RIOT 10-K & 10-Q changes, risk factors and insider trading

The Company’sOur business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described below. When any one or more of these risks materialize from time to time, the Company’sour business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events, or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. This section should be read in conjunction with Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report and the consolidated financial statements and accompanying notes.notes included in this Annual Report.

The Bitcoinbitcoin industry has historically been subject to various asset-related risks relating to Bitcoin, as an asset, whichthat have adverselynegatively affected thebitcoin’s market price of Bitcoin.price. Ownership of Bitcoinbitcoin has,has historically,traditionally been concentrated inamong a relatively smalllimited number of personsholders, orwhose entitieslarge that,positions collectively,give holdthem athe significantability numberto ofinfluence Bitcoinmarket prices (referred to as “whales” in the Bitcoin industry). WhileAlthough ownership of Bitcoin has diversified significantly in recent years, whales continueremain toactive existin whosethe marketmarket, activityand (e.g.,their salestrading behavior, such as selling substantial quantities of large numbers of Bitcoin)bitcoin, could haveadversely an adverse effect on theaffect demand for, and the market price of, Bitcoin,bitcoin. whichAny material decline in the price of bitcoin could haveadversely an adverse effect onaffect our businessbusiness, financial condition, and results of operation.operations. Further,Although whilelarger larger,and increasingly regulated exchangesdigital withasset greatertrading transparency and oversightplatforms have begun to proliferate,emerged, the Bitcoinbitcoin economymarket remains nascent and largelyrelatively opaque.opaque Thecompared to traditional financial markets. Trading venues for Bitcoin transactionsbitcoin may experience greaterheightened operational problemsissues and may be exposedmore susceptible to a greater risk of facilitating unethical, fraudulentfraudulent, or illicit transactionsactivities, (such asincluding “wash tradingtrading,”), than traditional financial markets andregulated securities exchanges. Digital asset trading platforms may also be susceptiblevulnerable to “front-runningfront-running,” activity,in which ismarket theparticipants processexploit by which someone uses technologytechnological or marketinformational advantageadvantages to obtaintrade prior knowledgeahead of upcomingknown or anticipated transactions allowingfor badeconomic actorsgain. Such practices are reported to takebe advantagerelatively of forthcoming price movement and make economic gains at the cost of those who introduced the transactions. Front-running is a frequent activitycommon on both centralized and decentralized digital asset platforms. In addition, many bitcoin trading platforms. Further, venues for Bitcoin transactions do not typicallypublicly makedisclose completecomprehensive information regarding their ownership structure, management teams,governance, corporate practices, andor compliance with regulatory compliancerequirements. availableThis lack of transparency limits the ability of market participants to assess the public,integrity who are, therefore, unable to verify theor impartiality of suchthese venuesvenues. inThe respectpresence of whales, combined with the Bitcoinbitcoin transactionsmarket’s theylimited facilitate.transparency, Assusceptibility ato resultmanipulative trading practices, and comparatively low levels of suchregulatory lack of regulation and transparency, as well as the risk posed by Bitcoin whales, wash trading and front-running, the publicoversight, may loseundermine public confidence in Bitcointhe integrity of bitcoin transactions and the price integrityreliability of thebitcoin digitalpricing. asset,A whichresulting couldloss adverselyof affectconfidence or decline in the market price of Bitcoin,bitcoin, perhapspotentially materially,significant, whichcould wouldadversely have an adverse impact onaffect our businessbusiness, financial condition, and results of operations.

There is a finite supply of Bitcoin,bitcoin, and the number of new Bitcoin rewarded perdeclining block algorithmically decreasesreward over time,time which posespresents a risk to our business.

WeBitcoin operatemining inis a highly competitive marketmarket, and if we fail to grow our hash rate,rate in a cost-effective manner,manner we may be unable to compete.

We may be unable to access sufficient additional capital forneeded futureto strategicgrow growthour initiatives.business.

We may be exposed to price volatility and uncertainty in our supply chain due to geopolitical crises and economic downturns such as recessions, rising inflation, tariffs, social, political and economic risks, conflicts and acts of war, sanctions and other restrictive actions by the United States and/or other countries. Changes in policy positions and priorities from the new U.S. government administration could increase this price volatility and uncertainty. Such crises will likely continue to have an effect on our ability to do business in a cost-effective manner. Inflationary pressures, as well as disruptions in our supply chain, have increased the costs of goods, services and personnel, which have in turn caused our capital expenditures and operating costs to rise. Additionally, these crises may discourage investment in Bitcoinbitcoin and investors may shift their investments to less volatile assets. The effects of such global economic shifts, worsening inflationary issues, changes in policy, and geopolitical events could adversely affect our ability to access the capital and other financial markets, as such, we may be required to consider alternative sources of funding for our growth and operations which may increase our cost of capital. Such events and conditions could have a materially adverse effect on our business, operations, or financial results and the value of the Bitcoinbitcoin we mine.

Strategic acquisitions, such as the Block Mining Acquisition and the E4A Solutions Acquisition, both in 2024, and the acquisitionsacquisition of Whinstone US, Inc. (“Whinstone”) and ESS Metron, bothMetron in 2021, are keyimportant tocomponents of our growth strategy. The success of any acquisition depends, in part, on our ability to effectively integrate the acquired business and realize the anticipated synergies. Integration efforts may involve unforeseen difficulties, require asignificant disproportionateattention amountfrom of our management’s attention,management, and may necessitate reallocating resources, both financial orand otherwise.operational resources. We may encounter challenges in the integration process, including difficulties associated with managing a larger and more complex organization ; aligning administrative, operational, and corporate structures; integrating internal controls, processes, and policies; reconciling differing business cultures; hiring and retaining key employees; harmonizing compensation and benefits programs; coordinating geographically dispersed operations; and executing our business strategy across the combined organization.

