BTCS 10-K & 10-Q changes, risk factors and insider trading
BTCS Inc. · Nasdaq · Finance Services · CIK 1436229 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Validator Node Operations (“NodeOps”)”
New heading “Decentralized Finance Operations (“Imperium”)”
New heading “Capital Strategy and Operations”
New heading “Digital Asset Security and Custody”
New heading “Scaling Blockchain Infrastructure Operations”
New heading “Expansion of Imperium and DeFi Activities”
New heading “Capital Formation and Use of Digital Assets”
New heading “Long-Term Strategic Objectives”
New heading “INDUSTRY AND MARKET OVERVIEW (DIGITAL ASSETS AND BLOCKCHAIN TECHNOLOGIES)”
New heading “Overview of Blockchain Networks and Digital Assets”
New heading “Proof-of-Stake and Network Infrastructure Participants”
New heading “Block Building and Transaction Execution”
New heading “Decentralized Finance Ecosystems”
New heading “Market Trends and Industry Dynamics”
New heading “Validator Node Operations Competition”
New heading “Block Building Competition”
New heading “Decentralized Finance Competition”
New heading “Competitive Position”
Removed heading “INDUSTRY AND MARKET OVERVIEW (CRYPTO ASSET AND BLOCKCHAIN TECHNOLOGIES)”
Removed heading “Blockchain and Cryptocurrencies”
Removed heading “Cryptocurrencies and Proof-of-Stake Ecosystems”
Removed heading “Advantages and Risks of Crypto Assets”
Removed heading “Current State of the Blockchain Industry and Market Outlook”
Removed heading “Government Oversight”
Removed heading “Enhancing the Technology Stack to Match or Surpass Competitors”
Removed heading “Boosting Order Flow to Builder+”
Removed heading “Increasing Control Over Block Space”
Largest changes
“In addition to the securities laws and investment company considerations, as our business model and operations continue to evolve, including, Builder+, and ChainQ, we are subject to and must comply with an expanding framework of laws and regulations, including comprehensive data privacy laws (such as the American Data Privacy Protection Act, as amended), enhanced cybersecurity requirements, consumer protection standards, and evolving financial services regulations. …”see in full comparison
“Decentralized finance refers to a category of blockchain-based applications that provide financial services through smart contracts rather than centralized intermediaries. DeFi protocols enable activities such as lending, borrowing, trading, liquidity provision, and revenue generation using digital assets. Participants in DeFi ecosystems may earn variable returns based on protocol utilization, market conditions, and risk parameters defined by the underlying smart contracts.”see in full comparison
“Imperium is designed to complement BTCS’s blockchain infrastructure activities by enabling more flexible and capital-efficient deployment of digital assets. In contrast to traditional staking, which is subject to constraints by protocol-defined reward structures and lock-up requirements, DeFi participation allows the Company to dynamically allocate assets across protocols and strategies based on prevailing market conditions, risk considerations, and liquidity needs.”see in full comparison
“In its validator node operations, BTCS competes with other independent node operators, infrastructure providers, and institutional participants that operate validator infrastructure on the Ethereum network. Competitive factors in this area include technical reliability, operational uptime, security practices, and cost efficiency. Because validator rewards are largely protocol-defined, competition is primarily driven by operational performance rather than pricing discretion. …”see in full comparison
Full comparison: every changed paragraph (151)
BTCS Inc. (“BTCS” or the “Company”) is a U.S.-based, Nasdaq-listed blockchain technology company focused on revenue generation through blockchain infrastructure and decentralized finance (“DeFi”) activities, primarily on the Ethereum network. BTCS operates as an active participant in the Ethereum ecosystem, generating digital asset denominated on-chain revenues through its operations.
The Company’s business model is centered on providing core blockchain infrastructure services, participating in transaction validation and block construction, and engaging in decentralized finance activities to generate revenue. While BTCS maintains significant Ethereum (“ETH”) holdings, the Company does not operate as a passive digital asset holder. Instead, ETH serves as an operating asset that supports revenue generation across the Company’s business lines.
BTCS
Inc. (“BTCS” or the “Company”) is a Nasdaq-listed blockchain technology company focused on advancing blockchain
infrastructure. Since 2014, BTCS has established itself as one of the only publicly traded U.S. companies with a primary emphasis on
proof-of-stake (“PoS”) and delegated proof-of-stake (“dPoS”) blockchain networks. The Company’s goal is
to drive scalable revenue by leveraging its robust blockchain infrastructure to develop innovative business lines that complement and
enhance its core operations.
BTCS’s
primary activities include Ethereum block-building (“Builder+”) and validator node operations (“NodeOps”) across
PoS and dPoS networks. The Company generates native token rewards by staking the Company’s crypto assets (also referred to “cryptocurrencies”,
“crypto”, “digital assets”, or “tokens”) to validator nodes (“nodes”) operated by BTCS
and other third-parties. By leveraging our blockchain infrastructure, we aim to drive scalable revenue growth and strengthen our leadership
in the blockchain ecosystem.
OURBusiness
BUSINESSLines
BTCS operates through three primary, complementary business lines:
Validator Node Operations (“NodeOps”)
BTCS operates validator nodes on the Ethereum network as a validator (“Validator”). Validator nodes perform validation and consensus-related activities (“attestation”) as well as block proposal functions that contribute to network security and block finalization. In exchange, BTCS earns ETH-denominated staking revenue, which include protocol-defined rewards and execution layer transaction fees. Validator operations represent a foundational component of the Company’s blockchain infrastructure activities.
Blockchain
Infrastructure
BTCS’s
blockchain infrastructure operations underpin its participation in blockchain network consensus mechanisms and security. The Company
operates a network of cloud-based validator nodes that perform essential roles in PoS and dPoS blockchain ecosystems. Validator nodes
validate transactions (“attestation”) and propose new blocks for inclusion in the blockchain (“block proposal”).
In return, BTCS earns native token rewards through these activities. These rewards are generated by staking (or “delegating”)
BTCS’s own crypto assets and from supporting third-party delegations to BTCS nodes.
BTCS’s
infrastructure currently supports a diverse range of PoS and dPoS blockchains, including Ethereum, Cosmos, Kava, Akash, Avalanche, and
others as of December 31, 2024. The flexibility of BTCS’s validator operations positions the Company to adapt to emerging opportunities
within the blockchain sector.
We
primarily earn crypto assets through the operation of our non-custodial validator nodes, with the intention of enhancing our production
of crypto assets in various blockchain networks. While we have no formal policy, our primary objective is to hold and re-stake these
earned crypto assets for network security and additional production opportunities, we may, on occasion, sell a portion for cash to meet
operational needs. Our primary cryptocurrency exchange is Kraken; however, we also have basic accounts with multiple alternative cryptocurrency
exchanges and OTC desks. As of the filing date, we have no exclusive agreements with any cryptocurrency exchanges, nor do we maintain
margin or other type accounts that could create additional liability for the Company. Our approach to our crypto asset holdings remains
adaptable to evolving market conditions and operational requirements.
Details
of the Company’s crypto asset held can be found under “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.”
EthereumBlock
Block Building – (“Builder+”)
Through its Builder+ operations, BTCS participates in the blockspace value chain by operating proprietary block builders (“Builders”) that construct optimized transaction blocks for submission to Validators. Builder+ revenues are derived from the fees earned when BTCS-constructed blocks are successfully proposed on-chain. In connection with these activities, the Company makes payments to the block proposing validator (“Validator Payments”) to external validators as part of the block-proposal process in order to secure block inclusion on the network. Validator Payments are made in digital assets and represent a direct cost associated with the Company’s block-building operations.
Builder+ has become an increasingly significant contributor to the Company’s revenues as BTCS has expanded private order flow integrations, enhanced infrastructure efficiency, and increased participation across Ethereum blockspace markets.
Decentralized Finance Operations (“Imperium”)
In 2025, BTCS launched Imperium, a business line focused on deploying digital assets into decentralized finance protocols as a liquidity provider and market participant. Through Imperium, the Company deploys ETH and stablecoins into smart contract-based protocols that facilitate decentralized lending, borrowing, liquidity provision, and other on-chain financial activities. Revenues earned through Imperium are variable and depend on protocol utilization, market conditions, and the performance of deployed assets.
Imperium is designed to complement BTCS’s blockchain infrastructure activities by enabling more flexible and capital-efficient deployment of digital assets. In contrast to traditional staking, which is subject to constraints by protocol-defined reward structures and lock-up requirements, DeFi participation allows the Company to dynamically allocate assets across protocols and strategies based on prevailing market conditions, risk considerations, and liquidity needs.
NodeOps and Builder+ collectively comprise the Company’s blockchain infrastructure activities, while Imperium represents a distinct DeFi operating segment. Revenues from blockchain infrastructure activities and DeFi activities are presented separately in the Company’s financial statements.
BTCS’s
Ethereum block-building operations, launched under the Builder+ brand in 2024, represent a core pillar of the Company’s blockchain
infrastructure strategy. Block-building is a critical function within Ethereum’s proof-of-stake ecosystem, where Builders create
and submit blocks to Validators for proposal, validation, and inclusion in the blockchain. A Builder selects and organizes transactions
from Ethereum’s transaction pool, known as the mempool, strategically assembling blocks to maximize the value of included transactions.
Builders compete to purchase block space and have their blocks selected by Validators, who propose them to the network for consensus,
resulting in the block’s verification and addition to the blockchain.
Builder+
optimizes this process by leveraging advanced algorithms to construct high-value blocks. By analyzing the mempool, Builder+ identifies
transactions with the highest gas fees and assembles them into blocks designed to maximize gross gas fee revenue. Builder+’s logic
also aims to minimize the costs to acquire block space (“Validator Payments”) required to secure block inclusion, ensuring
an efficient and scalable approach. This has positioned Builder+ as a significant driver of BTCS’s growth, enabling the Company
to capture value from Ethereum’s transaction fee market.
