.4 bitcoin, which equates to an average of 3.6 net bitcoin mined per day. Bitcoin mined, net of pool participation fees, equated to $135.6 million in cryptocurrency mining revenue for the year ended December 31, 2025. During the same period, we sold 1,009 bitcoin at an average price of $100,547, generating aggregate gross proceeds of $101.5 million.

The components of costs of mining revenues were comparable to the first quarter of 2026 as the year ended December 31, 2025 marked a reduced reliance on our hosting partners, thereby reducing hosting fees. Operating costs for the year ended December 31, 2025 were driven by (a) impairment losses on long-lived assets resulting from the declining market conditions during the fourth quarter 2025; (b) impairment loss on goodwill allocated to the cryptocurrency mining business segment; (c) changes in the fair value of our cryptocurrency held in treasury, offset by the realized gain on sales of cryptocurrency made to fund operations during the period; and (d) depreciation expenses, which increased from the eleven months ended December 31, 2024 as the fourth building at Ward County was energized for cryptocurrency mining and began depreciating in January 2025.

Now, during 2026, we are continuing to diversify our revenue streams into other digital infrastructure solutions serving the HPC/AI sector. See “Business—Properties— Ward County.” We took on no debt to accomplish these strategic initiatives and during the first quarter of 2026 recognized $44.0 million in revenue from our digital infrastructure solutions business.

Our future financial operating strategy is to prioritize stable, contracted cash flows from our digital infrastructure operations while continuing to generate revenue from bitcoin mining for as long as it remains profitable. Our existing mining assets in Midland will continue to mine bitcoin for as long as such operations remain profitable, while we commence work to develop these locations into HPC/AI facilities. We will opportunistically liquidate our bitcoin holdings to fund capital expenditures, including the expansion of our Ward County property and the development of our Midland sites for HPC/AI use. We view our bitcoin treasury principally as a source of funding flexibility, and we retain full discretion over the timing and amount of any liquidation. We anticipate using liquidity generated by our operations and bitcoin treasury in excess of working capital requirements to advance our growth strategy, which includes expanding contracted capacity at our existing sites, developing additional powered shell and turnkey data center capacity, and pursuing site acquisition opportunities.

Trends and Key Factors Affecting Performance 

Ability to Access Power Capacity 

Increases in Bitcoin network hashrate drive greater demand for additional miners. Additional miners require additional power capacity that can be difficult to source at cost-effective prices or within locations that are favorable to bitcoin mining. We aim to continue to leverage our existing relationships and develop new relationships within the energy industry to secure low-cost power capacity. 

Energy Costs

Energy costs are the most significant driver of the profitability of our mining business as well as digital infrastructure solutions and can be highly volatile. Network difficulty heavily impacts the amount of energy utilized to earn a bitcoin. We manage our cost of electricity through participation in various demand response programs, power purchase agreements, and curtailment of miners when electricity prices make it unprofitable to mine bitcoin. The Predecessor entered into energy derivatives contracts, which expired in May 2024, and we may do so in the future as well. Geopolitical and macroeconomic factors, such as overseas military or economic conflict between states, can adversely affect electricity costs by raising the cost of power generation inputs such as natural gas. Other events out of our control can also impact electricity costs and availability. In certain power markets, financial hedging can be employed to protect buyers from the financial impact of significant increases in power prices.

Electricity costs may be adversely affected by macroeconomic or geopolitical events. For example, Russia’s invasion of Ukraine in February 2022 exerted pressure on the global energy market, particularly Europe’s natural gas supply. Higher liquid natural gas import needs in Europe previously resulted in increased volatility and worldwide supply tensions. The conflict added further pressure to supply chain disruptions and likely supported rising inflation through higher commodity prices. The U.S. experienced elevated electricity pricing possibly due to this conflict, although we have no, and do not intend to have any, direct operations in Russia or Ukraine. The current conflict in Iran has also affected global energy and transportation markets, in particular, the volatility of oil prices due to attacks on infrastructure and blockages of the Strait of Hormuz.

Our energy costs at our owned and leased sites totaled $2.3 million for the three months ended March 31, 2026, compared to $13.3 million for the three months ended March 31, 2025. The decrease in energy cost was due to the repurposing of Ward County facility for digital infrastructure solutions during the fourth quarter of 2025, resulting in a decline of the deployed energy capacity at our owned and leased cryptocurrency mining sites to approximately 87 MW.