Acquisitions may also expose us to newadditional liabilities and risks, some of which may be unknown.unknown at the time of acquisition. Although we andconduct our advisors conductextensive due diligence on the operations of the businessesdiligence, we acquire, there can be nocannot guarantee that we arewill aware ofidentify all liabilitiesmaterial issues, liabilities, or risks associated with an acquired company.business. TheseAny such unknown or unanticipated liabilities, andwhether anyfinancial, additionallegal, risksregulatory, operational, or otherwise, could materially and uncertaintiesadversely related to an acquired company not known to us or that we may deem immaterial or unlikely to occur at the time of the acquisition, could negatively impactaffect our future business, financial condition, and results of operations.

We can give no assurance that we will be able to effectivelysuccessfully integrate and manage the operations of any acquired businessbusinesses, achieve expected synergies, or realize anticipatedthe synergies.benefits we anticipate. Failure to successfullydo integrate an acquired businessso could have a material adverse effect on our financial condition andcondition, results of operations.operations, and ability to execute our growth strategy.

We have financed our strategic growth primarilythrough by issuing new sharesissuances of our common stock in public offerings and the issuance of debt and planexpect to raisecontinue raising additional capital through similar offerings in the future, and our inability to do so on favorable terms maycould adversely affect our operations and the market price of our securities.

We have raisedhistorically capital to financefinanced the strategic growth of our business through public offerings of our common stock and the issuance of debt, and planexpect to raise additional capital through similar offeringsfinancing activities to fundsupport our current and future expansion initiatives. We may not be able to secureobtain additional debtequity or equitydebt financing on favorable terms, ifor at all,all. whichAny inability to secure necessary financing could hinder our growth and adversely impact our operations. Market disruptions in the digital asset industry may also affect our access to capital. In 2022 and 2023, a number ofseveral digital asset platforms and exchanges filed for bankruptcy and/or became thesubject subjectsto ofgovernment investigationinvestigations byrelating various governmental agencies for,to, among other things, alleged fraud. These disruptionsevents contributed to volatility and reduced confidence in the cryptodigital asset marketecosystem and may negatively impact our ability to obtain favorablefinancing financing.on acceptable terms. If we raise additional equity financing,capital, our stockholders may experience dilution of their ownership interests, and the permarket share valueprice of our common stock couldmay decline. If we are unable to generate sufficient cash flows to support our strategic growth,initiatives, we may be required to adoptimplement onealternative ormeasures, more alternatives, such asincluding reducing or delaying investments or capital expenditures, selling assets, or obtainingpursuing additional equity financing on terms that may be onerous or highly dilutive. Furthermore, asIf we engageincur inadditional debtindebtedness, financing,lenders may have priority over holders of our common stock with respect to repayment and liquidation preferences in the event of bankruptcy,bankruptcy theor holdersliquidation. ofDebt any debt we issue would likely have priority over the holders of shares of our common stock in terms of order of payment preference. Wefinancing may bealso requiredinclude torestrictive accept termscovenants that restrictlimit our ability to incur additional debtindebtedness or take other actions, includingand accepting terms thatmay require us to maintain specifiedcertain liquidity or otherfinancial ratios that could otherwisemay not bealign inwith the interests of our stockholders. Any of these events could adversely affect our business, financial condition, results of operations, and the market price of our securities.

Our primary focus is on vertically integrating our Bitcoin mining, and weWe have recorded historical operating losses and negative cash flowflows from ouroperations, operationsparticularly whenduring periods in which the value of Bitcointhe bitcoin we minemined doesdid not exceed ourthe associated costs.operating, Further,energy, aspersonnel, and capital costs of our Bitcoin Mining activities. As part of our strategic growth plans, we have mademade, and expect to continue making, significant capital investments ininto expandingdata center operations, increase our workforce, and verticallysupport integratingthe ownership and operation of our BitcoinFacilities. MiningThese operations,investments increasingincrease our employeecost base,base and incurringmay additionalcontribute costs associated with owning and operating a self-mining facility. However,to future marketlosses pricesif of Bitcoinwe are difficultunable to predict,generate andsufficient werevenue to offset these expenses. We cannot guaranteeassure you that our future Bitcoin Mining revenue will exceed our associated costs.costs or that we will achieve or maintain profitability. Continued operating losses could materially and adversely affect our business, financial condition, and results of operations.

The lack oflimited regulation of digital asset exchanges on which Bitcoin,bitcoin and other cryptocurrencies,cryptocurrencies are traded on may expose us to the effects of negative publicity resultingassociated fromwith fraudulent actorsor inunstable themarket cryptocurrencyparticipants, spacewhich and cancould adversely affect an investment in the Company.us.