While
Builder+ currently operates exclusively on Ethereum, it has been designed to expand to other blockchain networks, aligning with BTCS’s
long-term strategy of diversification. By combining cutting-edge technology with its blockchain infrastructure expertise, BTCS seeks
to capture an increasing share of the Ethereum Builder market. The platform’s 2024 performance demonstrated its potential as a
scalable revenue driver, and BTCS believes Builder+ will play a key role in its future growth.
Staking-as-a-Service
- NodeOps
Through
BTCS’s blockchain infrastructure operations, we validate transactions on behalf of those who delegate their crypto holdings (or
“stake”) to BTCS-operated validator nodes (referred to as “Staking as a Service” or “StaaS”) on dPoS
blockchains.
Delegation
is a non-custodial process that allows token holders (“Delegators”) to maintain control of their private keys and revoke
their delegation at any time (subject to the rules of a particular blockchain). There is no transfer of ownership, often referred to
as “private keys”, of any Delegator’s crypto assets as part of the Delegation process. Delegation provides a method
for token holders to designate to a validator node operator the ministerial task of running a validator node while still participating
in the network consensus mechanism and earning rewards.
StaaS
providers are operators of computer infrastructure and validation software that allow them and their Delegators to stake certain native
crypto assets utilizing a dPoS consensus protocol. dPoS protocols provide for the validation of transactions on the related network as
well as a “sybil resistance” mechanism to help secure the network.
The
nodes comprising a blockchain network use a protocol (or set of rules) to reach an agreement as to whether a given transaction proposed
by a user of the network is valid under the rules of the protocol and should be added to the ledger (such agreement being referred to
as “consensus”). Protocols typically group transactions into blocks that can only be added to the common ledger when validated
by a sufficient percentage of a dispersed network of unrelated computers or servers called “nodes” in the network. A complete
record (or “blockchain”) is maintained on the ledger by adding these groups (or “blocks”) of transactions to
the chain, and the nodes constantly automatically monitor the blocks to ensure record accuracy.
dPoS
networks rely on validators who own native crypto assets and operate nodes for the network to confirm the validity of the transactions
comprising each block to be added to the network ledger. The dPoS protocol software run by the relevant network nodes generally determines
the validator node for each block at random, though each blockchain may have differing selection criteria. To be eligible to validate
transactions and to write new blocks to the chain, validators are required to “stake” the relevant native crypto assets whereby
validators commit value (in the form of the native crypto asset) to the underlying network and lock their native crypto assets, preventing
them from otherwise transacting with those native crypto assets while they are staked. The dPoS mechanism is a sybil-resistance tool
(fights against attacks on nodes) that incentivizes validators to confirm transactions that conform to the rules of the protocol at the
risk of losing their staked crypto assets (“slashing”). Validators utilizing their native crypto assets to participate in
dPoS protocols secure the relevant network and receive staking rewards for doing so.
As
a non-custodial Validator operator and StaaS provider, BTCS charges a validator node fee (“Validator Fee”), which is calculated as a percentage of the crypto asset rewards earned on crypto assets delegated to its node, creating the opportunity for potential
scalable revenue and business growth with limited additional costs. This fee is broadcast by the Validator to the network and publicly
available. Both the crypto reward paid to the Delegator and the crypto fee paid to the Validator are distributed by the blockchain network.
These Validator Fees in the dPoS network encourage validators to participate in the network and thereby help to secure and decentralize
the network.
A
StaaS provider maintains a ministerial role in validating transactions on a given dPoS network on behalf of its Delegators by: (1) arranging
transactions using open-source software to stake the relevant crypto assets; (2) monitoring the nodes it is operating to ensure the computers
remain online to validate transactions; and (3) verifying transactions on the network when required.
As
a StaaS provider, BTCS does not take custody of or pool Delegator crypto assets or Delegator crypto rewards (i.e. BTCS does not take
possession of users’ private keys or cryptocurrency assets) at any time during the delegation process. The rewards earned on
delegated crypto assets are sent directly to Delegators by the respective blockchain network and are never in BTCS’s
possession. Therefore, BTCS does not obtain custody or facilitate transfers of any third-party crypto assets in its role as a
Validator or StaaS provider.
ChainQ
BTCS
has developed ChainQ, an AI-powered blockchain data and analytics platform designed to increase transparency and accessibility in the
blockchain ecosystem. Currently in beta, ChainQ indexes public blockchain data from BTCS’s operations, providing an intuitive platform
for users to explore and analyze on-chain activity.
StakeSeeker
Discontinuation
As
of December 27, 2024, BTCS discontinued its StakeSeeker platform to focus its resources on Builder+ and validator node operations.
Custody
and Key Storage
BTCS
prioritizes the secure custody of its crypto assets. The Company primarily stores its assets in cold wallets, which are offline and encrypted,
ensuring maximum protection against potential breaches. BTCS aims to maintain less than 0.1% of its crypto assets on crypto exchanges
at any given time, except during necessary transfers between wallets and exchanges to support purchase or sale activities. Occasionally,
we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer
crypto assets to more secure cold wallets when appropriate. As of December 31, 2024, 98% of BTCS’s crypto assets were held in cold
storage wallets and the remaining crypto assets were held in other storage wallets, including hot wallets.
The
Company currently does not maintain any insurance policies that provide coverage for potential losses of crypto assets in cases of theft,
lost keys, or any other events that might lead to the loss of private keys or crypto assets held within our secure digital wallets.
Our
cold wallet private keys are protected through multiple redundant security measures, industry-standard key sharding protocols, encryption,
and geographically distributed offline encrypted key storage in secured facilities and restricted access protocols. We believe this multi-layered
approach ensures the utmost security for our crypto assets.
Our
approach of prioritizing the self-custody of our crypto assets minimizes exposure to risks associated with centralized platforms and
third-party failures.
INDUSTRY
AND MARKET OVERVIEW (CRYPTO ASSET AND BLOCKCHAIN TECHNOLOGIES)
Blockchain
and Cryptocurrencies
Blockchain
technology is a decentralized, encrypted ledger system designed to securely store and verify data without the need for intermediaries.
It has been widely adopted across industries due to its ability to enhance transparency, security, and efficiency in processes that traditionally
relied on centralized systems. Blockchain technology underpins crypto assets, a class of digital assets that includes cryptocurrencies,
which can function as a medium of exchange, store of value, or unit of account, as well as enable non-financial applications such as
smart contracts, tokenized assets, and decentralized applications (dApps).
The
global adoption of blockchain technology has grown significantly in recent years, fueled by advancements in infrastructure, increasing
institutional interest, and the development of next-generation use cases. Beyond cryptocurrencies, blockchain technology is being explored
in sectors such as finance, healthcare, supply chain, governance, and digital identity management. These innovations have the potential
to transform traditional industries, offering efficiencies and capabilities not achievable with legacy systems.
Cryptocurrencies
and Proof-of-Stake Ecosystems
Cryptocurrencies
operate on blockchain networks using cryptographic protocols to secure transactions and manage decentralized ledgers. These networks
rely on nodes, which are computers participating in the network, to validate and record transactions. A distinguishing feature of cryptocurrencies
is their ability to enable secure peer-to-peer transactions without requiring a trusted intermediary, such as a financial institution
or government.
Unlike
proof-of-work (“PoW”) networks, which require significant energy resources to validate transactions, PoS) and dPoS networks
utilize an efficient consensus mechanism that relies on validators staking their crypto assets to secure the network. Validators, such
as those operated by BTCS, play a critical role in maintaining the integrity of these networks by validating transactions and proposing
new blocks for inclusion in the blockchain.
PoS
ecosystems have gained substantial traction due to their energy efficiency, scalability, and ability to support diverse applications,
including decentralized finance (DeFi), non-fungible tokens (NFTs), and other blockchain-based innovations. Ethereum’s transition
to PoS in 2022 further solidified its position as a leading blockchain for smart contracts and decentralized applications. This evolution
has also driven the development of new roles within the ecosystem, such as Builders, who optimize and propose blocks for on-chain validation,
creating new opportunities for revenue generation.
Advantages
and Risks of Crypto Assets
Crypto
assets offer numerous advantages over traditional fiat currencies and legacy systems, including:
However,
these advantages come with unique risks and challenges. The sector remains highly volatile, with market prices subject to significant
fluctuations. Regulatory uncertainty, evolving legal frameworks, and the nascent stage of the technology introduce risks to businesses
operating within this environment. Additionally, scalability and interoperability remain critical areas for improvement to meet growing
demand.
Current
State of the Blockchain Industry and Market Outlook
As
of the end of 2024, the blockchain and cryptocurrency industry continued to mature, with increased institutional participation, technological
advancements, and regulatory scrutiny shaping its trajectory. The adoption of PoS networks has accelerated, driven by the demand for
sustainable and scalable blockchain infrastructure. Innovations such as Ethereum’s ecosystem of Builders, Relays, and Validators
have created new opportunities for value creation, aligning with BTCS’s core operations.
In
the future, the industry is expected to see continued integration of blockchain technology across traditional industries, advancements
in Layer 2 scaling solutions, and broader adoption of decentralized finance and tokenized assets. Layer 2 solutions are designed to improve
the efficiency of blockchain networks by processing transactions off the main blockchain (Layer 1) while still benefiting from its security.
This helps reduce congestion and lower transaction costs, making blockchain applications more scalable.
BTCS
is strategically positioned to benefit from these trends through its focus on blockchain infrastructure, especially regarding Ethereum
block-building and validator node operations, ensuring its ability to capitalize on the evolving market landscape.