Our energy costs at our owned and leased sites totaled $53.6 million for the year ended December 31, 2025 (Successor), compared to $29.1 million for the eleven months ended December 31, 2024 (Successor), and $2.5 million for the one month ended January 31, 2024 (Predecessor). The increase in energy costs was due to an increase in the number of miners that were hashing throughout 2025. Of the miners acquired from the Predecessor on January 31, 2024, approximately 27,200 miners were deployed and actively hashing at our owned and leased sites at that time, which had a capacity of approximately 87 MW. After the final building at the Ward County facility came online in January 2025, and prior to the decommissioning of the Ward County facility, we had total energy capacity of approximately 321 MW at our owned and leased sites. As a result of the decommissioning of the owned mining at Ward County facility during the fourth quarter of 2025, the usable capacity at our owned and leased sites was reduced to approximately 87 MW deployed for cryptocurrency mining operations. 

During all periods, we also utilized hosting service providers, for which energy costs are included within the total hosting fees. Both energy costs and hosting fees are reported as Costs of mining revenues, exclusive of depreciation in the Consolidated Statements of Operations.

Bitcoin Market Price

The prices of cryptocurrency assets, including bitcoin, have historically experienced substantial volatility. Changes in the market price of bitcoin may have little or no correlation to identifiable market forces and may be subject to rapidly changing investor sentiment. Bitcoin may be valued based on various factors, including its acceptance as a means of exchange by consumers and producers, scarcity, market demand and media reporting.

As we continue to shift our business to leasing digital infrastructure assets, we anticipate that our primary operating revenues will be derived from non-mining activities denominated in U.S. dollars. As our Midland sites are developed and monetized for HPC/AI use, we would expect our bitcoin mining operations — and the bitcoin we generate from those operations — to decline over time. Accordingly, we view our existing bitcoin treasury as a capital allocation asset to be managed and deployed in support of our broader growth strategy, including potential site acquisitions and development, rather than as a long-term balance sheet holding to be indefinitely accumulated.

As a result of the volatility in the price of bitcoin, the effective tax rate of 55.4% for the three months ended March 31, 2026 differed significantly from the U.S. federal statutory rate of 21%, primarily due to the establishment during the quarter of a valuation allowance against the deferred tax asset associated with unrealized losses on the Company's cryptocurrency holdings. As the Company transitions away from holding cryptocurrency on its balance sheet, the Company expects its exposure to future unrealized cryptocurrency losses and associated additional valuation allowances, and a resulting variance from the U.S. federal statutory rate of 21% due to this exposure, to diminish. See Note 12 to the condensed consolidated financial statements included elsewhere in this prospectus for additional information.

Halving

Changes to the quantity of bitcoin rewarded per block could directly impact our operating results. The Bitcoin network is subject to periodic scheduled changes in the quantity of bitcoin rewarded per block, known as the halving (“Halving”). Most recently, on April 19, 2024, the block reward was reduced from 6.25 to 3.125 bitcoin. The next Halving event, which will reduce the block reward to 1.5625 bitcoin per block, is estimated to occur in April 2028. This Halving process will repeat until the total amount of bitcoin rewards issued reaches 21 million and the supply of new bitcoin is exhausted, which is presently expected to occur around 2140. Potential future Halving will decrease the amount of bitcoin rewards that we will receive for the block solved, and there is no guarantee the price of bitcoin will adjust accordingly.

Network Difficulty

Additional mining machines deployed onto the Bitcoin network by any participant increase the network hashrate. Increased network hashrate reduces the time spent mining new blocks. To keep the time interval between new blocks fixed at approximately 10 minutes, the Bitcoin network adjusts its “network difficulty” every 2,016 blocks (or roughly every two weeks) such that more hashes are needed to mine a new block. Difficulty is often denoted as the relative difficulty with respect to the genesis block, which requires approximately 2^32 hashes. Changes in network difficulty can adversely affect our mining revenue and margins going forward if the amount of hash time to mine a new block is increased.

Ability to Source Additional Miners

Our mining business will be directly impacted by our ability to increase our hashrate and our resulting share of network rewards. Our ability to increase our hashrate depends on purchasing or renting additional miners which are competitive, at cost-effective prices and lead times.

Ability to Access Capital Markets

Bitcoin mining is highly capital intensive. Our ability to scale infrastructure and expand our fleet of miners may depend on our ability to access the capital markets.