The digital asset exchanges on which Bitcoinbitcoin is traded are relatively new andand, largelyin many jurisdictions, remain unregulated. Many digital assetsuch exchanges do not provide the public with significantcomprehensive information regarding their ownershipownership, structure, management teams,management, corporate governance, business practices, or regulatory compliance. As a result, the marketplace may lose confidence in,in these exchanges or may experience problemsdisruptions relatingassociated to,with suchtheir digital asset exchanges,operations, including prominentwith respect to exchanges handlingthat handle a significant portion of the volume of digital asset trading. In 2022 and 2023, a number ofseveral digital asset exchanges filed for bankruptcy proceedingsprotection and/or became thesubject subjectsto of investigationinvestigations by various governmental agenciesauthorities for,regarding amongalleged fraud and other things,misconduct. fraud,These causingevents agenerated loss of confidence and an increase insignificant negative publicity for the broader digital asset ecosystem.ecosystem Asand acontributed result,to increased price volatility across many digital asset markets, including the market for Bitcoin,bitcoin. haveA experiencedcontinued increasedloss price volatility. The Bitcoin ecosystem may continue to be negatively impacted and experience long term volatility ifof public confidence decreases.in digital asset exchanges may negatively impact the bitcoin ecosystem as a whole and may result in sustained or increased volatility.

These eventsdevelopments areremain continuing to developongoing, and it is not possible to predict,predict atall thisof time,the every riskrisks that they may posearise tofor us, our counterparties, our service providers, or the digital asset industry as a whole.generally. A perceived lack of stability in the digital asset exchange market andas well as the closurefailure, temporary shutdown, or temporary shutdownrestriction of digital asset exchanges due to businessoperational failure,issues, hackerscybersecurity breaches, fraud, insolvency, or malware, government-mandated regulation, or fraud regulation—may reduceerode confidence in digital asset networks and resultcontribute into greaterfurther volatility in cryptocurrency values.prices. TheseAny potentialsuch consequences of a digital asset exchange’s failure could havematerially aand materialadversely adverse effect onaffect the market price forof our securities.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information thatintended willto assist in the readerunderstanding in understandingof our results of operations and financial condition. This MD&A should be read in conjunction with our Consolidated Financial Statements and the related notes (the “Notes”) that are included in Part II, Item 8. “Financial Statements and Supplementary Data” of this Annual Report.

DiscussionsThis ofMD&A 2022generally discusses 2025 and 2024 items and a year-to-year comparisonscomparison between 2025 and 2024. Discussion of 2023 items and a year-to-year comparison between 2023 and 2022 not impacted by the elimination of the Data Center Hosting reportable segment are not included in this MD&A, and2024 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’sour Annual Report on Form 10-K for the year ended December 31, 2023.2024.

This MD&A includes forward-looking statements based uponon our current expectations that involve risks and uncertainties, such as our 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. See “Cautionary Note Regarding Forward-Looking Statements.Statements” and Part I, Item 1A. “Risk Factors” of this Annual Report for a discussion of factors that could cause actual results to differ materially – and potentially adversely – from the results described in or implied by the forward-looking statements contained in this MD&A and elsewhere in this Annual Report.

We are organizedoperate in two reportable business segments: Bitcoin Mining and Engineering.

During the year ended December 31, 2024,2025, we continued development activities at the Corsicana Facility, acquired the Kentucky Facility and deployed miners at all our Facilities, with the objective of increasing our operational efficiency and performance in the future. As of December 31, 2024,2025, we had a total deployed hash rate capacity of 31.538.5 EH/s, as compared to 12.431.5 EH/s as of December 31, 2023,2024, an increase of 154.0%.22.1%.

During the year ended December 31, 2024,2025, we mined 4,8285,686 Bitcoin,bitcoin, as compared to 6,6264,828 Bitcoinbitcoin mined during the year ended December 31, 2023.2024. The decreaseincrease of 1,798858 Bitcoinbitcoin was primarily due to the April 2024 halving event, which was partially offset by our increase in deployed hash rate.rate as a result of the development of the Corsicana Facility, the acquisition of Block Mining and our significantly improved operational efficiency, partially offset by the increase in the global network hash rate and the halving that occurred in April 2024.

The Coinbase Prime Broker Agreement contains certain mutual indemnification provisions, including that Coinbase will indemnify the Company from and against direct claims and losses arising out of or relating to any (i) violation, misappropriation, or infringement upon any United States patent, copyright, trademark, trade secret or other intellectual property right of a third partythird-party or (ii) violation of applicable law, unless such claims or losses arise out of or relate to the Company’s gross negligence, fraud, willful misconduct, or breach of the Coinbase Prime Broker Agreement. The Company will indemnify Coinbase from and against any and all third-party claims and losses arising out of or relating to the Company’s breach of the Coinbase Prime Broker Agreement, the Company’s violation of any law, rule, or regulation, or rights of any third party,third-party, or the Company’s gross negligence, fraud, or willful misconduct, except to the extent such third-party claims and losses resulted from the gross negligence, fraud or willful misconduct of Coinbase.

During 2023, 2024, and 2025, we entered into purchase orders under the Master Agreement to acquire new immersion miners from MicroBT. These purchase orders represented a total hash rate of 25.649.2 EH/s, forwith a total purchase price of approximately $453.4$779.5 million, subject to downward price adjustmentadjustments as provided by the Master Agreement. These miners are primarily for use at the Corsicana Facility, which commenced operations in April 2024. Delivery of these miners began in 20232023, and all miners under these purchase orders are expected to be received and deployed by mid-2025.the second quarter of 2026, with deployment following on an ongoing basis. The Master Agreement provides us with four additional annual options to purchase miners, on the same or more favorable terms as the second purchase order executed under the Master Agreement. These additional miners represent a total hash rate of approximately 75.0 EH/s, assuming exercise of all four annual purchase options.