Business
ProfileEvolution and RisksStrategic Focus
During 2025, BTCS completed a strategic repositioning to concentrate its operations and capital allocation on Ethereum focused activities. As part of this transition, the Company discontinued validator node operations on non-Ethereum blockchains and liquidated the majority of its non-Ethereum digital asset holdings. The Company also discontinued the development and operation of legacy technology service platforms, including StakeSeeker in 2024 and ChainQ in 2025, in order to focus resources on scalable, revenue-generating blockchain infrastructure and DeFi activities.
These actions reflect BTCS’s emphasis on operational execution, capital efficiency, and alignment with Ethereum-native opportunities. While the Company may continue to hold non-Ethereum digital assets in support of specific infrastructure or operational activities, Ethereum remains the core network underpinning BTCS’s business model.
Capital Strategy and Operations
Management's Discussion & Analysis (MD&A)
New heading “Executive Overview”
New heading “Strategic Evolution and Operating Focus”
New heading “Expansion into Decentralized Finance through Imperium”
New heading “Capital Strategy”
New heading “Use of Digital Assets in our Operations”
New heading “Operating Use of Digital Assets”
New heading “Treasury Management Philosophy”
New heading “Decentralized Finance Asset Deployment”
New heading “Risk Management Considerations”
New heading “Role of Digital Assets in Ongoing Operations”
New heading “Known Trends, Market Conditions, and Uncertainties”
New heading “Digital Asset Market Volatility”
New heading “Blockchain Network and Protocol Dynamics”
New heading “Decentralized Finance Revenue Variability”
New heading “Regulatory Environment”
New heading “Implications for Operating Performance”
New heading “Share Repurchase Program”
New heading “Convertible Notes Payable”
New heading “Dividends and Capital Distributions”
New heading “ITEM 1A. RISK FACTORS”
New heading “We operate in a rapidly evolving industry, and our business model and strategy may not be successful.”
New heading “Our business is highly dependent on Ethereum, and our concentration in ETH exposes us to significant risks that could materially adversely affect our business, financial condition, and results of operations.”
New heading “We may not be able to successfully execute our strategy to scale our blockchain infrastructure operations and DeFi activities.”
New heading “We may be required to sell digital assets to fund operations, meet obligations, or respond to market conditions, which could result in realized losses and adversely affect our financial condition and results of operations.”
New heading “Digital asset market disruptions, exchange failures, or loss of liquidity could impair our ability to access or convert digital assets.”
New heading “Our validator node operations, including operations through pooled staking protocols, depend on reliable infrastructure, may be subject to reduced rewards, penalties, or slashing.”
New heading “Risks related to our validator node operations through pooled staking protocols such as Rocket Pool could adversely affect our business, results of operations, and financial condition.”
New heading “Changes to Ethereum staking economics, validator requirements, or protocol rules could reduce our staking revenues.”
New heading “Staked ETH may be subject to withdrawal delays or other constraints that could adversely affect liquidity.”
New heading “Risks Related to Block Building (Builder+), MEV, and Transaction Execution”
New heading “Our Builder+ revenues depend on highly competitive and rapidly evolving transaction execution markets.”
New heading “Our Builder+ operations depend on the continued functioning and adoption of the broader block-building and MEV relay ecosystem, and disruptions to that ecosystem could materially reduce our revenues.”
New heading “Changes to the Ethereum protocol could adversely affect the economics of our Builder+ operations.”
New heading “Our block-building activities may be subject to reputational risks, regulatory scrutiny, and evolving market norms.”
New heading “Risks Related to DeFi Operations (Imperium), Smart Contracts, and Protocol Participation”
New heading “Our participation in DeFi protocols and pooled staking arrangements exposes us to smart contract risk, oracle risk, governance risk, and protocol failure risk, which could result in the loss of digital assets.”
New heading “DeFi revenue is variable, may decline, and may not be sustainable.”
New heading “DeFi protocols may change their rules, parameters, or governance decisions in ways that adversely affect our revenue.”
New heading “Risks Related to ETH-Backed DeFi Borrowing, Leverage, and Liquidation”
New heading “Our ETH-backed borrowings through DeFi protocols subject us to liquidation risk and declines in ETH prices or adverse protocol conditions could result in forced liquidations, material losses, and potential defaults under our Senior Convertible Notes.”
New heading “Variable interest rates and protocol-level changes may increase our cost of capital.”
New heading “Risks Related to Capital Markets, Financing Strategy, and Dilution”
New heading “Our ability to raise capital may be limited, and we may need additional capital to execute our strategy.”
New heading “Our business depends on access to banking services and financial infrastructure and the loss of banking relationships could materially adversely affect our business.”
New heading “Our Senior Convertible Notes may result in dilution and contain provisions that may adversely affect shareholders.”
New heading “Our share repurchase program may not enhance shareholder value and may reduce liquidity.”
New heading “Risks Related to Cybersecurity, Custody, and Digital Asset Security”
New heading “If we experience a cybersecurity incident, theft, loss of private keys, or compromise of wallet controls, we could lose digital assets and suffer significant harm.”
New heading “We rely on third-party vendors, service providers, and infrastructure providers, and disruptions or failures involving these third parties could materially adversely affect our business.”
New heading “We do not maintain insurance coverage for losses of digital assets.”
New heading “Risks Related to Regulation, Legal Uncertainty, and Government Oversight”
New heading “The regulatory landscape for digital assets, blockchain infrastructure, DeFi, and related activities is rapidly evolving, and regulatory developments could materially adversely affect our business.”
New heading “Digital assets, including ETH, are subject to evolving and uncertain regulatory classifications, and adverse regulatory developments, including classification of digital assets as securities or classification of the Company as an investment company under the Investment Company Act of 1940, could materially adversely affect our business.”
New heading “Our validator node operations, block-building activities, and DeFi participation may be subject to increased regulatory scrutiny and could be deemed to involve regulated activities.”
New heading “Regulatory actions, enforcement proceedings, or legal restrictions affecting third parties and protocols we rely on could materially adversely affect our business.”
New heading “Regulatory authorities may take enforcement actions or adopt rules that could materially adversely affect our operations.”
New heading “Regulatory requirements related to anti-money laundering (“AML”), sanctions, and financial crime compliance could adversely affect our business.”
New heading “We may be subject to state money transmission laws or other licensing requirements.”
New heading “Regulation of stablecoins could materially adversely affect our DeFi activities.”
New heading “Tax laws and reporting requirements related to digital assets are evolving and could adversely affect our business.”
New heading “Accounting standards, SEC disclosure expectations, and audit practices for digital assets may evolve and could materially adversely affect our reporting obligations.”
New heading “International regulatory developments could adversely affect our business.”
New heading “Risks Related to Our Public Company Status, Internal Controls, and Reporting”
New heading “We face increased financial reporting and internal control risks due to the complexity of our operations, and any failure to maintain effective internal control over financial reporting could adversely affect our business.”
New heading “Our stock price may be volatile, and investors may lose all or part of their investment.”
New heading “Risks Related to Intellectual Property, Personnel, and Operations”
New heading “We depend on key personnel, and the loss of key personnel could harm our business.”
New heading “Risks Related to Litigation”
New heading “We may be subject to litigation, regulatory proceedings, and other legal actions, which could result in significant costs and adversely affect our business.”
Removed heading “Revenue by Segment”
Removed heading “Revenue from blockchain infrastructure staking activities through NodeOps”
Removed heading “Revenue from Ethereum block-building through Builder+”
Removed heading “Accounting for Crypto Assets”
Removed heading “Blockchain Infrastructure (NodeOps)”
Removed heading “Ethereum Block Building (Builder+)”
Removed heading “Restricted Stock Units (RSUs)”
Removed heading “Risks Related to Our Company in General”
Removed heading “We have a history of operating losses and expect to incur additional operating losses as we scale our business.”
Removed heading “We have an evolving business model which we may be unable to develop, adapt or execute effectively.”
Removed heading “The loss of our executive officers could have a material adverse effect on us.”
Removed heading “Financial institutions may refuse to provide banking services to businesses engaged in cryptocurrency-related activities, and broader financial sector instability could materially and adversely affect us and our industry.”
Removed heading “Risks Related to Crypto Assets”
Removed heading “General Risks Related to Crypto Assets”
Removed heading “The prices of crypto assets are highly volatile, and significant declines in their value may adversely affect our business and financial condition.”
Removed heading “The price of crypto assets may be affected by the sale of such crypto assets by other vehicles investing in crypto assets or tracking cryptocurrency markets.”
Removed heading “There is a lack of liquid markets, and possible manipulation of blockchain/cryptocurrency-based crypto assets.”
Removed heading “Political or economic crises may motivate large-scale sales of crypto assets, which could result in a reduction in crypto asset values and adversely affect an investment in us.”
Removed heading “Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.”
Removed heading “A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, with a growing number of regulators taking the position that certain crypto assets are securities and bringing enforcement actions accordingly, and if we are unable to properly characterize a crypto asset or comply with the applicable regulatory requirements, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.”
Removed heading “Because crypto assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act and incur large losses as a result and potentially be required to register as an investment company. This would have a material adverse effect on an investment in us.”
Removed heading “If the SEC concludes that NodeOps our non-custodial staking business involves the offer and sale of a security in violation of Section 5 of the Securities Act of 1933 and the courts conclude the SEC is correct, we will be required to cease our staking as a service business and seek another business opportunity and may be subject to monetary and other penalties.”
Removed heading “Current interpretations require the regulation of Bitcoin, Ethereum, and other crypto assets under the CEA by the CFTC, we may be required to register and comply with such regulations. To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary, non-recurring expenses to us. We may also decide to cease certain operations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.”
Removed heading “Our interactions with a blockchain may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.”
Removed heading “If federal or state legislatures or agencies initiate or release tax determinations that change the classification of Bitcoin, Ethereum or other crypto assets as property for tax purposes (in the context of when such crypto assets are held as an investment), such determination could have a negative tax consequence on our Company or our shareholders.”
Removed heading “The further development and acceptance of cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies, which represent a rapidly changing industry, are subject to a variety of factors that are difficult to evaluate.”