Demand for Digital Infrastructure Solutions

The planned growth of our digital infrastructure solutions business, through increased investment in HPC/AI infrastructure over the next several years, should gradually reduce our overall exposure to volatility in the spot price of bitcoin as digital infrastructure solutions begins to account for a larger percentage of our financial results. The digital infrastructure solutions business is characterized by implementation of long-term contracts with customers spanning several years and terms and conditions resulting in stable, predictable revenue and cash flows over the contract period.

Our Competition and Customers

Digital asset mining is increasingly dominated by large-scale industrial operators and, in some cases, sovereign nation-states with substantial resources. Competition spans hardware procurement, capital access, low-cost power, and high-power site development. While sector-wide transparency remains limited, available data indicates that network hashrate has continued to rise as both new entrants and existing competitors deploy additional capacity. We believe our mining fleet and low-cost power portfolio position us competitively as the industry matures.

In addition to factors underlying our mining business growth and profitability, the success of our digital infrastructure solutions business greatly depends on our ability to retain and develop opportunities with our existing customer, to secure additional infrastructure, and to attract new customers. In our digital infrastructure solutions business, we compete with data center REITs, developers, hyperscalers, and other bitcoin miners with facilities suitable for HPC workloads, primarily for high-power sites and the capital to develop them. We believe our operational track record and development expertise position us to effectively capture the strong and growing demand for high-power data center capacity.

Cost to Earn One Bitcoin

Our profitability in bitcoin mining was, and will continue to be, heavily dependent upon our cost to earn one bitcoin, which we calculate as Cost of mining revenues, exclusive of depreciation as reported in the Consolidated Statement of Operations, divided by the number of bitcoin earned in the period. Management believes that the cost to earn a bitcoin is a key indicator of gross profitability.

The following table provides details regarding the productivity and related costs at our owned and leased sites during the periods presented:

Energy costs are the most significant component of our cost to earn one bitcoin at owned and leased sites and are primarily driven by the number of miners deployed, miner uptime, and the underlying price of electricity. At our owned and leased sites, energy costs incurred represented 44.1% of cryptocurrency mining revenue earned at those sites during the three months ended March 31, 2026, compared with 44.7% during the three months ended March 31, 2025. The average energy cost across our owned and leased locations was $0.021 per kilowatt-hour during the three months ended March 31, 2026, compared with $0.033 per kWh during the three months ended March 31, 2025.

The following table provides details regarding the productivity and related costs at our owned and leased facilities during the periods presented: 

Energy costs are the most significant component of our cost to earn one bitcoin at owned and leased sites and are primarily driven by the number of miners deployed, miner uptime, and the underlying price of electricity. At our owned and leased sites, energy costs incurred represented 51.1% of cryptocurrency mining revenue earned at those sites during the year ended December 31, 2025 (Successor), compared with 43.2% during the eleven months ended December 31, 2024 (Successor), and 39.5% during the one month ended January 31, 2024 (Predecessor). The average energy cost across our owned and leased locations was $0.036 per kWh during the year ended December 31, 2025 (Successor), compared with $0.036 per kWh during the eleven months ended December 31, 2024 (Successor) and $0.046 per kWh during the one month ended January 31, 2024 (Predecessor), respectively.

For our hosted locations, the largest component of direct costs of mining is the operating fees we pay to the hosting facility. As with our owned and leased sites, energy costs are the largest component of the hosting fees. We also pay to each hosting partner a revenue share amount, whether in bitcoin or in U.S. dollars, which fluctuates based on our production of bitcoin at each respective facility. For the three months ended March 31, 2026, the hosting fees and revenue share expense was 85.2% of cryptocurrency mining revenues earned at our hosted sites. Hosting fees and revenue share expense combined were 83.6% of cryptocurrency mining revenues during the three months ended March 31, 2025.

The Company and its Predecessor also had bitcoin mining operations at hosted facilities during the periods presented. The Successor terminated the hosting agreement with USMIO Alpha LLC, a wholly-owned subsidiary of Hut 8, in November 2024, and terminated its hosting agreement with EZ Blockchain in May 2025. As of December 31, 2025, the Company’s only remaining hosted bitcoin operations are with GXD in Oklahoma, the contract for which was terminated in the first quarter of 2026. The table below summarizes operating statistics for our hosted bitcoin mining sites during the periods presented.