Our Engineering business designs and manufactures power distributionpower-distribution equipment and custom engineeredengineered-to-order electrical products. TheThese products allowsupport usour tovertical vertically-integrateintegration manystrategy by enabling the internal development of critical electrical componentsequipment and engineering services necessary for developments at our siteFacilities. developmentsThis andintegration tohelps reduce ourmitigate execution and counter-partycounterparty risk in ongoing and future expansion projects. The specialized talent employed in our Engineering business allows us the opportunity to explore new methods to optimize and develop best-in-class Bitcoin Mining operations and havehas been instrumental in the development of our industrial-scale immersion-cooled Bitcoin miningMining hardware. The vertical integration of our Engineering division gives us additional strength and security in developing and deploying our Data Center buildouts. Our Data Center business is able to leverage Engineering’s market specific expertise for best-in-class design as well as speed to market.

Our Engineering business also provides electricityelectrical distribution product design, manufacturing, and installation services primarily focused on large-scale commercialindustrial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power generation, utility, water, industrial, and alternative energy.

In December 2024, we acquired E4A Solutions, a leading provider of electrical engineering services to a diverse customer base of energy developers and data center operators (the “E4A Solutions Acquisition”). This acquisition adds tostrengthens our vertically integrated strategy by adding engineering expertise to service its own existing and future electrical infrastructure as well as provide solutions and services to the rapidly growing market for electrical infrastructure.

Long-term power contracts form the basis of our power strategy. We utilize our Power Purchase Agreements (together, the “PPAPPAs”) in place at the Rockdale Facility (the “Rockdale PPA”), Corsicana Facility (the “Corsicana PPA”) and Kentucky Facility (the “Kentucky PPA”) in the following ways:

We power down operations and return power to the utility when prevailing market electricity prices for electricity provideoffer the potential for us to receive morerealize power curtailment credits thanin excess of the Bitcoin Mining revenues we would have generatedotherwise had we not curtailed our mining operations.generated. We receive power credits for the difference in the market power price and our fixed power price,price. whichBy provides uscapturing the abilityspread between market power prices and our fixed-rate power contracts, we are able to maximize our overall profitability between Bitcoin Mining andwhile supporting thegrid gridstability by notreducing drawingdemand for power fromduring theperiods gridof whenpeak electricity is most scarce.scarcity.

We competitively bid to sell ERCOT and MISO the option to control our electrical load during certain hours. ERCOT and MISO compensate us in the form of Demand Response Service Programs’ Credits, which are received whether or not we are called on to power down.

At the Rockdale Facility and the Corsicana Facility, we voluntarily power down operations during times of peak demand in summer months. Participation provides us with substantial savings on transmission costs in the subsequent year’s power bills, reducing our overall power costs.

The following table presents our power curtailment credits at the Rockdale Facility and the Kentucky Facility:

Increased Competition and Global Network DifficultyHash Rate

The price of Bitcoinbitcoin increased during the first quarter of 2024 due to areached new sourceall-time ofhighs demand,in 2025, supported by continued institutional investment in the eleven Bitcoin spot ETFs, whichglobal wereadoption, approvedand toincreased begininterest tradingfrom byboth theretail SECand onsovereign Januaryinvestors. 11,Bitcoin 2024.spot TheETFs remained a primary driver of institutional demand, with total assets under management exceeding $100 billion as of December 31, 2025. These ETFs, as investment vehicles, provide investors with a newbroader access point for investorsway to gain exposure to Bitcoinbitcoin through more traditional financial markets.

During 2023 and 2024, the Bitcoinbitcoin mining industry sawexperienced record growth as the price of Bitcoinbitcoin increased from the lows experienced in early 2023. In 2025, the industry continued to grow, though at a slower pace due to increased network difficulty and more aggressive competition for efficient energy sources globally. The increasingrising Bitcoinbitcoin price renewed opportunities to access capital markets to fund growth, leading to unprecedented expansion in mining operationsoperations, andwhich resultingresulted in a doubling inof the size of provisioned hash calculation services on the network, as measured by total hash rate. ManyIn Bitcoinadvance of the April 2024 bitcoin network halving, many bitcoin mining companies heavily invested in implementing vertically-integratedvertically integrated business models, infrastructure, and upgrading and expanding mining fleetsfleets. Competition among mining companies continued to intensify in advance2025, with top operators focusing on mergers, acquisitions, and direct power procurement contracts to secure stable energy pricing in the face of thevolatile Aprilmarket 2024 Bitcoin network halving. Competition on the Bitcoin network has expanded in kind and we expect competition within the mining industry to continue as long as Bitcoin prices remain elevated or increase further.conditions.

We have observed that when the market price for Bitcoinbitcoin experiences a sustained increase (as it did across 2024),increases, new miners are introduced onto the Bitcoinbitcoin network, increasingcontributing itsto an increase in the global network difficulty.hash Despiterate. increasing ourOur hash rate grew by approximately 154.0%22.1% from December 31, 2023,2024 to December 31, 2024,2025, the halvingresulting in Aprilan 2024 and increased network difficulty following increased network hash rate across the periods resulted in a decreaseincrease of approximately 27.1%17.8% in the number of Bitcoinbitcoin we mined in 2024 as compared toduring the same period in 2023.period.