Removed heading “The decentralized nature of crypto asset systems may lead to slow or inadequate responses to crises, which may negatively affect our business.”
Removed heading “Crypto exchanges are relatively new and therefore may be more exposed to fraud and failure than established, regulated exchanges for other products. To the extent that large crypto exchanges representing a substantial portion of the crypto asset volume are involved in fraud or experience security failures or other operational issues, such exchanges’ failures may result in a reduction in the price of crypto assets and adversely affect an investment in us.”
Removed heading “Operational Risks Specific to BTCS’s Crypto Asset Activities”
Removed heading “Because our blockchain infrastructure business is dependent on the value of the crypto assets we stake to obtain blockchain rewards, and because those rewards are paid out in the form of the blockchain’s native crypto assets, low market values and/or continued or long-term declines in crypto asset prices will materially and adversely affect our results of operations.”
Removed heading “Builder+, ChainQ , and our blockchain infrastructure operations including Company owned and run validator nodes on PoS blockchains, are subject to concentration risks due to reliance on a limited number of infrastructure providers.”
Removed heading “Crypto assets staked on proof-of-stake blockchains are locked in smart contracts and may not be accessible and liquid.”
Removed heading “Our staking-as-a-service business is dependent on consumer investment in crypto assets, and economic downturns or excessive removal of delegated crypto assets could materially and adversely impact our business.”
Removed heading “We may suffer losses due to staking, delegating, and other related services.”
Removed heading “Our business faces significant scaling obstacles due to its dependence on crypto assets and related infrastructure.”
Removed heading “Our business operations involve running validator nodes for blockchain networks, including those associated with third-party staking ecosystems. This presents several risks that could materially affect our financial condition, results of operations, and business prospects.”
Removed heading “Shifts in the Ethereum block-building landscape and market could increase the difficulty of remaining competitive and increase costs.”
Removed heading “Our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions is uncertain and untested, and we are subject to uncertainty with respect to our Ethereum block building and non-custodial staking-as-a-service businesses and we may be subject to investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities.”
Removed heading “We may experience losses resulting from technical failures, bugs, or vulnerabilities in our block builder software.”
Removed heading “Malicious actors gaining 50% or greater control of a cryptocurrency network could manipulate the blockchain, leading to significant adverse effects on the network and indirectly on our business.”
Removed heading “Security Risks Related to Our Crypto Asset Holdings”
Removed heading “Our crypto assets may be subject to loss, damage, theft or restriction on access.”
Removed heading “To the extent that any of our crypto assets are held by crypto exchanges, we may face heightened risks from cybersecurity attacks and the financial stability of the exchanges.”
Removed heading “The loss or destruction of a private key required to access a crypto asset may be irreversible. Our loss of access to our private keys could adversely affect an investment in our Company.”
Removed heading “Security threats to us could result in a loss of Company’s crypto assets.”
Removed heading “Incorrect or fraudulent crypto asset transactions may be irreversible.”
Removed heading “The limited rights of legal recourse against us, and our lack of insurance protection expose us and our shareholders to the risk of loss of our crypto assets for which no person is liable.”
Removed heading “Crypto assets held by us are not subject to FDIC or SIPC protections.”
Removed heading “There is substantial doubt that we will be able to fully develop or commercialize our ChainQ platform as intended.”
Removed heading “Even if we develop and commercialize our ChainQ platform, we may not be able to generate material revenues.”
Removed heading “The development of our ChainQ platform will depend on the successful efforts of our employees.”
Removed heading “We are subject to cyber security risks and may incur delays in platform development in an effort to minimize those risks and to respond to cyber incidents.”
Removed heading “We may become subject to data privacy and data security laws and regulations by virtue of our ChainQ platform, which could force us to incur significant compliance costs and expose us to liabilities.”
Removed heading “We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing the ChainQ platform.”
Removed heading “Risks Related to Our Public Company Reporting Requirements and Accounting Matters”
Removed heading “We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements.”
Removed heading “Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.”
Removed heading “If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.”
Removed heading “We are subject to the information and reporting requirements of the Exchange Act, and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).”
Removed heading “Our stock price may be volatile.”
Removed heading “While we paid a cash dividend in 2022, and declared a Series V Preferred stock (“Series V”) dividend in 2023, we do not expect to pay regular or recurring dividends in the future. Any return on investment may be limited to the value of our Common Stock.”
Removed heading “Our articles of incorporation allow for our Board to create new series of preferred stock without further approval by our shareholders, which could adversely affect the rights of the holders of our Common Stock.”
Removed heading “Substantial future sales of our Common Stock by us or by our existing shareholders could cause our stock price to fall.”
Largest changes
“In addition to the securities laws and regulations discussed elsewhere in these Risk Factors, laws regulating financial services, the internet, mobile technologies, digital, and related technologies inside and outside of the U.S. may impose obligations on us, as well as broader liability. For example, we are required to comply with laws and regulations related to sanctions and export controls enforced by U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC, and U.S. …”see in full comparison
“There is a risk that as we develop and offer our platform and other services, we may become subject to one or more of these data privacy and security laws. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection, and information security, including by deploying geo-blocking features to limit the jurisdictions from which our platform can be accessed, it is possible that our practices, offerings, or platform, or third parties on which we rely, could fail. …”see in full comparison
“A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, with a growing number of regulators taking the position that certain crypto assets are securities and bringing enforcement actions accordingly, and if we are unable to properly characterize a crypto asset or comply with the applicable regulatory requirements, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.”see in full comparison
“The complexity of U.S. federal and state and international regulatory and enforcement regimes, coupled with the evolving global regulatory environment, could result in a single event prompting a large number of overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions. Any of the foregoing could, individually or in the aggregate, harm our reputation, damage our brands and business, and adversely affect our operating results and financial condition. …”see in full comparison
“Even if we believe that we are operating in compliance with applicable laws and regulations, we may become subject to investigations, subpoenas, enforcement actions, litigation, or administrative proceedings related to our digital asset holdings, validator operations, block-building activities, or other aspects of our business. Regulatory authorities may also adopt new rules or interpretations that impose additional compliance requirements or restrictions on participants in the digital asset ecosystem.”see in full comparison
“In the United States, state and federal lawmakers and regulatory authorities have increased their attention on the collection and use of user data. For example, California enacted the California Rights Privacy Act, or CPRA, which augmented the California Privacy Rights Act, became effective in 2020. …”see in full comparison
Full comparison: every changed paragraph (543)
The
following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical
financial statements and the notes to those statements that appear elsewhere in this report. Certain statements in the discussion contain
forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations
and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements
as a result of a number of factors, including those set forth under Risk Factors and elsewhere in this report. When we
refer to the
“Fiscal 2025”, and “Fiscal 2024” and the “Fiscal 2023”, we are referring to the years ended
December 31, 2025, December 31, 20242025 and December 31, 2023, 2024,
respectively.
Executive Overview
BTCS Inc. is a blockchain technology company focused on revenue generation through blockchain infrastructure and decentralized finance (“DeFi”) activities, primarily on the Ethereum network. During 2025, the Company continued to execute a strategic repositioning toward Ethereum-native operations designed to generate recurring on-chain revenues, improve capital efficiency, and actively deploy digital assets in support of long-term growth.
The Company’s business model is centered on participating directly in core components of the Ethereum ecosystem, including validator node operations as a validator (“Validator”), block-building activities as a block builder (“Builder”), and DeFi asset deployment. While BTCS holds significant Ethereum (“ETH”) assets, they are primarily maintained as operating assets that support the Company’s revenue-generating activities, infrastructure participation, and DeFi activities.
Strategic Evolution and Operating Focus
During 2025, BTCS completed a strategic realignment of its operations and capital allocation to focus primarily on Ethereum-based activities. As part of this transition, the Company discontinued validator node operations on non-Ethereum blockchains and liquidated the majority of its non-Ethereum digital asset holdings. The Company also discontinued the development and operation of legacy technology platforms, including StakeSeeker in 2024 and ChainQ in 2025, in order to concentrate resources on scalable, revenue-generating infrastructure and DeFi initiatives.
This repositioning reflects management’s assessment that Ethereum provides the most compelling long-term opportunity for infrastructure participation, transaction execution, and DeFi activity, given its network scale, liquidity, and ecosystem maturity.
BTCS
Inc., a Nasdaq-listed U.S.-based blockchain technology company, focuses on advancing blockchain infrastructure. With a primary emphasis
on the Ethereum network, BTCS drives scalable growth through block-building and validator node operations, leveraging advanced technology
and robust operational expertise.
Growth of Blockchain Infrastructure Operations
Blockchain infrastructure activities, consisting primarily of validator node operations (NodeOps) and block building (Builder+), represent a core driver of the Company’s revenues. Validator operations provide recurring ETH-denominated revenues through protocol-defined incentives and transaction fees, while Builder+ has emerged as a higher-growth, technology-driven revenue opportunity.
Builder+ participates in Ethereum’s transaction execution ecosystem by constructing and submitting optimized transaction blocks. During 2025, the Company continued to scale Builder+ operations by expanding private order flow integrations, enhancing infrastructure efficiency, and increasing participation across Ethereum blockspace markets. As a result, block building became an increasingly significant contributor to the Company’s revenue mix, reflecting both increased transaction activity and improved execution performance.
Management believes that block building represents a scalable opportunity, driven by technology, infrastructure optimization, and access to transaction flow rather than asset lock-up requirements.
Expansion into Decentralized Finance through Imperium
In 2025, BTCS launched Imperium, a DeFi-focused operating segment designed to deploy digital assets into decentralized protocols as a liquidity provider and market participant. Imperium enables the Company to allocate assets across DeFi protocols that facilitate lending, borrowing, liquidity provision, and other on-chain financial activities.