For our hosted locations, the largest component of direct costs of mining is the operating fees we pay to the hosting facility. As with our owned and leased sites, energy costs are the largest component of the hosting fees. We also pay to each hosting partner a revenue share amount, whether in bitcoin or in U.S. dollars, which fluctuates based on our production of bitcoin at each respective facility. For the year ended December 31, 2025 (Successor), the hosting fees and revenue share expense was 82.0% of cryptocurrency mining revenues earned at our hosted sites. Hosting fees and revenue share expense combined were 72.0% of cryptocurrency mining revenues during the eleven months ended December 31, 2024 (Successor) and 74.3% of cryptocurrency mining revenue for the one month ended January 31, 2024 (Predecessor).

The table below describes the average cost to earn one bitcoin for the three months ended March 31, 2026 and 2025, and the total energy usage and cost per each kWh utilized within both our owned, leased, and hosted facilities.

The average cost to earn one bitcoin excludes depreciation expense, a non-cash expense that we do not consider in determining the economical feasibility of operating our mining equipment. Depreciation expense reflects historical expenditures in mining assets rather than providing a current or future indicator of cash flows. As a result, we exclude depreciation of past capital investments in our historical or forecasted breakeven analysis. 

If depreciation costs of our mining equipment were considered, the average cost to earn one bitcoin would increase to $93,330 for the three months ended March 31, 2026 compared with $82,703 for the three months ended March 31, 2025.

The table below describes the average cost to earn one bitcoin for the year ended December 31, 2025 (Successor), eleven months ended December 31, 2024 (Successor) and the one month ended January 31, 2024 (Predecessor) and the total energy usage and cost per each kWh utilized within both our owned, leased, and hosted facilities. 

The average cost to earn one bitcoin excludes depreciation expense, a non-cash expense that we do not consider in determining the economical feasibility of operating our mining equipment. Depreciation expense reflects historical expenditures in mining assets rather than providing a current or future indicator of cash flows. As a result, we exclude depreciation of past capital investments in our historical or forecasted breakeven analysis.

If depreciation costs of our mining equipment were considered, the average cost to earn one bitcoin would increase to $99,540 for the year ended December 31, 2025, compared with $59,021 for the eleven months ended December 31, 2024. If depreciation costs of the Predecessor’s mining equipment were considered for the one month ended January 31, 2024, the average cost to earn one bitcoin would increase to $42,831.

Key Operating and Financial Indicators

In addition to our US GAAP financial results, we use Adjusted gross profit and Adjusted EBITDA, as well as the following key operating indicators to evaluate the business, identify trends and make strategic decisions.

The following table presents the Company’s key operating indicators for the three months ended March 31, 2026 and 2025. While Net income (loss) is the primary financial measure that management uses to assess the Company’s performance, we also assess performance using Adjusted gross profit and Adjusted EBITDA, two non-GAAP measures. For the definitions of Adjusted gross profit and Adjusted EBITDA and reconciliations to the Company’s most directly comparable financial measures calculated and presented in accordance with GAAP, see “—Adjusted gross profit” and “—Adjusted EBITDA” below.

We also consider the following non-financial metrics in assessing the productivity and efficiency of our cryptocurrency mining operations:  

The Company’s key operating indicators for the year ended December 31, 2025 (Successor), the eleven months ended December 31, 2024 (Successor), and the one month ended January 31, 2024 (Predecessor), including two non-GAAP measures of Adjusted Gross Profit and Adjusted EBITDA, are presented in the following table. 

We also consider the following non-financial metrics in assessing the productivity and efficiency of our cryptocurrency mining operations:  

Hashrate

We operate mining hardware, or “miners,” which produce “hash” computations to attempt to solve a new block in the bitcoin blockchain. Hash computations are measured in “hashrate” or “hashes per second.”

“Total hashrate” is the combined hashrate of all miners we owned during the final month of the periods presented based on miners’ specifications, including both miners deployed and miners in storage. “Hashrate contributed” reflects the average actual hashrate generated by our miners and contributed to a mining pool during the final month of the periods presented. Actual hashrate generated will often be less due to curtailment or maintenance downtime.

“Network hashrate” is the total hashrate or computing power contributed to the Bitcoin network. Mining pools combine the hashrate for numerous miners across the industry to increase the chances of solving a block on the bitcoin blockchain. The greater the share of a mining pool’s hashrate compared to the rest of the network, the greater the probability of success that the mining pool solves a new block and earns the bitcoin reward. We currently utilize a mining pool that pays us bitcoin rewards utilizing a Full-Pay-Per-Share payout model, where miners receive a fixed payout of block rewards and transaction fees based on the hashrate they contribute to the mining pool, regardless of whether the pool successfully mines a block. While the Network hashrate does not directly influence the success of our mining efforts (see “Business—Overview of Bitcoin and the Bitcoin Mining Industry—Hashrate and Difficulty”) management considers it, relative to our total hashrate, a very strong indicator of the expected results of our mining efforts.