Accordingly, as the global network difficultyhash rate continues to increase, existingrise, miners willmust need to increasescale their hash rateoperations to maintain andor improve their chancesshare of earningmining arewards. In response, we have expanded our Bitcoin miningMining reward. To do this, we seek out new Bitcoin mining capacity, includingcapacity through our acquisition andthe development of new Bitcoinfacilities, mining facilities (such as the Corsicana FacilityFacility, and strategic acquisitions, including the Block Mining Acquisition)Acquisition. andThese efforts are supported by investments in electricity supply and distribution facilitiesinfrastructure. toWe serviceare them,also asfocused well ason other strategic growth opportunities.opportunities that enhance our long-term competitiveness. Further, we have adopted new and improved technology to increase both our mining power and efficiency, including our industrial-scale adoption of immersion cooling and our strategic acquisitions of large quantities of the newest and mostlatest powerful and efficient miners available.

IncreasedVolatile Transaction Fees

The Bitcoinbitcoin mining industry recently experienced an increase in transaction fees on the Bitcoinbitcoin network, asalongside well as an increase ingrowing overall demand for Bitcoin.bitcoin. Various protocols on the Bitcoin network gained popularity during 2023, and at times temporarily resulted in a significant increase in theWhile transaction fees paidremain toinherently addvolatile, a certain Bitcoin transaction to the blockchain. These transaction fees are volatile in nature butthey are paid directly to miners and are representative of the public interest in transacting inon Bitcoin.the Transactionbitcoin feesnetwork. areThese packagedtransaction fees, combined with the block subsidy issued by the Bitcoinbitcoin networknetwork, tomake combine forup the total reward paid to miners upon solving a block.

WeSince 2021, we have led the industry by focusingfocused on a vertically-integratedvertically integrated business model since 2021.model. We continueremain committed to focus on building long-term stockholder value by taking strategic actions to further vertically-integratevertically integrate our business at the current Rockdale Facility, developing the Corsicana Facility, expanding the Kentucky Facility, and havingintegrating acquiredour acquisitions, including the Kentucky Facility and E4A Solutions. Management believes a focus onthat vertical integration will positively affectstrengthen each of our business segments by providing increased capacity for our Bitcoin Mining operations, moreexpanding opportunities for implementing our proprietary power strategy, and by positioning us to capitalize on supply chain efficiencies and electrical engineering services garnered through our Engineering segment. We continue to focus on deploying our efficient Bitcoin miningMining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining facilities.

The PUCT,Public Utility Commission of Texas, ERCOT, and Oncor collectively oversee the regulatory, administrative, and delivery aspects of our power supply in Texas;Texas. In Kentucky, MISO oversees our power supplysupply. As the bitcoin mining industry has expanded in Kentucky. In recent years, regulatory scrutiny on Bitcoinbitcoin mining facilities and their energy consumption has intensified as the industry has grown.accordingly.

As theTexas’s grid operator, ERCOT is responsible for monitoring and testing market participants, including our Bitcoin miningMining facilities inat the Rockdale Facility and Corsicana,the Corsicana Facility, to evaluate their impact on grid reliability. DuringAs part of this process, ERCOT may issue curtailment notices to reduce the power usage at our Texas operations. WeOur Facilities in Texas are periodicallysubject testedto periodic testing and monitored,monitoring and have experienced curtailment of power basedcurtailments onin response to instructions we receive from Oncor and ERCOT. Due toGiven the uncertaintiesinherent uncertainty regarding the duration or extent of power curtailments and testing procedures, we are currently unable to reasonably estimate anytheir potential impactsimpact toon our business.operations. If we cannot secure adequate access to electrical power, we may be forced to reduce or shut down our operations, which would have a material adverse effect on our business, prospects, financial condition, and operating results.

See Part I, Item 1A. “Risk Factors” of this Annual Report for additional discussion regarding potential impacts that our competitive and evolving industry may have on our business.

Investors should carefully review and consider the information regarding certain factors that could materially affect our business, results of operations, financial condition, cash flows, and equity as set forth herein and in Part I, Item 1A. Risk Factors of our 2025 Annual Report. There have been no material changes, other than the amendment below, to the risk factors set forth in our 2025 Annual Report. We may disclose changes to our risk factors or disclose additional risk factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently believe not to be material may also adversely impact our business, financial condition, results of operations, cash flows, and equity.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information to assist readers in understanding our results of operations and financial condition. This MD&A should be read in conjunction with the Notes and other financial information included elsewhere in this Quarterly Report, as well asand our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Unless otherwise indicated, amounts are stated in thousands of U.S. dollars except for: share, per share, per MWhMWh, MW, GW, and miner amounts; bitcoin quantities, prices, and hash rate; cost to mine one bitcoin; and production value of one bitcoin mined.

We own and manage multiple large-scale data center facilities in Texas and Kentucky that provide mission-critical power and infrastructure for our Bitcoin Mining at our Facilities, and non-mining Data Center operations at our Rockdale Facility. Our Rockdale Facility in Texas currently provides up to approximately 700 MW of developed capacity for Bitcoin Mining and Data Center leasing and is among the largest digital infrastructure campuses in North America, as measured by developed capacity. We have completed construction of approximately 400 MW of developed capacity at our second large-scale Texas development, the Corsicana Facility. We expect the Corsicana Facility to reach approximately 1 GW of developed capacity available for Bitcoin Mining and other high-density compute workloads upon full build-out. The Kentucky Facility currently provides approximately 192 MW of developed capacity.

In January 2026, we announced the execution of the AMD Lease to provide 25 MW of critical IT load capacity at our Rockdale Facility. The AMD Lease has an initial term of ten years and provides for expansion options for up to an additional 75 MW of critical IT load capacity, as well as a right of first refusal for up to an additional 100 MW. The AMD Lease also provides three successive five-year term renewal options at the lessee’s discretion. The AMD Lease included an expansion option for an additional 75 MW of critical IT load capacity and a right of first refusal for an additional 100 MW.