In contrast to traditional staking, which is subject to protocol-defined reward structures and lock-up mechanics, DeFi participation allows for more dynamic capital allocation based on market conditions, liquidity needs, and risk considerations. Revenues generated through Imperium are variable and dependent on protocol utilization and prevailing market conditions.
Management expects Imperium to represent an increasingly important component of the Company’s operations and believes that DeFi activities provide opportunities to enhance risk-adjusted returns, improve capital flexibility, and complement the Company’s blockchain infrastructure operations, although there can be no assurance that these objectives will be achieved. BTCS plans to further expand asset deployments into DeFi protocols and pursue additional integrations to broaden its on-chain activities, subject to market conditions, available capital, regulatory developments, and risk management considerations.
Capital Strategy
A central element of BTCS’s operating model is its integrated capital strategy, which combines decentralized finance mechanisms with traditional capital markets activities. During 2025, the Company utilized a combination of at-the-market equity (“ATM”) offerings, structured convertible notes, and ETH-backed DeFi borrowing to fund operations, scale infrastructure, and deploy digital assets.
This approach is designed to support growth while managing liquidity and minimizing reliance on equity issuance alone. Management actively evaluates capital allocation across validator operations, block-building support, and DeFi deployments based on expected returns, risk profiles, and market conditions.
Outlook
BTCS enters 2026 with a business model centered on expanding high-margin scalable revenue opportunities. Management believes that continued expansion of Builder+ operations and increased deployment through Imperium position the Company to participate meaningfully in the ongoing growth of decentralized technologies and crate long-term shareholder value.
The following sections of Management’s Discussion and Analysis provide additional detail regarding the Company’s digital asset and treasury management practices, known trends and uncertainties, results of operations, and liquidity and capital resources.
Use of Digital Assets in our Operations
Digital assets, primarily ETH, play a central role in the Company’s operating model. Unlike companies that hold digital assets primarily for investment or appreciation purposes, BTCS uses its digital asset holdings as operating assets to support revenue generation, infrastructure participation, and decentralized finance (DeFi) activities.
Operating Use of Digital Assets
ETH held by the Company is actively deployed across its business lines, including validator node operations, block building support, and DeFi activities conducted through the Imperium operating segment. Management continuously evaluates how digital assets are utilized among these activities based on revenue, gross profit, liquidity requirements, risk considerations, and prevailing market conditions.
As a result, the Company’s digital asset balances may fluctuate period over period due to operational activities, redeployments, protocol participation, borrowing activity, and market price movements. These fluctuations are a function of the Company’s operating strategy and may materially impact reported financial results.
Treasury Management Philosophy
The Company’s treasury management strategy is designed to balance capital efficiency, liquidity, and risk management. BTCS seeks to maintain sufficient liquidity to support ongoing operations while deploying excess digital assets in a manner intended to generate incremental on-chain returns.
Management does not maintain a fixed allocation policy for digital assets across staking, block building support, or DeFi activities. Instead, allocation decisions are made dynamically, taking into account market conditions, protocol economics, and the Company’s capital requirements.
In certain circumstances, the Company may convert a portion of its digital asset holdings to cash to fund operations, meet obligations, or manage liquidity. Conversely, the Company may deploy cash or stablecoins into digital assets to support infrastructure operations or DeFi participation.
Decentralized Finance Asset Deployment
Through Imperium, BTCS deploys digital assets into decentralized finance protocols that facilitate lending, borrowing, liquidity provision, and other on-chain financial activities. These deployments are intended to enhance capital flexibility and improve risk-adjusted returns relative to traditional staking activities.
Returns generated through DeFi participation are variable and subject to factors such as protocol utilization, market demand, interest rates, liquidity conditions, and smart contract risks. Management actively monitors these factors and may adjust deployment strategies in response to changes in market conditions or protocol performance.
Risk Management Considerations
The Company’s digital asset and treasury management activities expose it to risks including digital asset price volatility, protocol changes, smart contract vulnerabilities, and liquidity constraints. Management seeks to mitigate these risks through diversification of deployments, active monitoring of protocol performance, conservative leverage practices, and disciplined capital allocation.
The Company’s approach to digital asset custody, wallet management, and security controls is described in Item 1 - Our Business and Growth Strategy and is designed to support operational flexibility while minimizing exposure to third-party custody and counterparty risks.
Role of Digital Assets in Ongoing Operations
Management believes that the active deployment of digital assets across blockchain infrastructure and DeFi activities is a core differentiator of the Company’s operating model. As the Company continues to scale Builder+ operations and expand Imperium, digital assets are expected to remain central to the Company’s treasury strategy and overall business performance.
Known Trends, Market Conditions, and Uncertainties
BTCS operates in blockchain infrastructure and decentralized finance (DeFi) markets that are characterized by rapid technological change, evolving market structures, and significant variability in economic outcomes. The Company’s operating results and financial condition are influenced by a number of known trends, market conditions, and uncertainties, many of which are interrelated.
Digital Asset Market Volatility
The market prices of digital assets, particularly ETH, are subject to significant volatility driven by a variety of factors, including macroeconomic conditions, investor sentiment, regulatory developments, technological changes, and activity within decentralized ecosystems. Because ETH is a core operating asset for the Company, fluctuations in its market price may significantly affect the value of the Company’s digital asset holdings, reported results, and liquidity.
While management actively deploys ETH to support revenue generation and operational activities, changes in ETH prices may impact period-to-period financial results independent of underlying operating performance.
Blockchain Network and Protocol Dynamics
The Company’s infrastructure and DeFi activities depend on the continued operation and adoption of the Ethereum network and related protocols. Changes to network protocols, including updates to consensus mechanisms, transaction fee structures, validator economics, or block-building dynamics, may materially and adversely affect the profitability, scalability, and economics of the Company’s operations. The Company has no control over such protocol changes and may have limited ability to adapt its operations in response.
In addition, transaction volumes, network congestion, and user activity levels can influence execution-layer rewards, block-building opportunities, and validator returns. These factors may vary significantly over time and are entirely outside the Company’s control.
BTCS’s
blockchain infrastructure center on supporting the validation of transactions and securing proof-of-stake (“PoS”) and delegated
proof-of-stake (“dPoS”) blockchain networks. The Company manages a network of cloud-based validator nodes that perform essential
network functions, including transaction validation (“attestation”) activities and proposing new blocks. Through these activities,
BTCS earns native token rewards by staking its own crypto assets on validator nodes operated by BTCS and third parties.
Our
evaluation of blockchain networks involves comprehensive due diligence procedures, including assessments of blockchain quality, reward
potential, and the technical challenges associated with running validator nodes. Criteria for assessing blockchain quality encompass
factors such as i) market and on-chain statistics, ii) liquidity, iii) potential blockchain utility, iv) history and milestones, v) growth
and development roadmap, vi) use cases, vii) community interest, viii) quality of documentation, ix) decentralization, and x) any other
publicly available information. This process ensures BTCS focuses on high-potential blockchain networks while mitigating technical and
operational risks.
EthereumBlock
Block Building –Market Builder+Conditions
Block building is a competitive and evolving segment of the Ethereum ecosystem. Builder+ performance is influenced by access to transaction flow, infrastructure efficiency, latency, competition among Builders, and Validator participation patterns. As transaction execution markets mature, competitive dynamics may change, and margins may fluctuate as participants optimize strategies or new entrants emerge.
Management continues to invest in technology, infrastructure optimization, and business development initiatives to adapt to these evolving conditions, but there can be no assurance that current market conditions will persist or that such investments will yield positive returns or competitive advantages.
Decentralized Finance Revenue Variability
Revenues generated through Imperium’s DeFi activities are inherently variable and depend on protocol utilization, prevailing fee rates, liquidity conditions, and market demand for decentralized financial services. DeFi rewards may compress or fluctuate over time as capital flows into or out of protocols, new products are introduced, or risk parameters are adjusted.
In addition, DeFi participation exposes the Company to protocol-specific risks, including smart contract vulnerabilities, governance decisions, and liquidity constraints, which may affect returns or result in losses.
Regulatory Environment
The regulatory landscape for digital assets and blockchain-based activities continues to evolve in the United States and internationally, including in Nevada where the Company is organized. Changes in federal or state laws, regulations, or regulatory interpretations (including those promulgated by the SEC, CFTC, FinCEN, or state regulators) could materially affect the Company’s operations, access to capital, ability to participate in certain activities, or compliance obligations. The Company may be or may become subject to registration, licensing, reporting, or other compliance requirements at the federal, state, or international level, which could impose significant costs and operational constraints on the Company. While management monitors regulatory developments and seeks to adapt its operating model accordingly, regulatory outcomes remain uncertain and may result in material adverse effects on the Company’s business, financial condition, and results of operations.
Implications for Operating Performance
Management believes that these trends and uncertainties are inherent to operating in blockchain infrastructure and DeFi markets. The Company seeks to manage these dynamics through disciplined capital allocation, active asset deployment, diversification of operating activities, and ongoing evaluation of market conditions. However, the impact of these factors on future operating results and financial condition may be material.
A
central focus of BTCS’s current operations is its Ethereum block-building initiatives under Builder+, which commenced operations
in 2024. Through Builder+ we purchase block space and leverage advanced algorithmic processes to construct blocks for on-chain validation.
The goal of Builder+ is to maximize gas fee revenue by optimizing the contents and structure of each block. The Company aims to maximize
the value of gas fees earned by increasing the number of blocks we purchase while minimizing the payments to validators required for
purchasing block space.
What changed in the latest 10-Q
Risk Factors
There have been no material changes in our risk factors from those disclosed in (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and (ii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. The risk factors previously disclosed in such reports constitute important cautionary statements and qualifications with respect to the forward-looking statements and other representations contained in this Quarterly Report on Form 10-Q. While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practicable under the circumstances, some level of risk and uncertainty will always be present. The risk factors described in our Form 10-K and our Form 10-Q for the quarter ended March 31, 2026 describe some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.