Bitcoin earned

Our management views total bitcoin earned as a key metric for our cryptocurrency mining business. Trends in total bitcoin earned were previously, and will continue to be, impacted by our ability to deploy additional miners, and by our ability to maintain high miner uptime and efficiency. Management monitors this metric over monthly and quarterly periods. Across all of our owned, leased, and hosted sites, we earned 96 bitcoin and 440 bitcoin, net of pool participation fees, during the three months ended March 31, 2026 and 2025.

Across all of our owned, leased, and hosted sites, we earned 1,337 bitcoin, 2,075 bitcoin, and 358 bitcoin, net of pool participation fees, during the year ended December 31, 2025, the eleven months ended December 31, 2024, and the one month ended January 31, 2024, respectively. These values represent the total bitcoin earned before hosting fees. Bitcoin earned each quarter is summarized in the table below.

Net income (loss) (Successor)

For the three months ended March 31, 2026, the Company recorded a net loss of $13.0 million. During the period, we recognized $44.0 million in digital infrastructure leasing revenue related to our Ward County facility, the repurposing of which has significantly reduced cryptocurrency mining revenue by approximately 82.0% to $7.4 million, as compared to the three months ended March 31, 2025. Such digital infrastructure leasing revenue represents 14.4% of revenue earned during the three months ended March 31, 2026. Revenue was offset by changes to certain operating factors as compared to the prior three months ended March 31, 2025 that are driving the net loss in the first quarter of 2026, including (a) a decline in the fair value of bitcoin during the period, which resulted in a $53.3 million loss on the fair value of bitcoin, and (b) a $9.1 million increase in general and administrative expenses attributable primarily to the repurposing of the Ward County facility as well as the expansion of the Company’s executive team. These additional expenses were offset by a decrease of 77.8% in the cost of mining revenue to $5.6 million, driven by the consolidation of the Company’s cryptocurrency mining operations, as well as a $10.9 million reduction in depreciation expense resulting from the 2025 impairment of long-lived cryptocurrency mining assets.

In comparison, for the three months ended March 31, 2025, the Company recorded a net loss of $28.0 million. Cryptocurrency mining revenue of $41.1 million comprised 100% of revenue earned during the three months ended March 31, 2025 and was offset by $25.2 million costs of mining revenue, $16.5 million depreciation expense, a $45.4 million decline in the fair value of bitcoin. In addition, the Company recognized a gain of $17.6 million on the sale of bitcoin during the first quarter of 2025, which was used to fund the cryptocurrency mining operations.

For the year ended December 31, 2025, the Company recorded a net loss of $247.7 million. Cryptocurrency mining revenue comprised 95.9% of revenue earned during the year ended December 31, 2025 and was offset by numerous changes to operating factors as compared to the prior eleven months ended December 31, 2024 that are driving the net loss in 2025, including (a) a $24.3 million increase in depreciation expense resulting primarily from the energization of the final building at the Ward County facility in January 2025; (b) a decline in the fair value of bitcoin during the fourth quarter of 2025, which drove the $66.8 million loss on the fair value of bitcoin. This sustained downturn in the value of bitcoin during the fourth quarter of 2025 prompted management to evaluate the recoverability of its long-lived tangible and intangible assets as of December 31, 2025, which resulted in the recognition of an impairment loss of $150.3 million on the long-lived assets used in our mining operations, as well as a $68.2 million impairment of the goodwill allocated to our cryptocurrency mining segment. In addition, we recorded a $10.2 million realized loss on the disposal of property and equipment resulting from the sale of mining equipment previously housed at our site hosted by EZB, assets acquired from Celsius Mining determined not to be usable in the Company’s future operations, and scrap from the decommissioning of cryptocurrency mining activities at our Ward County facility. Offsetting these significant losses is an increase in the number of bitcoin sold to fund operations during the year ended December 31, 2025, which resulted in $47.4 million gains on the sale of cryptocurrency, a $41.9 million increase from the eleven months ended December 31, 2024. 