In April 2026, we enteredannounced into the AMD Lease Amendment toAMD’s exercise of a portion of the existing expansion option set forth in the AMD Lease, to provide an additional deployment of 25 MW of critical IT load capacity.capacity, which was pursuant to the AMD Lease Amendment. Under the AMD Lease Amendment, AMD holds a remaining balance of 50 MW of reserved critical IT load capacity under the existing expansion option. The AMD Lease Amendment also grants AMD a conditional, first-priority right to lease up to an additional 100 MW of critical IT load capacity, exercisable in increments of not less than 50 MW. If both the remaining 50 MW of reserved capacity under the existing expansion option and the additional 100 MW option are fully exercised, AMD’s total leased capacity at the Rockdale Facility would increase to 200 MW. This conditional, first-priority right replaces the right of first refusal for an additional 100 MW previously granted to AMD in the AMD Lease.

During the threesix months ended MarchJune 31,30, 2026, we continued to deploy miners across all our Facilities, with the objective of improving our operational efficiency and performance. As of MarchJune 31,30, 2026, we had a total deployed hash rate capacity of 42.544.4 EH/s, as compared to 38.5 EH/s as of December 31, 2025, an increase of 10.4%.15.3%.

DuringFor the threesix months ended MarchJune 31, 2026, we mined 1,473 bitcoin, reflecting a decrease of 57 bitcoin compared to the 1,530 bitcoin mined during the three months ended March 31, 2025. The decrease was primarily due to increases in the global network hash rate, partially offset by our increase in deployed hash rate and significantly improved operational efficiency. For the three months ended March 31,30, 2026 and 2025, Bitcoin Mining revenue was $111.9$225.6 million and $142.9$283.7 million, respectively. The decrease of $31.0$58.1 million was primarily due to lower bitcoin prices during the 2026 period, which averaged $68,223$73,736 per bitcoin, as compared to $82,535$95,991 per bitcoin for the 2025 period,period. and a slightThe decrease in bitcoin production of 3.7% due to the substantial increase in the global network hash rate. These decreases werewas partially offset by a 22.6%19.5% increase in our average operating hash rate, which increased from 29.730.8 EH/s during the threesix months ended MarchJune 31,30, 20252025, to 36.436.8 EH/s during the threesix months ended MarchJune 31,30, 2026.2026, and the increase in bitcoin production.

Our bitcoin custodian and brokerage services relationships are non-exclusive, and we may change our custodian and brokerage relationships at any time. We continually monitor our bitcoin assets held by our custodians. Our insurance providers do not have inspection rights associated with our bitcoin assets held in cold storage. For additional information regarding our relationships with our custodians, NYDIG Trust Company LLC and Coinbase, Inc., on behalf of itself and Coinbase Custody Trust Company, LLC, and, if applicable, Coinbase or Coinbase Custody International Ltd., and a description of our underlying agreements with them, see Part I,II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report.

Bitcoin MiningOperating Metrics

The following table presents our key Bitcoin Miningoperating metrics:

During 2023,2023 2024,through and 2025,2026, we entered into purchase orders under the Master Agreement to acquire new miners from MicroBT. These purchase orders represented a total hash rate of 49.250.9 EH/s, with a total purchase price of approximately $779.5$795.2 million, subject to downward price adjustments as provided by the Master Agreement. These miners are primarily intended for deployment at the Corsicana Facility, which commenced operations in April 2024. Delivery of these miners began in 2023, and all miners under these purchase orders are expected to be received bythrough the second quarterend of 2026, with deployment following on an ongoing basis. The Master Agreement provided us with fourthree additional annual options to purchase miners, on the same or more favorable terms as the second purchase order executed under the Master Agreement.

For the three and six months ended MarchJune 31,30, 2026, Bitcoin Mining revenue was approximately $111.9$113.7 million.million and $225.6 million, respectively.

Our Data Center business designs, developsdevelops, and operates large-scale data center projects designed to support the growing demand for high-density compute. This includes the lease of data center space and power capacity, which is generally paid monthly. Power costs are passed through to customers at cost. Additionally, we provide tenant fit-out services to our customers for the build-out of customer-specific equipment at cost plus a margin.

For the three and six months ended MarchJune 31,30, 2026, Data Center revenue was approximately $33.2$23.2 million and $56.4 million, respectively, reflecting initial leasing activity and associated tenant fit-out,fit-out throughattributable to the AMD Lease.

For the three and six months ended MarchJune 31,30, 2026, Engineering revenue was approximately $22.2$37.3 million.million and $59.5 million, respectively.

Our investment strategy with respect toregarding our bitcoin (“Bitcoin Treasury Strategy”) is designed to balance long-term value appreciation with operational flexibility and liquidity management. We selectively sell or leverage portions of our bitcoin holdings, and may continue to do so in the future, to fund operational needs, capital expenditures, and strategic initiatives, particularly when market conditions present opportunistic pricing above predetermined thresholds that we believe maximize shareholder value.

This approach enables us to realize value from our bitcoin holdings at favorable market conditions to support our liquidity profile and fund business growth. We believe this strategy enhances our operational stability, supports our liquidity profile, and provides the financial flexibility necessary to execute on our business plan and meet our capital allocation objectives.

The price of bitcoin reached new all-time highs in 2025, supported by continued institutional investment in the Bitcoin spot exchange-traded funds (“ETFs”), global adoption, and increased interest from both retail and sovereign investors, but fell in the first quarterhalf of 2026 to prices last seen in 2024. Bitcoin spot ETFs remained a primary driver of institutional demand, with total assets under management exceeding $85 billion as of March 31, 2026.demand. These ETFs, as investment vehicles, provide investors with a broader way to gain exposure to bitcoin through more traditional financial markets. In March 2025, the United States established the United States Bitcoin Strategic Reserve, which currently holds the largest bitcoin reserve in the world, solidifying bitcoin as a mainstream financial asset and alternative source of value to fiat currency.

During 2023 and 2024, the bitcoin mining industry experienced record growth as the price of bitcoin increased from the lows experienced in early 2023. In 2025 and the first quarterhalf of 2026, the industry continued to grow, though at a slower pace due to increased network difficulty during 2025 and more aggressive competition for efficient energy sources globally. The rising bitcoin price renewed opportunities to access capital markets to fund growth, leading to unprecedented expansion in mining operations, which resulted in a doubling of the size of provisioned hash calculation services on the network, as measured by total hash rate. Competition among mining companies continued to intensify in 2025, with top operators focusing on mergers, acquisitions, and direct power procurement contracts to secure stable energy pricing in the face of volatile market conditions.

We have observed that when the market price for bitcoin experiences sustained increases, new miners are introduced onto the bitcoin network, contributing to an increase in the global network hash rate. Our hash rate grew by approximately 10.4%15.3% from December 31, 2025 to MarchJune 31,30, 2026, thoughand the number of bitcoin we mined during the same period decreasedincreased, slightly as a result ofoffsetting the increase in the global network hash rate as compared to the same period in 2025.

The Public Utility Commission of Texas,Texas (“PUCT”), ERCOT, and Oncor Electric Delivery Company LLC (“Oncor”) collectively oversee the regulatory, administrative, and delivery aspects of our power supply in Texas. In Kentucky, MISO oversees our power supply. As the bitcoin mining industry has expanded in recent years, regulatory scrutiny on bitcoin mining facilities and their energy consumption has intensified accordingly.

Driven by the proliferation of energy-intensive applications such as bitcoin mining and HPC, demand for energy capacity continues to outpace supply. Data centers are increasingly scrutinized by federal, state, and local authorities due to concerns regarding energy consumption, land use, carbon emissions, water usage, environmental impacts, workforce, data-sovereignty considerations, and national-security-related issues. Regulators may impose new permitting requirements, energy-efficiency standards, carbon-reduction mandates, sustainability reporting rules, or operational restrictions specific to data centers, AI infrastructure, or high-density compute environments. Such regulations, particularly at the federal level or in the States of Texas and Kentucky, where our Facilities operate, could increase our capital expenditures, delay development timelines, limit expansion opportunities, or require costly modifications to existing infrastructure.

The development and expansion of our Facilities require significant quantities of critical components that are currently in high demand and may be difficult to source. To mitigate the risks associated with supply chain volatility, increasing demand, and uncertainty arising from U.S. tariffs and retaliatory international tariffs, we have proactively procured and currently maintain a supply of essential electrical infrastructure components and construction materials. These strategic reserves are intended to support the expansion and data center development of the Corsicana Facility and Rockdale Facilities,Facility, the expansion of our Kentucky Facilities,Facility, and the maintenance of our existing systems, and to reduce our exposure to potential inflationary pricing and equipment delivery delays.

We sell our bitcoin to fund operations. SubsequentDuring to the fiscal year ending December 31, 2025,2026, we have experienced an impact from the recent volatility and downward trend in the market price of Bitcoinbitcoin, reducingwhich has reduced the purchasing power of our bitcoin holdings. This decline may necessitate the sale of a greater volume of our bitcoin than previously anticipated to generate the liquidity required to fund our ongoing operations and working capital needs. By diversifying our infrastructure to support broader data services, we aim to mitigate our direct exposure to cryptocurrency price fluctuations and establish a more stable, diversified revenue stream centered on digital infrastructure.

Comparative Results for the Three Months Ended MarchJune 31,30, 2026,2026 and 2025:

Total revenue for the three months ended MarchJune 31,30, 2026 and 2025 was $167.2$174.2 million and $161.4$153.0 million, respectively. Total revenue consists of our Bitcoin Mining revenue, Data Center revenue, Engineering revenuerevenue, and Other revenue. Other revenue consists almost entirely of residual activity related to our former Data Center Hosting bitcoin mining operations. See below for explanations of changes in revenue by operating segment.

ForBitcoin Mining revenue was $113.7 million and $140.9 million for the three months ended MarchJune 31,30, 2026 and 2025, Bitcoin Mining revenue was $111.9 million and $142.9 million, respectively. The decrease of $31.0$27.2 million was primarily due to lowerhigher bitcoin prices in the 20262025 period, which averaged $68,223$98,800 per bitcoin, as compared to $82,535$71,667 per bitcoin for the 20252026 period, andoffset aby slightan decreaseincrease in bitcoinBitcoin production of 3.7%11.3% due to the substantial increase in the global network hash rate. These decreases were partially offset by a 22.6% increase in our average operating hash rate, which increased from 29.7 EH/s induring the three months ended MarchJune 31,30, 20252026 compared to 36.4the EH/ssame period in the2025, threeprimarily monthsdue endedto Marcha 31,17.4% 2026.increase in average operating hash rate.

ForData Center revenue of $23.2 million for the three months ended MarchJune 31,30, 2026, Data Center revenue2026 was approximately $33.2 million, primarily attributable to initial leasing activity and associated tenant fit-out throughfrom the AMD Lease. We recognizedbegan recognizing our new Data Center operations as a reportable segment in the threefirst monthsquarter ended March 31,of 2026. Accordingly, there were no Data Center revenues for the three months ended MarchJune 31,30, 2025.

ForEngineering revenue was $37.3 million and $10.6 million for the three months ended MarchJune 31,30, 2026 and 2025, Engineering revenue was $22.2 million and $13.9 million, respectively. The increase was primarily attributable to the recordstrong third-party data center demand for custom electrical equipment. Our custom electrical products are used as important components in data center development and in power generation and distribution facilities. There continues to be significant third-party demand for these products due to the increased interest in data center construction, as well as growing worldwide demand for power.

CostsCost of revenue and operating expenses

The increase of approximately $11.9$11.1 million in Cost of revenue for Bitcoin Mining was primarily due to increased Bitcoin Mining capacity and power consumption due to the 125 MW of power capacity at the Rockdale Facility that was assumed in the settlement of litigation between the Company and Rhodium Encore LLC in April 2025 (the “Rhodium Settlement”) and the continued expansion at the Kentucky Facility. The expanded facilities require additional headcount and direct costs necessary to maintain and support our expanded Bitcoin Mining operations. Cost of revenue for Bitcoin Mining excludes depreciation and amortization, which are stated separately on our Condensed Consolidated Statements of Operations. In 2025, we acquired the Rockdale Facility land that was previously subject to a ground lease. As a result, ground rent was zero in 2026.

Cost of revenue for Engineering for the three months ended MarchJune 31,30, 2026 and 2025 was $18.1$27.0 million and $11.8$9.9 million, respectively, an increase of approximately $6.3$17.1 million. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs. Consistent with the causes of increased Engineering revenue noted above, the increase was primarily due to increased receipts of materials resulting in our ability to complete projects.

Selling, general, and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $76.2$82.0 million and $71.4$75.9 million, respectively, an increase of approximately $4.8$6.1 million. Selling, general, and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs. The increase was primarily due to ana $11.8$5.4 million increase in stock-based compensation, a $4.8 million increase in compensation expense, including stock-based compensation, asand a result$2.2 ofmillion hiringincrease additionalin employeesother costs to support our ongoing growth and data center development. This increase wasgrowth, partially offset by a $5.0$6.3 million decrease in legal and professional fees due to recently ending or settling much of our outstanding litigation. Additional decreases were from lower consulting and insurance costs.

Depreciation and amortization for the three months ended MarchJune 31,30, 2026 and 2025 was $97.7$97.8 million and $77.9$83.2 million, respectively, an increase of approximately $19.8$14.6 million. The increase was primarily due to increases in miners deployed.

The change in fair value of bitcoin for the three months ended MarchJune 31,30, 2026 and 2025 werewas lossesa loss of $326.7$74.6 million and $208.0a gain of $470.8 million, respectively, and was recognized to adjust the fair value of our bitcoin held at the end of each period.

The change in fair value of our derivatives for the three months ended MarchJune 31,30, 2026 and 2025 was a loss of $51.9$8.4 million and a gain of $41.9$42.7 million, respectively, and was recorded to adjust the fair value of our PPAs, which were classified as derivatives and measured at fair value. The changes in fair value were due to changes in future power prices over the applicable periods. The loss incurred duringfor the three months ended MarchJune 31,30, 2026 was primarily attributable to the average of the forward prices utilized in the discounted cash flow estimation models decreasing from $55.7 per MWh as of December 31, 2025 to $49.1$49.12 per MWh as of March 31, 2026 to $48.60 per MWh as of June 30, 2026. The gainloss recognized duringfor the three months ended MarchJune 31,30, 2025 was primarily attributable to the average of the forward prices increasingdecreasing from $51.98 per MWh as of December 31, 2024 to $55.41 per MWh as of March 31, 2025 to $53.31 per MWh as of June 30, 2025.

Power curtailment credits for the three months ended MarchJune 31,30, 2026 and 2025 were $21.0$10.1 million and $7.8$8.3 million, respectively, and represent sales of unused power under our PPAs and participation in ancillary services under ERCOT and MISO Demand Response Service Programs. The amount of these credits varies from period to period depending on various factors impacting the supply of power to, and the demand for power on, the power grids, such as weather and global fuel costs.

The change in fair value of contingent consideration duringwas a loss of $9.4 million for the three months ended MarchJune 31,30, 20262025, and 2025 were zero and a gain of $8.3 million, respectively, and wereas a result of the change in estimates for the potential earnout contingent consideration to the former sellers in the Block Mining Acquisition and the E4A Solutions Acquisition. For the three months ended June 30, 2026, there was no change in the fair value of contingent consideration attributable to either the E4A Solutions Acquisition or the Block Mining Acquisition.

Interest expenseincome for the three months ended MarchJune 31,30, 2026 and 2025 was $2.6$3.6 million and $2.3$3.3 million, respectively,respectively. andThe increase was primarily relateddue to interestan paidincrease in average cash balances on our revolving lines of credit and letters of credit.deposit.

The lossgain on equity method investment – marketable securities for the three months ended MarchJune 31,30, 2025,2025 ofwas $63.2$6.1 million and was recognized to adjust the fair value of our equity method investment held at the end of each period. The equity method investment was sold in its entirety during the year ended December 31, 2025.