Removed heading “A default under the Company’s Loan Agreement could render the Company ineligible to use Registration Statement on Form S-3 for securities offerings, which would materially impair the Company’s ability to raise capital in the public markets and adversely affect its share repurchase program.”
Largest changes
“A default under the Company’s Loan Agreement could render the Company ineligible to use Registration Statement on Form S-3 for securities offerings, which would materially impair the Company’s ability to raise capital in the public markets and adversely affect its share repurchase program.”see in full comparison
“If the Company were to default on its obligations under the Loan Agreement including any failure to make required interest or principal payments, satisfy margin calls, or comply with other covenants such default could cause the Company to fail to satisfy the registrant eligibility requirements of Form S-3. In such event, the Company would be required to conduct any future public offerings of its securities on Form S-1, which is subject to more extensive disclosure requirements, longer SEC review periods, and greater time and expense to prepare. …”see in full comparison
“The Company currently relies on the availability of Form S-3 registration statements under the Securities Act of 1933 (the “Securities Act”), to conduct primary and secondary offerings of its securities and to facilitate its share repurchase program. …”see in full comparison
“In addition, the Company’s share repurchase program relies on the availability of Form S-3 to register shares for resale and to provide liquidity to stockholders. If the Company loses its Form S-3 eligibility, it may be unable to continue its share repurchase program on current terms, or at all, which could have an adverse effect on the market price of the Company’s common stock and the Company’s ability to return value to stockholders. …”see in full comparison
see in full comparisonExceptThereas set forth below, therehave been no material changes in our risk factors from those disclosed inthe(i) our Annual Report on Form 10-K for the fiscal year endedendedDecember 31,2025.2025 and (ii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. The riskfactor set forth below, together with thosefactors previously disclosed inoursuchForm 10-K,reports constitute important cautionary statements and qualifications with respect to the forward-looking statements and other representations contained in this Quarterly Report on Form 10-Q. While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practicable under the circumstances, some level of risk and uncertainty will always be present. The“RiskriskFactors”factors described intheour Form 10-K and our Form 10-Q for thefiscal yearquarter endedDecemberMarch 31,20252026describesdescribe some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.
Full comparison: every changed paragraph (5)
ExceptThere
as set forth below, there have been no material changes in our risk factors from those disclosed in the(i) our Annual Report on Form 10-K for the fiscal year ended
ended December 31, 2025.2025 and (ii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. The risk factor set forth below, together with thosefactors previously disclosed
in oursuch Form 10-K,reports constitute important
cautionary statements and qualifications with respect to the forward-looking statements and other
representations contained in this Quarterly
Report on Form 10-Q. While we attempt to identify, manage, and mitigate risks and uncertainties
associated with our business to the extent
practicable under the circumstances, some level of risk and uncertainty will always be present.
The “Riskrisk Factors”factors described in theour Form
10-K and our Form 10-Q for the fiscal yearquarter ended DecemberMarch 31, 20252026 describesdescribe some of the risks and uncertainties
associated with our business, which we
strongly encourage you to review. These risks and uncertainties have the potential to materially
affect our business, financial condition,
results of operations, cash flows, projected results, and future prospects.
A
default under the Company’s Loan Agreement could render the Company ineligible to use Registration Statement on Form S-3 for securities
offerings, which would materially impair the Company’s ability to raise capital in the public markets and adversely affect its
share repurchase program.
The
Company currently relies on the availability of Form S-3 registration statements under the Securities Act of 1933 (the “Securities
Act”), to conduct primary and secondary offerings of its securities and to facilitate its share repurchase program. Eligibility
to use Form S-3 is conditioned upon, among other things, the Company’s compliance with the timely filing requirements and other
registrant eligibility conditions set forth in General Instruction I.B of Form S-3, including that the Company has not failed to pay
any dividend or sinking fund installment on preferred stock, or defaulted on any installment on indebtedness for borrowed money, or on
any material lease, since the end of the last fiscal year.
If
the Company were to default on its obligations under the Loan Agreement including any failure to make required interest or principal
payments, satisfy margin calls, or comply with other covenants such default could cause the Company to fail to satisfy the registrant
eligibility requirements of Form S-3. In such event, the Company would be required to conduct any future public offerings of its securities
on Form S-1, which is subject to more extensive disclosure requirements, longer SEC review periods, and greater time and expense to prepare.
The loss of Form S-3 eligibility would significantly impair the Company’s flexibility to access the capital markets on a timely
and cost-effective basis, which could adversely affect the Company’s ability to fund operations, pursue strategic opportunities,
or respond to adverse business conditions.
In
addition, the Company’s share repurchase program relies on the availability of Form S-3 to register shares for resale and to provide
liquidity to stockholders. If the Company loses its Form S-3 eligibility, it may be unable to continue its share repurchase program on
current terms, or at all, which could have an adverse effect on the market price of the Company’s common stock and the Company’s
ability to return value to stockholders. Any of the foregoing could have a material adverse effect on the Company’s business, financial
condition, results of operations, and the value of its securities.
Management's Discussion & Analysis (MD&A)
Largest changes
“Net cash provided by (used in) investing activities was $0 during the 2026 Period, compared to net cash used in investing activities of approximately $9.4 million in the 2025 Period. …”see in full comparison
Total revenues for the 2026 Quarter decreased compared to the 2025 Quarter, primarily due to the decrease of Blockchain infrastructure revenues partially offset by an increase in DeFi activities generated through the Company’s Imperium operations. Blockchain infrastructure revenues decreased compared to the prior period, primarily due to variability in block-building activity and execution-layer rewards,see in full comparisonrewards,which are influenced by transaction flow, validator participation, and network conditions. Staking rewards under NodeOps also decreased,decreased,primarily reflecting the redeployment of digital assets from staking to DeFi activities during the 2026 Quarter. DeFi revenues accounted for approximately 61% of total revenues for the 2026 Quarter and reflect the Company’s expanded participation in decentralized finance activities, including decentralized lending (approximately 22% of revenues) and liquidity pool strategies (approximately 39% of revenues), which were not present in the 2025 Quarter.
“Net cash provided by investing activities was approximately $18.2 million during the 2026 Quarter, compared to net cash used in investing activities of approximately $34 thousand in the 2025 Quarter. The 2026 activity primarily reflects the sale of approximately $18.2 million of digital assets, primarily ETH, to support liquidity management and capital deployment into DeFi and blockchain infrastructure activities.”see in full comparison
Cash used in operating activities was approximatelysee in full comparison$1.7$1.3 million for the 2026Quarter,Period, compared to approximately$1.9$3.2 million for the 2025Quarter.Period. The decreaseprimarilyreflectsimprovedthe combined effect of changes in operatingefficiencyassets andduringliabilitiestheandperiod,significantincludingnoncashImperium DeFi operations, partially offset by the impact of stablecoin flowsadjustments associated withliquiditythepoolCompany’sdeploymentsdigital-asset-denominatedandoperatingother DeFi-related transactions.model.
“The Company had no net cash provided by or used in financing activities during the 2026 Period, compared to net cash provided by financing activities of approximately $11.3 million in the 2025 Period. …”see in full comparison
Professional fees increased for the 2026 Quartersee in full comparisonincreasedand the 2026 Period compared to the2025respectiveQuarter,prior year periods, primarily due to higherlegalaccounting fees reflecting the onboarding of a new audit firm andaccountingelevatedcosts, including an increase inannual auditfees.billings.TheForincreasethereflects2026higherPeriod,accountinglegalcostsfeesassociated with audit and reporting requirements, as well asalso increasedlegalexpenses related toreflecting the Company’s ongoingoperations.operationalProfessionalandfeescompliancemayactivities.fluctuateThese increases were partially offset by lower investor relations costs infuture periods based onboth thelevel2026of legal activity, regulatory requirements, investor relations opportunitiesQuarter andfinancialthereporting2026needs.Period.
Full comparison: every changed paragraph (52)
The
following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical
financial statements and the notes to those statements that appear elsewhere in this report. Certain statements in the discussion contain
forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations
and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements
as a result of a number of factors, including those discussed in the Risk Factors section contained in our Annual Report on Form 10-K
for the year ended December 31, 2025. When we refer to the “2026 Quarter” and the “2025 Quarter” we are referring
to the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. When we refer to the “2026 Period” and the “2025
Period” we are referring to the six months ended June 30, 2026 and June 30, 2025, respectively.
These
activities are closely integrated
with the Company’s digital asset holdings, particularly ETH, which is deployed as collateral
and liquidity to support bothrevenue revenue
generation.
BTCS
entered 2026 with a strategic focus on decentralized finance activities under Imperium. Management expects continued
expansion of Imperium
to drive scalable revenue generation and gross profit growth, while ongoing development of blockchain infrastructure operations around
operations, including Builder+, is expected to support the Company’s broader strategy.
The
following table presents a summary of the Company’s digital asset token holdings as of MarchJune 31,30, 2026, including (i) digital assets
held directly and measured at fair value, (ii) digital assets underlying liquidity pool positions, and (iii) stablecoins held. This table
is intended to provide a consolidated view of the Company’s digital asset exposure and is supplemental to the disclosures included
in the accompanying financial statements. Token quantities are presented to illustrate the Company’s exposure to underlying digital
assets across its operations.
Amounts
presented for digital assets and stablecoins reflect token units held as of MarchJune 31,30, 2026. Total carrying value and total fair value
are presented in U.S. dollars.
The
Company’s treasury management
strategy is designed to balance revenue andgeneration, profit,profitability, liquidity, and risk management. BTCS seeks to
maintain sufficient liquidity to support
ongoing operations while deploying digital assets, including through DeFi lending and liquidity
pool participation, to support scalable
revenue generation.
Results
of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025
The
following table reflects our operating results for the three months ended MarchJune 31,30, 2026 and 2025:
The following table reflects our operating results for the six months ended June 30, 2026 and 2025:
Revenues
Total
revenues for the 2026 Quarter increased compared to the 2025 Quarter, primarily due to the addition of DeFi revenues generated through
the Company’s Imperium operations.
Total
revenues for the 2026 Quarter decreased compared to the 2025 Quarter, primarily due to the decrease of Blockchain
infrastructure revenues
partially offset by an increase in DeFi activities generated through the Company’s Imperium operations. Blockchain infrastructure
revenues decreased compared to the prior period, primarily due to variability in block-building activity and execution-layer rewards,
rewards, which are influenced by transaction flow, validator participation, and network conditions. Staking rewards under NodeOps also decreased,
decreased, primarily reflecting the redeployment of digital assets from staking to DeFi activities during the 2026 Quarter. DeFi revenues accounted
for approximately 61% of total revenues for the 2026 Quarter and reflect the Company’s expanded participation in decentralized
finance activities, including decentralized lending (approximately 22% of revenues) and liquidity pool strategies (approximately 39%
of revenues), which were not present in the 2025 Quarter.
Total
revenues for the 2026 Period increased compared to the 2025 Period, primarily due to a growth in Imperium operations, which more than
offset a decline in blockchain infrastructure revenues. DeFi
revenues accounted for approximately 47%55% of total revenues for the 2026 Quarter
Period and reflect the Company’s expanded participation
in decentralized finance activities, including decentralized lending (approximately 25%
24% of revenues) and liquidity pool strategies (approximately
22% 31% of revenues), which were not present in the 2025 Quarter.Period. Blockchain
infrastructure revenues decreased compared to the prior period, primarily due to variability in block-building activity and execution-layer
rewards, which are influenced by transaction flow, validator participation, and network conditions. Staking rewards under NodeOps also
decreased, primarily reflecting the redeployment of digital assets from staking to DeFi activities during the 2026 Period.
Cost
of revenues for the 2026 Quarter and 2026 Period decreased compared to the 2025 Quarter,Quarter and 2025 Period, primarily due to lower validator
payments (“Validator
Payments”) associated with block-building activities and improved infrastructure efficiencies.
Cost
of revenues continues to be primarily driven by validatorValidator paymentsPayments required to secure block inclusion, as well as infrastructure and
hosting costs associated with blockchain operations. DeFi-related costs were minimal during the 2026 Quarter.Quarter and 2026 Period.
Professional
fees increased for the 2026 Quarter increasedand the 2026 Period compared to the 2025respective Quarter,prior year periods, primarily due to higher legalaccounting
fees reflecting the onboarding of a new audit firm and accountingelevated costs, including an increase
inannual audit fees.billings. TheFor increasethe reflects2026 higherPeriod, accountinglegal costsfees associated with audit and reporting requirements, as well asalso increased legal
expenses related toreflecting the Company’s ongoing operations.operational Professionaland feescompliance mayactivities. fluctuateThese increases were partially offset by lower investor
relations costs in future periods based onboth the level2026 of legal
activity, regulatory requirements, investor relations opportunitiesQuarter and financialthe reporting2026 needs.Period.
General
and administrative expenses for the 2026 Quarter and 2026 Period decreased compared to the 2025 Quarter,Quarter and 2025 Period, primarily due
to continued discipline in overall
administrative spending. General and administrative expenses may fluctuate in future periods based
on operational growth, regulatory
requirements, and overall business activity.
Research
and development expenses for the 2026 Quarter and 2026 Period decreased compared to the 2025 Quarter,Quarter and 2025 Period, primarily due to
the completion and wind-down of
development activities related to ChainQ in 2025 and the transition of certain Builder+ and related infrastructure
initiatives from development into routine, revenue-generating operations, which resulted in a significant reduction in employee salary
operations.allocations to R&D. During the 2026 Quarter,Quarter and 2026 Period, research and development activities were more limited and consisted
primarily of feasibility assessments,
testing, and evaluation of blockchain infrastructure enhancements and decentralized finance initiatives,
resulting in lower overall R&D
spending compared to the prior year.
Compensation
and related expenses for the 2026 Quarter and 2026 Period increased compared to the 2025
Quarter Quarter,and 2025 Period, primarily due to equity-based compensation expense
related to amortization of unvested employee stock options
and restricted stock units issued during the 2026 Quarter.2026. The Company continues
to utilize equity-based compensation as a key component of its total
rewards strategy to align employee incentives with long-term shareholder
value. Total compensation costs may fluctuate based on headcount
changes, the timing of performance-based accruals, and the issuance
or forfeiture of equity awards.
Marketing
expenses for the 2026 Quarter decreasedincreased compared to the 2025 Quarter, primarily reflecting aan reductionincrease in marketing and promotional activities
during the period. The timing and level of marketing expenditures may vary in future periods based on the Company’s strategic initiatives
and market conditions.
Marketing expenses for the 2026 Period decreased compared to the 2025 Period, primarily due to the non-recurrence of significant one-time advertising campaigns in the 2025 Period.
The timing and level of marketing expenditures may vary in future periods based on the Company’s strategic initiatives and market conditions.
For
the 2026 Quarter,Quarter and 2026 Period, the Company
recorded an impairment loss on intangible digital assets, including non-fungible tokens
(“NFTs”) and tokenized liquidity pool
positions. The impairment reflects declines in the estimated fair value of these assets,
including changes in the value of underlying
digital assets for liquidity pool positions, below their carrying value during the period.
These impairment losses are non-cash in nature.
Realized
losses on digital assets transactions for the 2026 Quarter and 2026 Period increased compared to the 2025 Quarter,Quarter and 2026 Period, primarily
due to (i) sales of ETH
to manage collateral levels and repay borrowings under DeFi arrangements and (ii) the derecognition of ETH upon
deposit into liquidity
pool positions.
The
Company recognized significant unrealized losses in the fair value of its digital asset holdings for the 2026 Quarter and 2026 Period
compared to the
2025 Quarter.Quarter and 2025 Period. The change was primarily driven by declines in the market prices of Ethereum and other
digital assets held and deployed
in the Company’s operations during the period, reflecting the inherent volatility of digital asset
markets. These fair value adjustments
are non-cash in nature but may continue to materially affect the reported fair value of digital
assets and impact reported operating
results due to the volatility of digital asset markets in future periods.
Total
operating expenses for the 2026 Quarter and 2026 Period increased compared to the 2025 Quarter,Quarter and 2025 Period, primarily driven by realized
and unrealized losses on
digital assets and higher compensation expense during the period. Operating expenses for the current quarter
also included unrealized
losses on digital assets, reflecting changes in the fair value of ETH and other digital assets held and deployed
in the Company’s
operations.
Interest
expense for the 2026 Quarter and 2026 Period increased compared to the 2025 Quarter,Quarter and 2025 Period, primarily due to interest accrued
on decentralized borrowings through
DeFi lending arrangements, as well as interest and amortization expense related to the Company’s
May 2025 and July 2025 Senior
Secured Convertible Notes (the “Notes”). This includes both cash interest paid and the amortization
of debt discount over
the term of the Notes.
The
Company did not recognize any gain or loss related to the change in the fair value of warrant liabilities during 2026 Quarter,Quarter and 2026
Period, as the
outstanding warrants expired in the currentprior period and are no longer subject to remeasurement. In 2025 Quarter,Quarter and 2025
Period, the Company recognized
a non-cash loss of approximately $165,000 and a non-cash gain of approximately $225,000$60,000 related to the
change in the fair value of warrant liabilities. The prior quarter and period gainlosses was primarily
attributable to movements in the Company’s
stock price and related volatility. As there are no remaining warrant liabilities, the
Company does not expect to recognize further gains
or losses related to this item in future periods.
Total
other income (expenses) reflected a net expense for the 2026 Quarter and net2026 incomePeriod forcompared to the 2025 Quarter.Quarter and 2025 Period. The
net expense for the 2026
Quarter and 2026 Period was primarily driven by interest expense incurred in connection with DeFi borrowings
and outstanding convertible notes. In the comparable 2025 Quarter, total other expense was further impacted by a non-cash loss related
to the change in the fair value of warrant liabilities. In the comparable 2025 Period, total other income was primarily attributableoffset to
by a non-cash
gain related to the change in the fair value of warrant liabilities.
Net loss for the 2026 Quarter and 2026 Period increased compared to the 2025 Quarter net income and 2025 Period net loss. In the 2025 Quarter, the Company reported net income primarily due to unrealized gains on digital assets resulting from favorable market price movements during that period, which were not present in the 2026 Quarter. In the 2026 Quarter and 2026 Period, net loss was primarily driven by unrealized losses on the fair value of the Company’s digital asset holdings resulting from declines in digital asset market prices during the quarter, as well as realized losses on digital asset transactions, including sales of ETH to manage collateral levels in DeFi borrowing arrangements and the derecognition of ETH upon deposit into liquidity pool positions. These items were primarily non-cash in nature, except for realized losses associated with asset sales.
On
July 22, 2025, the Company entered into an amendment to its engagement with H.C. Wainwright in connection with a new Form S-3 registration
statement filed on July 23, 2025, to register up to $2 billion of securities for future issuance (the “New Registration Statement”).
The New Registration Statement was approved by the SEC and declared effective on August 1, 2025. As of the date of this report, the Company
had not sold any
securities under the New Registration Statement.
From
September 14, 2021 through MayAugust 14,17, 2026, the Company sold a total of 32,762,52333,361,730 shares of common stock under the ATM Agreement
for for
aggregate total gross proceeds of approximately $163.6$164.2 million at an average selling price of $4.99$4.92 per share, resulting in net
proceeds proceeds
of approximately $158.5$159.1 million after deducting commissions and other transaction costs.
From
September 11, 2025 through MayAugust 14,17, 2026, the Company repurchased and retired 888,677 shares of our common stock for an aggregate
purchase purchase
price of approximately $4.0 million. The repurchases were funded from available cash on hand and are presented as a financing
cash outflow
in our statement of cash flows. All repurchased shares were immediately retired and are no longer considered issued or outstanding.
As As
of MayAugust 14,17, 2026, approximately $46.0 million remained available for repurchases under the authorization.
From
January 1, 2025 through MayAugust 11,17, 2026, the Company borrowed an aggregate
of approximately $123.5$130.4 million in stablecoins, primarily USDT
and GHO, through Aave, a DeFi lending protocol, using ETH as collateral,
and repaid approximately $79.7$87.9 million during the same period.
These borrowings included transactions executed in connection with on-chain
debt refinancing activities. As of MayAugust 11,17, 2026, the
Company had approximately $44.3$43.0 million in outstanding DeFi borrowings, inclusive
of accrued interest, collateralized by approximately 50,128
46,525 ETH with an aggregate fair value of $117.3$88.7 million, based on the closing price
of $2,339$1,905 per ETH on that date. Because these borrowings
are overcollateralized, declines in the market price of ETH could require the
Company to post additional collateral or repay a portion
of the borrowings to maintain required collateralization levels under the Aave
protocol. Management monitors the collateral value and
associated loan health factors on an ongoing basis and may add collateral or reduce
borrowings in response to significant market movements.
Borrowings
through Aave accrue interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically based on
protocol liquidity and market utilization. ETH collateral posted to Aave simultaneously accrues variable interest at rates that fluctuate
based on the same market factors. These rates are determined algorithmically by the protocol based on market conditions and are publicly
available through on-chain protocol data. As a result, the Company’s net cost of capital may vary depending on prevailing protocol-level
conditions. The Company has no control over these rate adjustments and is subject to the risk of significant rate increases. As of MayAugust
11,17, 2026, the Company had outstanding borrowings denominated in USDT and GHO, with variable borrowing rates on the Aave protocol applicable
to those borrowings of approximately 3.94%3.81% and 3.82% per annum, respectively.
Borrowings
through DeFi protocols are subject to risks not present in traditional financing arrangements, including collateral liquidation risk,
protocol governance changes, smart contract vulnerabilities, manipulation risk, market volatility affecting collateral values, and the
absence of traditional legal recourse or bankruptcy protections. Management actively monitors collateralization ratios and protocol conditions
and may reduce or repay borrowings in response to market movements or changes in risk tolerance. As of MayAugust 11,17, 2026, the Company
has has
not experienced any full or partial liquidation events related to its DeFi borrowings, but remains subject to such risks under adverse
market conditions.
Convertible
Notes Payable
As
of MarchJune 31,30, 2026, the Company did not have any recorded dividend payables or other obligations related to these distributions. The Company
does not currently anticipate declaring regular cash or digital asset dividends, and the declaration of future dividends or other capital
distributions, if any, will depend on the Company’s financial condition, results of operations, liquidity position, capital requirements,
and other factors considered by the Board.
Liquidity
is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate
on an ongoing basis. At MarchJune 31,30, 2026, the Company had approximately $0.3 million of cash and cash equivalents and working capital of
approximately $84.1$45.6 million.
As
of MayAugust 11,17, 2026, the Company had approximately $141.5$113.4 million of cash,
stablecoins, and liquid digital assets (primarily ETH). Because
the Company’s liquidity position includes digital assets and DeFi-related
balances that are subject to market volatility, protocol-based
reward accruals, and borrowing activity, such balances may fluctuate materially
over short periods and may differ from balances as of
the filing date.
As
of MayAugust 11,17, 2026, the Company had total debt obligations of approximately
$62.1 $60.8 million, consisting of approximately $44.3$43.0 million
of underDeFi itsborrowings lendingon arrangement withthe Aave Protocol and approximately $17.9 million
of convertible notes payable.notes. The Company’s DeFi borrowing
balances and related collateral values may fluctuate based on borrowing
activity, accrued interest, and changes in digital asset
market prices. Of these debt obligations, the $43.0 million of DeFi borrowings on Aave have no fixed maturity date and remain outstanding until repaid or liquidated in accordance with Aave’s protocol terms, and are classified
as a current liability on the Company’s balance sheet. The $17.9 million
of convertible notes is due within 12 months of the filing date of this report.
Certain
digital assets may be subject to protocol-defined unstaking or withdrawal periods, which could limit the Company’s ability to rapidly
convert those assets to cash. As of MayAugust 11,17, 2026, unstaking periods for the Company’s staked digital assets generally ranged
from from
several hours to thirty days, though such periods may change based on protocol upgrades or network conditions. Market volatility,
network network
congestion, or regulatory developments could further restrict liquidity or adversely affect realized prices.
Cash
used in operating activities was approximately $1.7$1.3 million for the 2026 Quarter,Period, compared to approximately $1.9$3.2 million for the 2025
Quarter.Period. The decrease primarily reflects improvedthe combined effect of changes in operating efficiencyassets
and duringliabilities theand period,significant includingnoncash Imperium DeFi operations, partially
offset by the impact of stablecoin flowsadjustments associated with liquiditythe poolCompany’s deploymentsdigital-asset-denominated andoperating other DeFi-related transactions.model.
Net cash provided by (used in) investing activities was $0 during the 2026 Period, compared to net cash used in investing activities of approximately $9.4 million in the 2025 Period. The Company had no cash investing activity during the 2026 Period because deployments of digital assets into liquidity pool positions, withdrawals of digital assets from liquidity pool positions, related swaps between ETH and stablecoins undertaken to facilitate such liquidity pool activity, and the disposition of digital assets in exchange for stablecoins were settled in digital assets rather than cash and, accordingly, are excluded from investing activities on the face of the statement of cash flows and are presented within the supplemental disclosure of noncash investing and financing activities.
Net
cash provided by investing activities was approximately $18.2 million during the 2026 Quarter, compared to net cash used in investing
activities of approximately $34 thousand in the 2025 Quarter. The 2026 activity primarily reflects the sale of approximately $18.2 million
of digital assets, primarily ETH, to support liquidity management and capital deployment into DeFi and blockchain infrastructure activities.
The Company had no net cash provided by or used in financing activities during the 2026 Period, compared to net cash provided by financing activities of approximately $11.3 million in the 2025 Period. During the 2026 Period, the Company received approximately $1.0 million of DeFi borrowing proceeds in stablecoins, settled approximately $26.5 million of DeFi borrowing principal through digital assets and stablecoins, and settled the Loyalty Payment described in Note 11 – Dividends and Capital Distributions through a non-cash distribution of approximately $723,000 in ETH to eligible common stockholders. Because these transactions did not involve cash or cash equivalents, they are excluded from financing activities on the face of the statement of cash flows and are presented within the supplemental disclosure of noncash investing and financing activities.
Cash financing activities during the 2025 Period primarily consisted of approximately $4.1 million of net proceeds from the Company’s at-the-market offering and approximately $7.3 million of net proceeds from the issuance of convertible notes, partially offset by approximately $0.1 million of debt issuance costs.
Net
cash used by financing activities was approximately $17.7 million during the 2026 Quarter, compared to net cash provided by financing
activities of approximately $0.2 million in the 2025 Quarter. Financing outflows during the 2026 Quarter were primarily driven by:
We
anticipate future financing activity may include additional DeFi borrowings and capital raised through the ATM program or through other
financing instruments, as we continue to scale blockchain infrastructure and DeFi operations, enhance liquidity, and support ongoing
capital deployment across blockchain infrastructure and DeFi activities.deployment.
As
of MarchJune 31,30, 2026, there were no off-balance sheet arrangements, and we were not a party to any off-balance sheet transactions. We have
no guarantees or obligations other than those that arise out of normal business operations.
There
have been no material changes to our critical accounting policies during the threesix months ended MarchJune 31,30, 2026. However, the application
of these policies continues to involve significant judgment, particularly with respect to (i) the fair value measurement of digital assets,
(ii) the classification and liquidity of digital assets deployed in staking and DeFi arrangements, (iii) revenue recognition from blockchain
infrastructure and DeFi activities, and (iv) the evaluation of risks associated with collateralized borrowing arrangements.
This
report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding our
liquidity, our growth strategy, our ability to generate scalable and efficient revenue, anticipated increases in our revenues and gross
margins, our capital allocationresources; anddigital treasuryasset management strategies, the expected performance of ourstrategy; blockchain infrastructure andoperations (Builder+); DeFi activities (Imperium);
operationscapital allocation; and ourrevenue/gross futureprofit business plans.expectations. Forward-looking statements can be identified by words such as “anticipates,” “intends,”
“may,” “potential,” “continues,” “plans,” “seeks,” “believes,”
“estimates,” “expects” and similar references to future periods.
BTCS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 3 filings (2 insiders, 5 trade dates, 685,000 shares, about $812.1K; 2 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -685,000 (purchases minus sales); net value about -$812.1K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-15 | Allen Charles W |
Open-market sale |
168,000 | $1.22 | $205.0K |
| 2026-06-12 | Allen Charles W |
Open-market sale |
87,000 | $1.15 | $100.0K |
| 2026-06-11 | Allen Charles W |
Open-market sale |
165,000 | $1.11 | $183.2K |
| 2026-06-10 | Hunter Benjamin Henry |
Open-market sale | 10,000 | $1.21 | $12.1K |
| 2026-06-10 | Allen Charles W |
Open-market sale |
150,000 | $1.19 | $178.5K |
| 2026-06-09 | Allen Charles W |
Open-market sale |
105,000 | $1.27 | $133.3K |
Well-known investors holding BTCS (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 1,128,350 | $1.3M | 0.0% | Added 143% |
| Renaissance Technologies | 2026-06-30 | 1,058,530 | $1.2M | 0.0% | No change |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 39,942 | $44.3K | 0.0% | Added 172% |