In comparison, net income totaled $40.1 million for the eleven months ended December 31, 2024 and was comprised primarily of bitcoin earned through mining, offset by fees paid to hosting service providers, project management fees pursuant to the Mining MSA (see “—Company History” below), and energy and labor costs at owned and leased facilities. The significant increase in the fair value of bitcoin during the eleven months ended December 31, 2024 resulted in a $71.7 million unrealized gain on the fair value of bitcoin we held. We also realized a gain on our investments in available-for-sale debt securities during the period totaling $2.4 million. See “—Results of Operations” below for a discussion of the underlying drivers of net income (loss) for the year ended December 31, 2025 and the eleven months ended December 31, 2024.

Net (loss) (Predecessor) 

For the one month ended January 31, 2024, the Predecessor recognized a net loss of $10.4 million, which consisted of $15.4 million of revenue from net bitcoin earned through mining, offset by $9.7 million costs of mining revenue, such as energy costs and hosting fees. The net loss for the period was primarily driven by $5.4 million in reorganization costs allocated from the former affiliate companies, as well as a $6.2 million depreciation expense and a $1.8 million loss on the write-off of miners lost in transit between facilities. See “—Results of Operations” below for a full discussion of the underlying drivers of net loss for the one month ended January 31, 2024.

Adjusted gross profit

Adjusted gross profit is a non-GAAP financial measure. We define Adjusted gross profit as gross profit exclusive of depreciation. We rely on Adjusted gross profit to evaluate our business, measure our performance, and make strategic decisions. It is used by our Chief Operating Decision Maker (“CODM”) when making decisions regarding the allocation of resources to operating segments.

We believe that the presentation of this non-GAAP financial measure will provide useful information to investors and analysts in assessing the Company’s financial performance by excluding non-cash depreciation expense which is representative of historical investments and which we do not believe is indicative of our current operating performance. Gross profit is the GAAP measure most directly comparable to Adjusted gross profit. Our non-GAAP financial measures should not be considered as an alternative to the most directly comparable GAAP financial measures. You are encouraged to evaluate each of these adjustments and the reasons our management considers them appropriate for supplemental analysis.

The following tables provide a reconciliation of Gross Profit to Adjusted Gross Profit:

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, further adjusted by certain non-recurring or infrequent costs and income, including the unrealized gain or loss on energy derivatives and other investments, one-time gains or losses on certain litigation settlements, share-based compensation, impairment on intangible and long-lived assets, and other infrequent costs incurred, as detailed in the table below. We rely on Adjusted EBITDA to evaluate our business, measure our performance, and make strategic decisions. Our management team uses Adjusted EBITDA to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation) and other items (such as one-time costs) that impact the comparability of financial results from period to period. We present Adjusted EBITDA because we believe it provides useful information regarding the factors and trends affecting its business in addition to measures calculated under GAAP.

We believe that the presentation of this non-GAAP financial measure will provide useful information to investors and analysts in assessing the Company’s historical financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of its core operating performance. Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. Our non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons our management considers them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. We may also incur unusual or non-recurring items in the future that may affect Adjusted EBITDA, and our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of the Predecessor’s historical results as reported under GAAP. Adjusted EBITDA may be defined differently by other companies in our industry and our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

The following tables provide a reconciliation of Net income (loss) to Adjusted EBITDA:

Results of Operations

The results of operations in this section describe the results of the Company and its Predecessor, for the periods indicated herein. At the close of business on January 31, 2024, the Company acquired substantially all the assets and assumed certain liabilities of Celsius Mining. The Company accounted for the Business Combination in accordance with FASB ASC Topic 805, Business Combinations. Ionic Digital was determined to be the legal and accounting acquirer and Celsius Mining was deemed to be the accounting predecessor. The Business Combination was accounted for using the acquisition method of accounting and the Successor’s financial statements reflect a new basis of accounting based on the fair value of the net assets acquired. As a result, the Company’s financial information is separated into two distinct periods to indicate the different ownership and accounting bases between the periods presented: the year ended December 31, 2025 (Successor), the eleven months ended December 31, 2024 (Successor), and the one month ended January 31, 2024 (Predecessor), which is the period prior to consummation of the Business Combination.

Comparison of the three months ended March 31, 2026 and 2025

The following tables summarize the Successor’s results of operations for the three months ended March 31, 2026 and 2025:

Comparison of the year ended December 31, 2025 (Successor), the eleven months ended December 31, 2024 (Successor) and the one month ended January 31, 2024 (Predecessor)

The following tables summarize the Successor’s results of operations for the year ended December 31, 2025, the eleven months ended December 31, 2024, and the Predecessor’s results of operations for the one month ended January 31, 2024: