UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~ 2025

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from __________ to __________

Commission file number: 001-38421

BIT DIGITAL, INC.

(Exact name of registrant as specified in its charter)

Cayman Islands		2798-~~0611758~~1606989
(State or other jurisdiction of Company or organization)		(I.R.S. Employer Identification No.)
31 Hudson Yards, Floor 11, New York, NY		10001
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number: (212) 463-5121

Securities registered under Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary Shares, par value $0.01	BTBT	The Nasdaq Capital Market
Ordinary Shares, $0.01 par value	BTBT	The Nasdaq Stock Market LLC

Securities registered under Section 12(g) of the Exchange Act:

Title of each class		Name of each exchange on which registered
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated Filer ☐☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by its registered public accounting firm that provided or issued its audit report. ☒ YES ☐ NO

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the aggregate market value of the voting and non-voting ~~134~~278,~~921~~429,~~053~~911 ordinary shares held by non-affiliates computed by reference to $32.1819, the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $~~429~~609,~~048~~761,~~949~~505 as of June 2830, ~~2024~~2025.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: ~~182~~326,~~435~~577,~~019~~219 as of March 724, ~~2025~~2026.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

TABLE OF CONTENTS

		Page Number
PART I		1
Item 1.	Business	1
Item 1A.	Risk Factors	1525
Item 1B.	Unresolved Staff Comments	7372
Item 1C.	Cybersecurity	7372
Item 2.	Properties	7573
Item 3.	Legal Proceedings	7574
Item 4.	Mine Safety Disclosures	7574
PART II		7675
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7675
Item 6.	[Reserved]	7776
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7776
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	~~102~~104
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	~~103~~105
Item 9A.	Controls and Procedures	~~103~~105
Item 9B.	Other Information	~~105~~106
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~105~~106
PART III		~~106~~107
Item 10.	Directors, Executive Officers and Corporate Governance	~~106~~107
Item 11.	Executive Compensation	~~111~~113
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~115~~119
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~116~~120
Item 14.	Principal Accountant Fees and Services	~~117~~121
PART IV		~~118~~122
Item 15.	Exhibits and Financial Statements Schedules	~~118~~122
Item 16.	Form 10-K Summary	~~119~~124
SIGNATURES		~~120~~125

FORWARD- LOOKING STATEMENTS AND RISK FACTOR SUMMARY

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “could”, “should”, “might”, “Target”, “potential”, “goal”, “objective”, “seek”, “would,” “will be,” “will continue,” “will likely result,” and similar expressions, among others.

We intend such forward-looking statements to be be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with ~~those~~ those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. In particular, information included under “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Report contain forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Bit Digital’s management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond Bit Digital’s control. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with those safe-harbor provisions. Except as may be required by law, Bit Digital undertakes no obligation to modify or revise any forward-looking statements to reflect new information, events or circumstances occurring after the date of this Report. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

The principal risks that could materially and adversely affect us include, among others, the following, grouped by category for ease of reference:

●

General Risks: History of operating losses; joint ventures and other business transactions; and loss of management and key employees.

●

Digital asset market and network dynamics risks, including treasury holdings: Volatility in ETH and BTC prices; the future development and growth of digital assets; Ethereum-specific market, technology and regulatory developments; and the risks of our digital asset treasury model.

●

Operational and custody risks: Risks of ETH staking and related activities; the risks of ETH scaling; smart contract, bridge, oracles and protocol vulnerabilities; market structure and liquidity risks; restaking risks; concentration and governance risks; custodians, staking providers, and validators; failures to securely store and manage currencies; potential theft, loss or destruction of private keys; disruptions in our supply chain; potential losses of personnel; and BTC halving events.

●

Regulatory, legal and policy risks: Extensive evolving U.S. and foreign laws and policies applicable to digital assets, custody, staking, market structure, sanctions/AML, securities and commodities regulation, and tax treatment (including our classification as a PFIC); possible conflicting or extraterritorial regulations potential investigations and litigation.

●

Power and infrastructure risks: Dependence on access to reliable, low-cost electricity and hosting; utility rate structures, curtailments, grid constraints, weather events; environmental and energy policy developments affecting proof-of-work mining.

●

Financing, liquidity capital markets and market access risks: Dilution associated with equity offerings; exchange listing requirements and compliance; constrained access to banking or capital markets for digital asset-related; debt, liens and collateral arrangements.

●

Accounting, financial reporting and internal control risks: Evolving accounting for digital assets and fair value measurements; potential impairment charges; auditor transitions; internal control considerations.

●

Strategic, counterparty and competition risks: Our strategic exposure to ETH; we operate in a highly competitive industry; dependence on a limited number of counterparties.

●

Technology, equipment and supply chain risks: Rapid technological change and equipment obsolescence; dependence on immersion cooling systems and other specialized infrastructure.

●

Cybersecurity, data privacy and intellectual property risks: Cybersecurity incidents may compromise systems; intellectual property disputes or alleged infringements could disrupt our business; accounting for digital assets and fair value measurements; potential impairment charges; auditor transitions; internal control considerations.

The summary above is qualified in its entirety by the more complete Risk Factors section set forth in Item 1A below.

PART I

Item 1 Business

~~Overview~~Bit Digital, Inc. (“BTBT” or the “Company” or “We”), is a holding company incorporated on February 17, 2017, under the laws of the Cayman Islands. The Company is a strategic asset company focused on active participation in Ethereum (ETH)-native treasury, staking strategies. Through our majority equity stake in WhiteFiber Inc. (Nasdaq: WYFI), the Company also engages in high performance computing (“HPC”) business, including cloud services and HPC data center services.

~~Bit~~On ~~Digital~~August 8, ~~Inc.~~2025, orWhiteFiber ~~the~~completed its initial public offering (“~~Company~~IPO”) of its ordinary shares. Prior to the consummation of the IPO, is athe ~~global~~Company ~~platform~~entered ~~for~~into ~~high~~a ~~performance~~contribution ~~computing~~agreement (the “~~HPC~~Contribution Agreement”) ~~infrastructure~~with ~~and~~WhiteFiber, ~~digital~~pursuant ~~asset~~to ~~production,~~which ~~with~~the ~~headquarters~~Company contributed (the “Contribution”) its inHPC ~~New~~business ~~York~~through ~~City~~the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. ~~The~~and ~~Company’s~~its wholly-owned subsidiaries WhiteFiber HPC, ~~business~~Inc., ~~operates~~WhiteFiber ~~under~~Canada, ~~the~~Inc., WhiteFiber ~~Inc~~Japan G.K. and WhiteFiber Iceland, ehf, to WhiteFiber in exchange for 27,043,749 ordinary shares of WhiteFiber (the “~~WhiteFiber~~Reorganization”). ~~brand~~Pursuant to the Contribution Agreement, the transfer was be accounted for as a common control transaction immediately prior to the IPO. ~~Our~~The ~~operations~~Contribution became effective on August ~~are~~6, ~~located~~2025, inwhen the USregistration statement on Form S-1, ~~Canada~~as amended (File No. 333-288650), of WhiteFiber was declared effective by the SEC. WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber and ~~Iceland~~the Company became the direct shareholder of WhiteFiber after the Reorganization. As of the date of this Form 10-K, the Company owns approximately 70.5% of WhiteFiber.

~~HPC~~On ~~Business~~August 17, 2023, WhiteFiber Iceland ehf (f/k/a Bit Digital Iceland ehf) was incorporated by a third party on August 17, 2023 under the name Bit Digital Iceland ehf. WhiteFiber Iceland’s directly and wholly-owned by WhiteFiber AI, is classified as a “controlled foreign corporation” for U.S. Federal Income tax purposes and is engaged in cloud services at the data center in Blönduόs Iceland.

WeOn ~~are~~October a19, ~~leading~~2023, ~~provider~~the Company incorporated ofWhiteFiber ~~high-performance~~AI, ~~computing~~Inc. (~~“HPC”)~~f/k/a ~~data~~Bit ~~centers~~Digital ~~and~~AI, ~~cloud-based HPC graphics processing units (“GPU”~~Inc) ~~services, which~~to weengage ~~term~~in cloud services, for ~~customers such as artificial intelligence (“~~AI”) ~~and~~applications ~~machine~~through ~~learning~~its ~~(“ML”) developers. Our HPC Tier-3 data centers provide hosting and colocation services and are developed and operated by our~~ wholly-owned ~~subsidiary, Enovum~~subsidiaries. ~~Our cloud services are provided by our WhiteFiber AI, Inc subsidiary. Collectively, we refer to these offerings as our HPC Business.~~

On ~~October~~June 1127, 2024, weWhiteFiber ~~significantly expanded our~~ HPC, ~~data~~Inc. ~~center operations and capabilities by acquiring Enovum Data Centers~~ (~~“Enovum”),~~ f/k/a ~~Tier-3 HPC data center~~ ~~platform~~Bit ~~based~~Digital ~~in Montreal~~HPC, ~~Canada~~Inc.) ~~Through Enovum, we lease and operate a 4MW AI data center located in Montreal, Canada~~ (“~~MTL 1~~WF HPC”). ~~MTL~~was 1incorporated isto asupport ~~fully~~the ~~operational~~Company’s ~~Tier-3~~cloud ~~data~~services ~~center~~in ~~that~~the isUnited ~~designed~~States. ~~for~~ WhiteFiber HPC, ~~workloads~~Inc. ~~MTL 1’s full capacity~~ is 100% ~~occupied~~ owned by ~~customers~~WhiteFiber ~~under lease agreements with an average duration of approximately 30 months. On December 27~~AI, ~~2024, we announced that we had acquired the real estate and building for a build-to-suit 5MW Tier-3 data center expansion project in Montreal (“MTL 2”)~~Inc. ~~The~~ ~~MTL~~which ~~2 data center~~ is 100% ~~expected~~owned ~~to be completed and operational~~ by ~~June~~White ~~2025~~Fiber, Inc.

~~Our~~On ~~HPC~~August ~~data center team is adept at bringing new sites online on an accelerated timeline. We are aggressively pursuing our development pipeline and expect to add 8MW of capacity~~15, ~~inclusive~~ ~~of the MTL 2 site~~2024, ~~for total capacity of 12MW~~WhiteFiber, ~~by the end of the second quarter of 2025~~Inc. By(f/k/a ~~the end of 2025~~Celer, ~~we are targeting~~ ~~aggregate~~Inc.) ~~HPC~~(“WhiteFiber”) ~~data~~was ~~center~~incorporated ~~capacity~~by ofBit ~~32MW.~~Digital ~~And we intend~~ to ~~achieve~~support ~~80MW+~~the ofCompany’s ~~total~~ HPC ~~data~~business. ~~center~~WhiteFiber ~~capacity~~was 100% owned by the ~~end~~Company ofuntil ~~2026.~~August ~~We adhere to a disciplined process of only purchasing and developing data centers with customer lease commitments in-hand~~6, ~~and~~2025 wewhen ~~are currently in negotiation with a prospective customer to adapt a site to~~ the ~~customer’s~~Contribution ~~specific~~Agreement ~~requirements~~became effective.

InOn ~~addition~~October to11, ~~providing highly desirable HPC data center hosting capacity to our customers~~2024, ~~our~~the ~~business~~Company ~~model~~completed ~~integrates~~the acquisition ~~HPC~~of ~~data~~Enovum ~~center~~Data ~~infrastructure~~Centers ~~and~~Corp ~~cloud service to provide scalable~~(“Enovum”), ~~high~~a Montreal-~~performance~~based ~~computing solutions for enterprises~~owner, ~~research institutions~~operator, and ~~AI-driven~~developer ~~businesses. Our integrated approach aligns specialized data center operations with GPU-focused cloud services, addressing the unique requirements~~ of ~~AI and~~ HPC ~~workloads. These workloads demand greater power density, advanced cooling solutions, and robust bandwidth to handle large-scale~~ data ~~transfers.~~centers Byincorporated ~~operating~~on ~~our~~July ~~data centers~~13, ~~we believe we can better meet these needs and reduce the complexity associated with procuring power and connectivity from external vendors~~2023. WeEnovum ~~can~~is 100% ~~also~~owned ~~design our facilities to accommodate the higher heat loads generated~~ by ~~modern~~WhiteFiber ~~GPUs,~~through ~~potentially shortening deployment timelines for customers who require rapid expansion of their compute infrastructure. From~~ a ~~financial~~general ~~standpoint,~~partner ~~our vertically integrated solution allows us to capture additional margin for both of our HPC data center~~ and ~~cloud~~a ~~services~~limited ~~businesses,~~partner ~~avoiding~~in ~~expenses that~~a ~~would~~Delaware ~~otherwise~~operating ~~be due to third-party providers~~partnership.

~~Our~~On ~~cloud~~March ~~services business provides cutting-edge~~11, ~~bespoke services involving a sophisticated array of computers and chips~~2025, ~~including~~WhiteFiber ~~NVIDIA GPUs~~Canada, ~~servers, network equipment, and data storage solutions~~Inc. We believe we provide our cloud services customers with the highest levels of performance and reliability while offering flexibility to scale with customer needs. Our cloud services solutions include a proprietary software layer that enables our customers to rapidly and reliably deploy AI applications with superior performance. We are offering our cloud services initially at a data center maintained by a third-party colocation provider in Iceland (~~the~~ “~~Iceland Data Center~~WF Canada”) ~~but~~was ~~have~~incorporated ~~plans~~ to ~~seamlessly integrate~~support ~~our~~the ~~cloud~~Company’s ~~services~~generative atAI ~~data~~workstreams ~~centers across key regions~~ in ~~Europe and North America~~Canada. InWF ~~the~~Canada ~~fourth~~is 100% ~~quarter~~owned ofby ~~2023, we secured~~WhiteFiber ~~our first cloud customer through a three-year service agreement to provide services using our advanced~~ AI, ~~equipment~~Inc., Wewhich ~~believe that both of our businesses are posted to benefit from increased market demand. This~~ is 100% ~~illustrated~~owned by ~~our demonstrated ability to pre-sign end users prior to committing capital for expansions, both for new data center sites and for GPU server procurement~~WhiteFiber.

~~For~~On ~~the~~May 127, ~~months~~2025, ~~ended~~Enovum ~~December 31,~~NC-1 ~~2024~~BIDCO, ~~our~~LLC ~~cloud~~(“Enovum NC”) ~~service~~was ~~business~~incorporated ~~recognized~~to ~~revenue~~support ofthe ~~$45~~HPC data centers workstreams in North Carolina.7 ~~million,~~Enovum NC is 100% owned by WhiteFiber.

On May 22, 2025, WhiteFiber Japan GK (“WF Japan”) was incorporated to support the Company’s generative AI workstreams in Japan. WF Japan is 100% owned by WhiteFiber AI, Inc., which is 100% owned by WhiteFiber.

Our core focus is on driving scalable growth through a diverse range of business streams leveraging and built on top of our core and proven blockchain infrastructure operations. Bit Digital’s operations are that of a strategic asset company, focused on two systems that underpin this shift: economic infrastructure through Ethereum, and intelligence infrastructure through AI compute.

WeOur believe our HPC business is positioned for significant growth, driven by the increasing demand for advanced computing and AI services. This planned expansion will involve developing additional HPC data centers at an accelerating pace and procuring GPUs and other AI equipment. To support this growth, we are in the process of building an expanded team of leaders and dedicated employees. In addition to the Senior Management Team of Enovum, we have already hired a Head of Revenue Officer and Go-to-Market (“GTM”), Senior Account Executive, two engineers, Chief Technology Officer (“CTO”) and Head of Marketing, with plans to further expand our workforce to include experts in technology, operations, and customer support. This dedicated team will be crucial in executing the Company’s strategic plans and maintaining high service levels as the business scales. See “Management – Senior Management”.Business

Bit Digital is a strategy asset company (SAC) focused on owning productive infrastructure that generates yield, usage and participation, and building operating capabilities around those assets as they compound over time. The Company operates its Ethereum infrastructure through staking and network participation. The Company treats ETH as a productive economic infrastructure, rather than as passive inventory. We actively allocate capital across productive strategic assets. Through our majority ownership in WhiteFiber, we engage in AI compute and data center infrastructure. WhiteFiber provides scalable energy and dense capacity for AI and HPC ~~Data~~workloads. ~~Centers~~Our strategic priority is to build a leading ETH treasury and network participation while integrating AI intelligence infrastructure exposure to position Bit Digital as a premier SAC.

WeThe ~~design,~~digital ~~develop,~~asset ~~and~~business ~~operate HPC~~is ~~data~~comprised ~~centers,~~primarily of ~~through~~two ~~which~~distinct webut ~~offer~~highly ~~our~~complementary ~~hosting~~operations: ~~and~~(i) ETH ~~colocation~~staking ~~services. Our data centers meet~~ (the ~~requirements~~“ETH ofStaking ~~the~~Operations”) ~~Tier-3~~and ~~standard,~~(ii) digital ~~including~~asset ~~power~~mining ~~redundancy,~~(the ~~concurrent~~“Digital ~~maintainability,~~Asset ~~multiple~~Mining ~~power~~Operations”). ~~feeds,~~In ~~uninterruptible~~the ~~power~~fourth ~~supply,~~quarter ~~highly~~of ~~reliable cooling systems~~2022, ~~and~~ ~~strict~~we ~~monitoring~~formally ~~and~~commenced ~~management~~Ethereum ~~systems~~staking operations. We ~~acquired~~purchase ~~Enovum~~and onstake ~~October~~ETH ~~11, 2024. The transaction included the lease~~ to ~~MTL~~generate 1,protocol-native ayield ~~fully operational~~ and ~~fully~~participate ~~leased~~directly ~~to customers 4MW Tier-3 datacenter headquartered~~ in ~~Montreal,~~the ~~Canada~~Ethereum network. ~~MTL~~Bit ~~1 is currently hosting over 5,000~~Digital ~~GPUs,~~allocates ~~including~~capital ~~NVIDIA~~with ~~H200s~~a ~~and~~focus ~~H100s,~~ on ~~behalf~~long-duration, offoundational 14infrastructure ~~customers~~and ~~across~~disciplined abalance ~~variety~~sheet ~~of end markets~~management.

OnIn ~~December~~June 272025, ~~2024, we acquired~~ the ~~real~~Company ~~estate~~announced ~~and~~that ~~building~~it ~~for~~had initiated a ~~build-to-suit~~strategic ~~5MW~~transition ~~Tier-3~~to ~~data~~become ~~center expansion project near Montreal, Canada. MTL 2,~~ a ~~160,000~~pure ~~square feet~~play ~~site~~ETH ~~that~~staking ~~was~~and ~~previously~~treasury ~~used as an encapsulation manufacturing facility, is located in Pointe-Claire, QC~~company. WeIn ~~initially~~connection ~~funded the purchase~~ with ~~cash on hand and are in~~ the ~~process~~transition, ~~of securing mortgage financing for both~~ the ~~site acquisition and subsequent infrastructure~~Company ~~capex.~~has Webeen ~~expect~~converting toits ~~invest~~bitcoin ~~approximately~~(BTC) ~~$19.3~~holdings ~~million~~into ETH over totime ~~develop~~and ~~the~~has ~~site~~undertaken toa ~~Tier-3~~strategic ~~standards~~alternatives ~~with~~process anfor ~~initial gross load of 5MW. The~~its bitcoin mining ~~site~~operations, which is expected to beresult ~~completed~~in ~~and~~a ~~operational~~sale byor ~~June 2025. We plan to retrofit the site with advanced cooling technology, including direct~~wind-~~to-chip liquid cooling~~down, ~~which enhances energy efficiency and supports AI and other high-performance workloads~~ with ~~150kW~~any ~~rack~~net ~~density. We~~proceeds ~~are collaborating with third parties~~ to ~~implement a heat reject loop to further enhance the sustainability profile of the data center. The facility will~~ be ~~powered by 100% renewable hydroelectricity provided by Hydro~~re-~~Quebec.~~deployed ~~Subject to the approval of Hydro-Quebec, additional capacity may be available at this site~~into ETH. This dynamic illustrates our strategy of underwriting site acquisition in Quebec based on in-place power but benefitting from significant incremental HPC data center capacity expansion with increased power. We anticipate dedicating a portion of MTL 2’s capacity to house GPUs for our cloud services business. Enovum enjoys significant embedded demand from existing customers, and is in receipt of requests in excess of our short term MW availability..

WeConsequently, ~~use~~management areoriented ~~well-defined~~the ~~set~~business ~~of criteria~~ to ~~select~~prioritize ~~our~~(i) ETH ~~data~~treasury ~~center~~operations; ~~sites. We actively target sub-20MW sites with proximity to metro areas~~ and ~~partial~~(ii) disciplined ~~infrastructure in~~BTC ~~place,~~treasury ~~where~~management wewhile ~~are~~winding ~~retrofitting~~down rather than developing greenfield projects. A retrofit entails sourcing and acquiring an existing industrial building with underutilized, in-place power connectivity. Our average build time for retrofits is six months, which we believe is approximately one-third to one-half of the industry average development timeline for greenfield projects. We are also developing a proprietary software capability that will link clusters across multiple sites, leveraging existing dark fiber networks connecting smaller data centers within a radius of approximately 700 kilometers. By productizing crossself-~~data center operation, we intend to create a single~~mining ~~supercluster,~~exposure ~~enabling us to sidestep potential fragmentation problems~~ and ~~dynamically~~deferring ~~“borrow”~~new ~~compute or storage resources from any~~ site. ~~We also prioritize sites offering opportunities to increase site power over time, enabling our HPC data centers to grow with customer demand~~buildouts. In addition, we selectively target certain larger opportunities with 50MW of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, we target sites powered by sustainable, green energy sources.

WeOur ~~believe~~business ~~that~~integrates ~~our~~(i) a ~~HPC~~digital asset ~~data~~treasury ~~center~~anchored ~~development~~in ~~and~~ETH ~~operating~~with ~~model~~(ii) an ~~provides~~operating ~~highly~~platform ~~attractive~~historically ~~economics~~focused ~~for~~on ~~our~~BTC ~~investors.~~mining Weand ~~estimate~~hosting ~~that~~and ~~our~~(iii) HPC ~~capex~~infostructure ~~requirement~~operated toby ~~develop~~White aFiber. ~~cutting~~We ~~edge,~~seek ~~Tier-3~~to ~~data~~accumulate ~~center~~and ishold ~~between~~ETH $7on -a ~~$9 million per MW. Consistent with common industry practice, approximately 70~~long-~~75%~~term ofbasis ~~this~~within ~~capex~~a ~~budget~~disciplined ~~will~~treasury ~~be financed with facility-level debt~~framework, ~~with~~and ~~the~~we ~~remaining capex requirement~~may ~~equity~~participate ~~financed.~~in ~~Based~~staking onor ~~ongoing discussions with prospective customers, we anticipate that the average contract term for our AI and ML~~staking-~~focused~~adjacent ~~enterprise~~activities ~~and~~where ~~GPU compute customers will be 4~~risk-12adjusted ~~years~~returns, ~~yielding~~liquidity ~~annual~~and ~~revenue~~regulatory ~~per~~considerations ~~gross~~are ~~MW of approximately $1~~acceptable.7 toWe ~~$2.5~~maintain ~~million~~flexibility ~~assuming~~to amine ~~power~~or ~~usage~~hold ~~effectiveness~~BTC ~~(“PUE”)~~when ofmarket ~~1.20~~economics toare 1attractive.~~40.~~ ~~The~~We ~~anticipated~~prioritize ~~economics~~robust ofcustody, ~~the~~cybersecurity, ~~HPC data~~segregation ~~centers~~of ~~are~~duties ~~dependent~~and oncounterparty ~~location~~oversight, and ~~the~~we ~~inclusion~~evaluate ofopportunities ~~energy~~in ~~expense pass~~ETH-~~through~~adjacent ~~agreements.~~services—including ~~We anticipate that our HPC data~~advisory—consistent ~~center~~with ~~profit~~an ~~margin will be approximately 75~~asset-~~85%.~~light ~~The~~operating ~~customer contracts are typically subject to annual price escalators that are approximately in line with inflation~~model.

ETH Treasury Strategy

Starting in 2022, the Company has accumulated and held ETH on a long-term basis, implementing controls over custody, counterparty exposure, and liquidity. Our strategy focuses on pursuing opportunities to increase the amount of ETH in the treasury, including through staking, restaking, liquid staking and other decentralized finance activities. The Company may deploy ETH into staking or other yield-generative protocols where risk-adjusted returns, liquidity and regulatory considerations are acceptable. We believe ETH’s role as a programmable settlement asset and its network-driven cash flows create a compelling long-term investment thesis. Over the course of 2025, we accumulated ETH at a measured cost basis and built operational capabilities around staking and network participation. As of December 31, 2025, Bit Digital held over 150,000 ETH, the majority of which is staked, generating protocol-native rewards while maintaining liquidity and institutional custody standards.

The key drivers of our results include (i) ETH market conditions, which affect the value of our holdings and the economics of any staking or staking-adjacent activities; (ii) client demand for Ethereum-adjacent services, including advisory; (iii) security, custody and compliance expenditures necessary to support institutional-grade treasury operations; and (iv) access to capital to opportunistically acquire ETH and invest in enabling infrastructure.

~~Cloud~~Treasury ~~Services~~and yield framework. Our objective is to grow our net ETH position over time, subject to risk and liquidity constraints. We evaluate staking and related mechanisms based on security, liquidity, counterparty and regulatory profiles. We expect staking yields to evolve with validator participation rates, protocol parameters and market conditions. Where we deploy ETH to staking or analogous activities, we intend to size exposures conservatively, prioritize best-in-class custody and validator operations (including multi-client diversity and performance monitoring), and maintain appropriate unencumbered liquidity to meet corporate needs. We may rebalance or unwind positions in response to changes in risk, reward, or regulatory context.

WeOperating ~~provide~~expenditures ~~specialized cloud services to support generative AI workstreams, especially training~~ and ~~inference,~~investment ~~emphasizing~~priorities. As ~~cost-effective~~an ~~utility and tailor~~ETH-~~made~~focused ~~solutions for~~company, ~~each~~we ~~client.~~have Weexperienced ~~are~~a anmix ~~authorized~~shift ~~Network~~in ~~Control~~operating ~~Processor~~expenses ~~(“NCP”)~~toward ~~with~~cybersecurity, ~~NVIDIA~~custody, antreasury ~~authorized~~operations, compliance ~~partner~~and ~~with~~technology ~~SuperMicro Computer~~enablement ~~Inc.®,~~for anadvisory ~~authorized~~and ~~Communications~~analytics. ~~Service~~Capital ~~Provider~~expenditures ~~(“CSP”)~~have ~~with~~been ~~Dell,~~modest ~~and~~relative anto ~~official~~our ~~partnership~~prior ~~with Hewlett~~mining-centric ~~Packard Enterprise~~model. We ~~are~~intend ~~proud~~ to bemaintain ~~among~~a ~~the~~flexible ~~first~~cost ~~service~~structure ~~providers~~aligned towith ~~offer~~services ~~H200,~~activity ~~B200,~~ and ~~GB200~~treasury ~~servers~~scale. ~~We provide a high-standard service level with an Uptime Percentage* ≥ 99.5%.~~

~~The~~Key ~~economics~~trends ofand ~~our cloud~~uncertainties. We ~~services~~are ~~business~~monitoring ~~drive~~(i) protocol ~~attractive~~upgrades ~~returns.~~on ~~The~~Ethereum’s ~~all-in~~roadmap ~~capex~~and ~~required~~their toimplications ~~purchase a GPU is approximately $30,000~~ for anstaking ~~NVIDIA H200 to $50~~yields,~~000~~ ~~for~~fee anmarkets ~~NVIDIA Blackwell chip, inclusive of networking, setup, shipping,~~ and ~~other expenses. We anticipate capex will be financed~~network bysecurity; a(ii) growth ~~combination~~in ofL2 ~~debt~~activity and ~~equity.~~cross-chain Weinteroperability; ~~expect~~(iii) institutional ~~contract~~adoption ~~duration with our cloud services customers~~trends, ~~comprised~~including ~~of established enterprises~~tokenization initiatives and ~~well~~regulated market-~~funded~~structure AIdevelopments; ~~startups,~~(iv) availability toand beterms ~~approximately~~of 36regulated ~~months,~~custodial ~~with~~services; anand ~~initial cost per card hour of $2~~(v) evolving U.~~15 to $3~~S.40 ~~translating to estimated annual revenue of between $18,000~~ and ~~$30,000, assuming a 100% utilization rate~~non-U.S. Weregulatory ~~anticipate~~frameworks aapplicable ~~profit~~to ~~margin~~digital ofassets ~~approximately 85% driven by high utilization rates, stable energy costs,~~ and ~~economies of scale in procurement and infrastructure management~~staking.

WeLiquidity ~~are~~considerations. Our ~~actively engaged in~~liquidity ~~research~~planning ~~and~~considers ~~development~~ETH ~~efforts~~price tovolatility, ~~enhance~~potential ~~our~~impairment ~~cloud~~charges ~~services~~under ~~capabilities~~applicable ~~for~~accounting ~~our customers. For example~~policies, wethe ~~are~~liquidity ~~developing~~profile ~~integrated~~of ~~software~~any tostaked ~~automate~~positions ~~layering of stacks~~ and ~~self-service portals on top of the cross-data center fabric, allowing~~ our ~~customers~~ability to access ~~GPU~~ orcapital ~~CPU~~markets ~~nodes~~through onour ~~demand—no~~shelf ~~matter~~registration ~~where~~and ~~they~~at-the-market ~~physically reside~~program. ~~This~~We ~~provides~~intend ~~significant flexibility as scaling is required~~ to ~~accelerate development of AI applications. In addition, we are working on advanced interconnect technologies like InfiniBand (IB) or~~ ~~RDMA~~maintain ~~over~~sufficient ~~Converged~~liquidity ~~Ethernet~~to ~~(“RoCE”).~~support ~~When combined with cross-data center links~~operations, ~~these~~regulatory ~~ensure that training jobs can be distributed without bottlenecks or high latency. By emphasizing scale~~compliance, ~~performance,~~ and ~~reliability~~security investments, wewhile ~~believe~~seeking ~~that~~opportunities ~~we will be positioned~~ to increase ~~maximize~~ETH ~~customer~~holdings ~~retention~~when ~~while~~market ~~pricing~~conditions ~~our~~are ~~services at a premium to those offered by our competitors~~attractive.

WeKnown ~~leverage~~events areasonably ~~global~~likely ~~network of data center resources by partnering with eight third-party data center providers~~ to ~~achieve~~affect ~~high autonomy in locations across Europe,~~future ~~Canada, and the U~~results.S. Our ~~initial~~future ~~HPC~~results ~~data~~may ~~center~~be ~~partnership~~materially ~~through~~affected ~~which~~by wechanges ~~lease~~in ~~capacity~~ETH isprices atand ~~BlöndUos~~staking ~~Campus,~~economics; ~~Iceland,~~regulatory ~~offering~~developments apertaining ~~world-class~~to ~~operations~~ETH, ~~team~~staking ~~with certified technicians~~ and ~~reliable~~custody; ~~engineers.~~counterparty ~~The~~or ~~facility~~custodian ~~has~~developments; ~~50kW~~cybersecurity ~~rack~~investments ~~density~~ and ~~6MW~~events; ~~total~~and ~~capacity. Its~~market ~~energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner of IHA Blue Planet Awards in 2017. On October~~structure ~~23,~~changes ~~2023,~~affecting ~~Bit~~liquidity ~~Digital~~and ~~announced~~capital ~~that~~access we had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support their GPU workloads. Under the agreement, as amended, we will supply this customer with a total of 4,096 GPUs for ~~the respective three~~digital-~~year~~asset ~~periods, amounting to total revenue of approximately $275 million, or $92 million on an annualized basis~~issuers.

OnETH ~~December~~Staking 12, 2023, the Company finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, the Company entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.Operations

InThe ~~the second quarter of 2024, the~~ Company ~~finalized~~commenced anEthereum ~~agreement~~staking ~~to supply its first customer with an additional 2,048 GPUs over a three-year period. To~~activities ~~finance~~in ~~this operation,~~ the ~~Company~~fourth ~~entered~~quarter ~~into~~of ~~a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years~~2022. InThrough ~~late~~these ~~July~~activities, at the ~~customer’s request, the~~ Company ~~and~~participates ~~the customer~~in ~~agreed to temporarily delay~~ the ~~purchase~~Ethereum ~~order~~proof-of-stake ~~so the customer could evaluate an upgrade to newer generation Nvidia GPUs.~~(“PoS”) ~~Consequently,~~network ~~the~~by ~~Company~~staking ~~and~~its ~~manufacturer~~own ~~postponed~~ETH ~~the~~holdings ~~purchase~~through ~~order. In early August, the customer made a non~~third-~~refundable prepayment~~party ofvalidator ~~$30~~operators.~~0 million for the services to be rendered under this agreement.~~

Under the Ethereum PoS consensus mechanism, participants may commit ETH to validator nodes in order to support the validation of transactions and the addition of new blocks to the Ethereum blockchain. In return for participating in this validation process, participants may earn protocol-based staking rewards.

The Company does not operate its own validator nodes. Instead, the Company delegates its ETH to independent third-party validators who operate the infrastructure required to participate in the Ethereum network. These validator operators perform the technical validation functions required by the protocol, including transaction verification and block proposal and attestation.

Delegation of ETH for staking purposes is a non-custodial process in which the Company retains ownership of its ETH while the validator operator performs the validation services. The Ethereum protocol automatically distributes staking rewards generated from validated blocks in accordance with the network rules.

Through this model, the Company is able to participate in network validation and earn staking rewards on its ETH holdings without directly operating validator infrastructure.

InBeginning in January ~~2025~~2024, the Company ~~entered~~transitioned its ~~into~~native aEthereum ~~new agreement~~staking operations to ~~supply~~Figment, ~~its~~an ~~Initial~~institutional-grade ~~Customer~~staking infrastructure provider with ana ~~additional~~strong ~~464~~institutional client ~~GPUs~~base, ~~for~~established operating track record, and a ~~period~~focus ofon ~~eighteen~~security ~~months~~and validator performance. ~~This~~As ~~new~~of ~~agreement~~December ~~replaces~~31, 2025, the Company ~~prior~~conducted ~~agreement~~its ~~whereby~~staking operations exclusively on the Ethereum network through Figment. The Company’s ~~was~~staking tostrategy ~~provide~~is focused solely on native Ethereum staking and does not include staking activities on other blockchain networks or participation in liquid staking arrangements. As of December 31, 2025, the ~~customer~~Company ~~with~~had anapproximately 138,263 ETH ~~incremental~~actively staked through Figment. Cumulative staking rewards were approximately 2,~~048~~442.9 ETH, ~~H100~~of ~~GPUs~~which approximately 2,366.8 ETH ~~The~~had ~~contract~~been ~~represents~~paid and approximately 76.1 ETH ~~$15~~remained ~~million~~pending. ofThe ~~annualized~~Company ~~revenue~~believes this operating model streamlines staking operations, enhances operational oversight, and ~~features~~provides direct aexposure ~~two-month~~to ~~prepayment~~Ethereum ~~from~~staking ~~the~~rewards ~~customer~~through a single institutional service provider.

OnWe ~~October~~started 9,participating ~~2024,~~in ~~the~~liquid ~~Company~~staking ~~executed a Master~~via ~~Services~~Liquid ~~and~~Collective ~~Lease~~protocol ~~Agreement~~on ~~(“MSA”)~~the ~~with~~Coinbase ~~Boosteroid~~platform ~~Inc.~~in ~~(“Boosteroid”),~~the afirst ~~global~~quarter ~~cloud~~of ~~gaming provider, following a binding term sheet with Boosteroid on August 19, 2024~~2023. WeLiquid ~~finalized~~staking anallows ~~initial~~participants ~~order of 300 GPUs, projected~~ to ~~generate~~achieve ~~approximately~~greater ~~$4.6~~capital ~~million~~efficiency inby ~~revenue~~utilizing ~~over~~their ~~the~~staked ~~five-year~~ETH ~~term.~~as ~~The~~collateral ~~GPUs~~and ~~will~~trading betheir ~~deployed~~staked byETH ~~Boosteroid~~tokens aton ~~respective~~the ~~data~~secondary ~~centers~~market. ~~across~~In the ~~U.S. and~~first wequarter ~~began earning revenue in November 2024. We finalized an additional order~~ of ~~189 GPUs~~2024, ~~projected~~we toreclaimed ~~generate~~all ~~approximately~~the ~~$3.2~~liquid ~~million in~~staked ~~revenue~~ETH ~~over~~from ~~the~~Liquid ~~five-year~~Collective ~~term~~protocol. In ~~The~~July ~~GPUs~~2025, ~~will~~we beresumed ~~deployed~~liquid bystaking through ~~Boosteroid at respective data centers across~~ the ~~Europe~~Liquid ~~and~~Collective weprotocol ~~began earning~~with ~~revenue~~5,120 ~~in December 2024~~ETH. ~~The~~This ~~MSA~~approach provides ~~Boosteroid~~flexibility ~~with the option~~ to ~~expand~~engage in ~~increments~~both ofstaking ~~100~~and ~~servers,~~restaking upthrough a tobroader ~~50,000~~range ~~servers, representing~~of astrategies ~~potential~~and ~~$700~~platforms. ~~million~~Subsequently, ~~revenue~~we ~~opportunity~~ceased ~~over~~our ~~the~~liquid ~~five-year~~staking ~~term,~~activities ~~subject~~with toLiquid ~~deployment~~Collective ~~plans~~protocol ~~and~~in October ~~market conditions~~2025.

OnETH November 6, 2024, the Company entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of six (6) month period, representing total revenue of approximately $320,000 for the term. The deployment commenced and ~~revenue generation began on November 7, 2024, using~~ the ~~Company’s~~ETH ~~existing inventory of H200 GPUs.~~Ecosystem

OnEthereum ~~November~~is ~~14,~~a ~~2024~~decentralized, ~~the~~open-source blockchain ~~Company~~network ~~entered~~enabling ~~into~~programmable asmart ~~Terms~~contracts ofand ~~Supply~~decentralized ~~and~~applications. ~~Service~~ETH ~~Level~~is ~~Agreement~~the ~~(together,~~native digital asset of the ~~“Agreement”)~~Ethereum network and anis ~~Order~~used ~~Form~~as ~~with~~the aunit ~~new customer.~~of ~~The~~account ~~order~~to ~~form~~pay ~~provides~~ for ~~services~~transaction ~~utilizing~~fees a(“gas”), ~~total~~validator ofrewards, 64and ~~H200~~computation. ~~GPUs~~Since onits alaunch in ~~month-to-month basis~~2015, ~~which~~Ethereum ~~either~~has ~~party~~become ~~may~~the ~~terminate upon~~leading atprogrammable ~~least~~settlement 14layer ~~days’~~for ~~written~~decentralized ~~notice~~finance, ~~prior~~tokenization, toand ~~any~~digital ~~renewal~~assets ~~date.~~infrastructure, and Itit ~~represents~~is ~~annual~~the ~~revenue~~second-largest ofblockchain ~~approximately~~by ~~$1.2~~market ~~million~~capitalization. ~~The~~Following Ethereum’s transition to proof-of-stake consensus in ~~deployment~~September ~~commenced~~2022, ~~and~~the ~~revenue~~network’s ~~generation~~energy ~~began~~consumption ondeclined ~~November~~materially ~~15,~~and ~~2024,~~a ~~using~~validator-based system for securing the ~~Company’s~~network ~~existing~~and earning ~~inventory~~staking ofrewards ~~H200~~was ~~GPUs~~introduced.

OnBTBT ~~December~~believes ~~30,~~that ~~2024,~~the wegrowth ~~entered~~and ~~into a Master~~maturation ~~Services~~of ~~Agreement~~the ~~(“MSA”)~~Ethereum ~~with~~ecosystem ahas ~~minimum~~direct ~~purchase~~implications ~~commitment~~for ofour 32business ~~GPUs~~model, ~~along~~which ~~with~~integrates (i) an ~~associated~~ETH-anchored ~~purchase~~corporate ~~order,~~treasury ~~from a~~focused ~~new~~on ~~customer,~~disciplined anaccumulation AIand ~~Compute Fund~~ risk-managed byyield ~~DNA~~generation, ~~Holdings~~and ~~Venture~~(ii) ~~Inc. The purchase order provides for services utilizing~~ a ~~total of 576 H200 GPUs over a twenty~~capital-~~five~~light ~~month~~operating ~~period,~~platform ~~terminable~~providing ~~by either party upon at least 90 days’ written notice prior to any renewal~~Ethereum-adjacent ~~date~~services. ItBTBT ~~represents~~views anthe ~~aggregate~~following ~~revenue~~Ethereum ~~opportunity~~ecosystem ofdevelopments ~~approximately~~as ~~$20.2~~particularly ~~million.~~relevant ~~Concurrently,~~to weour ~~placed~~long-term ~~a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in February 2025.~~strategy:

On● ~~January~~Network 6,scale ~~2025,~~and ~~the~~usage. ~~Company entered~~Ethereum’s ~~into~~utility as a ~~Master~~programmable ~~Services~~settlement ~~Agreement~~layer ~~(“MSA”)~~supports ~~with~~ a ~~minimum~~broad ~~purchase~~and ~~commitment~~diversifying set of 32use ~~GPUs~~cases, ~~along~~including ~~with~~decentralized anexchanges, ~~associated~~lending/borrowing ~~purchase order~~protocols, ~~from~~payment arails, ~~new~~identity ~~customer.~~and ~~The~~credentialing ~~purchase~~systems, ~~order~~gaming, ~~provides~~real-world ~~for~~asset ~~services~~tokenization, ~~utilizing~~and aenterprise ~~total~~blockchain ofinitiatives. 32We ~~H200~~believe ~~GPUs~~continued ~~over~~growth ain ~~minimum~~on-chain ofactivity, ~~six~~measured ~~(6)~~by ~~month period~~transactions, ~~representing~~users, total ~~revenue~~value oflocked, ~~approximately~~active ~~$300~~addresses,~~000~~ ~~for~~and ~~the~~L2 ~~term.~~throughput, ~~The~~contributes ~~deployment~~to ~~commenced~~Ethereum’s network effects and ~~revenue~~long-term ~~generation~~demand ~~began~~for onETH ~~January 8,~~as ~~2025~~a utility asset. In our view, ~~using~~higher ETH usage over the ~~Company’s~~long ~~existing~~term ~~inventory~~may ofcorrelate ~~H200~~with ~~GPUs~~increased demand for ETH balances to pay for gas, provide liquidity, and post collateral.

In● ~~January~~Proof-of-stake ~~2025,~~economics ~~the~~and ~~Company entered~~validator ~~into~~infrastructure. aUnder ~~Master~~proof-of-stake, ~~Services~~ETH ~~Agreement~~can ~~(“MSA”)~~be ,staked ~~along~~to ~~with~~help ~~two~~secure ~~associated~~the ~~purchase~~network ~~orders~~and earn protocol rewards, ~~from~~subject ato ~~new~~slashing ~~customer.~~and ~~The~~other ~~purchase orders~~performance ~~provide~~risks. ~~for~~As ~~services~~staking ~~utilizing~~participation, avalidator ~~total~~efficiency, ofand 24protocol ~~H200~~parameters ~~GPUs~~evolve, ~~over~~we aexpect ~~minimum~~market ~~twelve~~yields ~~(12)~~to ~~month~~adjust. ~~period~~We believe disciplined, ~~representing~~security-first ~~total~~staking ~~revenue~~and ofcustody ~~approximately $450,000~~practices are a core competency for ~~the~~an ~~term~~institutional ETH treasury. ~~The~~We ~~deployment~~may ~~commenced~~also ~~and~~selectively ~~revenue~~participate ~~generation~~in ~~began~~risk-adjusted onyield ~~January~~opportunities ~~27,~~that ~~2025,~~are ~~using~~consistent ~~the~~with ~~Company’s~~our ~~existing~~liquidity, ~~inventory of~~compliance, ~~H200~~and ~~GPUs~~counterparty frameworks.

On January 30, 2025, the Company entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of twelve (12) month period, representing total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using the Company’s existing inventory of H200 GPUs.

~~Industry~~● ~~Overview~~Scaling via rollups and Layer 2 networks. The Ethereum roadmap contemplates scaling through rollups and Layer 2 (“L2”) solutions that bundle transactions and settle them on ETH. Increased throughput at lower per-transaction costs may broaden addressable use cases and drive user adoption. We expect L2 growth to expand the universe of Ethereum-adjacent services—such as tooling, analytics, governance advisory, and treasuries—that are relevant to our advisory and services offerings.

We● ~~compete~~Tokenization ~~in the large~~ and ~~rapidly~~ ~~growing~~institutional ~~data~~adoption. ~~center~~Financial institutions and ~~cloud~~enterprises ~~services~~continue ~~markets.~~to ~~The~~explore ~~data~~or ~~center~~pilot ~~market~~tokenization ~~refers~~of totraditional ~~the~~instruments ~~industry~~(such ~~dedicated~~as ~~to designing~~funds, ~~building~~treasuries, ~~and~~ ~~managing data centers~~credit, ~~essential~~and ~~for~~private ~~storing,~~assets) ~~processing,~~ and ~~managing~~on-chain ~~vast~~settlement ~~amounts~~workflows. ofWe ~~digital~~believe ~~information,~~tokenization ~~including~~and ~~for~~related AImarket-structure ~~and~~innovations ~~ML applications.~~could ~~These~~increase ~~centers~~institutional ~~house~~engagement ~~servers~~with ETH, ~~networking~~deepen ~~equipment~~liquidity, and ~~storage~~broaden ~~systems~~opportunities for regulated custody, ~~ensuring~~treasury ~~seamless~~operations, and ~~secure~~compliance-aligned ~~data~~yield ~~operation~~solutions.

~~The~~● ~~cloud~~Security, ~~services~~client ~~market represents~~protection, ~~the~~and ~~transmission~~compliance ofinfrastructure. ~~computer~~Institutional ~~services,~~adoption ~~including~~requires ~~storage,~~robust ~~services~~custody, ~~software~~cybersecurity, ~~analytics, databases, networking,~~ and ~~intelligence, via~~compliance ~~the~~controls. ~~internet~~Our ~~(referred~~treasury tooperations asprioritize ~~“the~~multi-layer ~~cloud”).~~key ~~More specifically~~management, wesegregation ~~are~~of ~~a NeoCloud service provider~~duties, ~~with~~and ~~differentiated services~~independent ~~supporting~~oversight AIof ~~workloads~~custodians and ~~specializing~~counterparties. inWe ~~deploying~~believe ~~optimized~~investments ~~infrastructures~~in ~~that~~cybersecurity ~~include not just GPU fleets but also network accelerators, high-speed storage, software solutions,~~ and ~~more.~~governance ~~This~~are ~~infrastructure is~~ essential ~~for~~to ~~managing~~supporting ~~the~~our ~~massive~~ETH ~~data~~strategy and ~~computing demands of AI training and inference tasks~~services.

It● isAlignment ~~standard~~with ~~for~~our ~~GPU~~ETH ~~hardware clusters,~~Treasury ~~used~~Strategy. inWe ~~the~~seek ~~rendering~~to ofgrow ~~cloud~~total ~~services,~~ETH toholdings beover ~~remotely~~time ~~housed~~and into ~~data~~manage ~~centers,~~our ~~making~~treasury ~~these~~to ~~two~~balance ~~segments~~security, ~~highly~~liquidity, ~~related~~ and ~~synergistic.~~ ~~Specially~~risk-adjusted ~~designed~~returns. ~~data~~We ~~centers~~may ~~host~~stake ~~the~~ETH ~~hardware needed~~ to ~~provide~~earn ~~HPC~~rewards ~~cloud services~~and, ~~and these are commonly referred to~~ as ~~HPC~~appropriate, ~~data~~evaluate ~~centers.~~participation ~~According~~in torelated ~~experts~~mechanisms at(including ~~Schneider~~liquid ~~Electric~~staking, ~~the~~restaking, ~~industry~~or isvalidator ~~shifting~~strategies) ~~away~~where ~~from~~we ~~traditional~~determine ~~data~~the ~~centers~~risk-return ~~that~~and ~~typically hosted~~liquidity ~~10kw~~align ~~racks~~with toour ~~newer~~policies ~~100kw~~and ~~racks~~applicable ~~that~~law. ~~support~~We ~~HPC~~expect ~~needs.~~our WeETH ~~only~~focus ~~design~~to ~~and~~influence ~~develop~~capital ~~HPC~~allocation, ~~data~~risk ~~centers~~management, ~~giving~~product usdevelopment, aand ~~competitive~~service ~~advantage over~~offerings ~~operators~~across ofour ~~traditional~~business ~~data~~(the ~~center~~“ETH ~~capacity.~~Treasury Strategy”)

~~According~~It tois ~~McKinsey~~our ~~& Company~~belief ~~experts,~~that ~~power~~our ~~demand~~public-company ~~for~~governance, treasury ~~data~~discipline, ~~centers~~and inoperating ~~the~~experience ~~U.S.~~in ~~– driven by the need for~~ digital ~~and~~asset AIinfrastructure ~~capabilities~~position –us ~~is expected~~ to ~~reach~~benefit ~~606 terawatt-hours by 2030, up~~ from ~~147 terawatt~~long-~~hours~~term inEthereum ~~2023 (312%~~ ecosystem growth). ~~McKinsey~~However, ~~estimates~~ETH ~~that~~prices, ~~data~~staking ~~centers~~economics, ~~will~~protocol ~~amount to~~changes, ~~11.7%~~regulatory ofdevelopments, ~~total~~market ~~U.S.~~structure ~~power demand over that period. Based on our knowledge of the industry~~conditions, weand ~~believe we are leaders in the markets~~security ~~that~~risks are ~~critical~~volatile ~~for~~and ~~these~~uncertain ~~capabilities,~~ and, ascould amaterially ~~result,~~affect weour ~~believe~~strategy weand ~~are~~results ~~well positioned to benefit from the growth~~ of ~~this sector~~operations.

~~Data~~Blockchain ~~Centers~~Infrastructure

~~According to~~Our ~~Precedence~~blockchain ~~Research,~~infrastructure ~~the~~entails ~~global~~operating validator ~~data~~nodes ~~center~~(on ~~market~~various isPoS ~~estimated to be valued at $125 billion in 2024~~ and isdPoS-based ~~anticipated~~blockchain ~~to reach $365 billion by 2034, expanding at a CAGR of 11~~networks.~~4%.~~ AsIn ofconnection ~~2023,~~with the ~~data~~validation ~~center~~of ~~services~~transactions ~~segment,~~occurring ~~which~~on ~~provides a range of offerings including~~those ~~consulting,~~blockchain ~~maintenance~~networks, ~~and~~BTBT ~~management~~stakes to(or ~~optimize~~“delegates”) ~~the~~blockchain-based ~~performance~~crypto ~~and~~assets ~~reliability~~native ofto ~~data~~those ~~center~~blockchains ~~infrastructure,~~networks ~~represented about 34.2%~~(“native ofcrypto ~~the~~assets”) ~~industry. The solutions segment, which refers~~ to ~~the~~earn ~~technological~~staking ~~offerings that fulfill key functions within data center infrastructure, comprised about 65~~rewards.~~8% of the industry. The solutions segment represents both hardware and software elements, encompassing servers, storage systems, networking equipment, and management software.~~

~~The~~PoS ~~data~~blockchain ~~center~~infrastructure ~~market~~ is ~~propelled~~ byakin ~~growing~~to ~~demands~~Bitcoin’s proof-of-work ~~for~~(“PoW”) ~~cloud~~mining ~~computing~~consensus ~~services,~~mechanism ~~big~~but ~~data~~differs ~~analytics,~~in ~~and~~a ~~digital~~few ~~transformation~~key ways. ~~Key~~PoW ~~contributors~~is toa ~~this~~consensus ~~dynamic~~mechanism that requires ~~landscape~~nodes ~~are~~to ~~technology~~dedicate ~~firms,~~computational ~~real~~resources ~~estate~~to ~~developers,~~validate ~~and~~transactions ~~service~~on ~~providers~~a blockchain. ~~Together~~In PoW, miners use energy-consuming computers to do “work,” and they ~~play~~are arewarded ~~vital~~with ~~role~~crypto inassets for validating transactions on the ~~ongoing~~blockchain. ~~evolution~~The reward is comprised of ~~data~~transaction ~~center~~fees ~~infrastructure~~and crypto assets. Conversely, ~~adapting~~PoS tois ~~meet~~a ~~the~~consensus ~~expanding~~mechanism ~~requirements~~that ofrequires ~~the~~validator ~~digital~~nodes ~~era~~to ~~and~~dedicate ~~ensuring~~financial resources in the ~~seamless~~form ~~operation~~ of ~~critical digital~~crypto ~~services~~assets, ~~across~~which ~~various~~are ~~industries~~staked to participate in the consensus algorithm. ~~The~~Validators, ~~increasing~~the ~~global~~equivalent ~~demand~~of ~~for~~miners ~~cloud~~in ~~computing~~PoW networks, ~~where~~operate wenodes ~~compete~~and asvalidate atransactions ~~cloud~~on ~~services~~the ~~provider, is~~blockchain. aValidators ~~major~~are ~~driver~~rewarded ofin ~~data~~crypto ~~centers,~~assets ~~underlining~~for ~~the~~aligning ~~inherent~~behavior ~~synergies~~with the ~~between~~rules ~~our~~of ~~businesses~~the algorithm.

~~Cloud~~We ~~Services~~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 Coinbase; 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.

According to Roots Analysis, the public cloud market size is projected to grow from $567 billion in 2024 to $3.4 trillion by 2035, representing a CAGR of 17.6% during the forecast period. The major factors driving the cloud services market growth are increasing digital transformation across businesses, growing internet and mobile device adoption across the globe, and, most notably, increased usage of large data sets. Moreover, cloud services are favored by customers due to low capital investment, resource scalability, and a high degree of accessibility. The rise of the system of connected devices, edge computing, 5G, and real-time analytics driven by AI and ML is anticipated to increase the market value of cloud technology across different businesses.

~~Sustainability~~Custody and Key Storage

~~Sustainability~~We safeguard and ~~energy efficiency~~keep ~~are~~private ~~increasingly~~our ~~important~~digital ~~considerations~~assets, ~~for~~including the ~~data~~ETH that ~~center~~we ~~and~~stake, ~~cloud~~by ~~services~~utilizing ~~markets~~custodian ~~due~~solutions toprovided ~~high~~by ~~energy~~Cactus ~~consumption~~Custody and ~~carbon~~ ~~emissions~~Fireblocks, which requires multi-factor authentication. While ~~The~~we ~~sustainability~~are ~~movement~~confident ~~for~~in ~~data~~the ~~centers~~security isof ~~driven~~our bydigital ~~organizations’~~assets ~~environmental,~~held ~~social~~by ~~and~~Cactus ~~governance commitments~~Custody and Fireblocks, given the ~~rise~~broader ofmarket ~~laws~~conditions, there ~~and~~can ~~regulations~~be ~~supporting~~no ~~sustainability.~~assurances ~~For~~that ~~example,~~other ~~the~~digital ~~Paris~~asset ~~Accord~~market participants, ~~which~~including ~~was~~Cactus ~~entered~~Custody ~~into~~and ~~force on~~Fireblocks ~~November~~as 4,our ~~2016~~custodian, iswill not ~~currently~~ultimately inbe ~~effect~~impacted. ~~across~~We ~~174~~continue ~~countries~~to ~~apart~~monitor ~~from~~ the ~~United~~digital ~~States~~assets ~~and~~industry ~~aims~~as toa ~~curb~~whole, ~~long-term~~although ~~global~~it ~~warming. Our~~is ~~facilities~~not inpossible ~~Quebec~~at ~~and~~this ~~Iceland~~time ~~benefit~~to predict ~~from~~all ~~clean,~~of ~~hydroelectric~~the ~~power~~risks ~~generation,~~stemming ~~and~~from wethese ~~will~~events ~~seek~~that tomay ~~offer~~result ~~comprehensive~~to ~~HPC~~us, ~~data center~~our ~~and~~services ~~cloud~~providers, ~~services~~our ~~solutions~~counterparties, ~~while~~and ~~prioritizing~~the ~~sustainability~~broader industry ~~and~~as ~~energy~~a ~~efficiency~~whole.

~~Strategic~~The ~~Relationships~~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.

~~Financing~~As of December 31, 2025, our combined digital asset holdings totaled approximately $415 million, consisting primarily of ETH, along with a smaller BTC position, and cash totaled $118 million.

~~In January~~BTC 2025, we entered into a non-binding Memorandum of Understanding (MOU) with an institutional investor to form a programmatic joint venture (the “Joint Venture”) for the development, construction and operation of data centers within the U.S., Canada, and Latin America. In this regard, the MOU identifies certain properties, collectively, as the Seed Project for the Joint Venture, requiring approximately $53 million of equity commitments, of which we will commit 30% and our partner the remaining 70%. The MOU provides that over time, the parties wish to invest in data center opportunities (other than the Seed Project) with aggregate capitalization of $2 billion and implied equity commitments of approximately $500 million (assuming customary use of leverage). We will be responsible for development management, construction management, and asset management services with regard to the projects of the Joint Venture, and we will be entitled to earn certain fees for the provision of these services. We will also be entitled to receive a promoted interest, in addition to returns on our pro rata equity investments into the Joint Venture. The MOU binds the parties to use their commercially reasonable efforts to negotiate and execute mutually agreed definitive transaction documents.Exposure

WeWhile ~~believe that~~ the ~~signing of~~Company ~~this~~is ~~MOU~~converting isits ~~illustrative~~BTC ofholdings into ETH over ~~strong~~time, ~~market~~it ~~demand~~has ~~from~~commenced ~~institutional~~a ~~private~~strategic ~~equity~~alternatives ~~investors~~process for ~~exposure~~its bitcoin mining tooperations ~~the~~during ~~types of projects~~2025, inwith ~~our~~any ~~data~~net ~~center~~proceeds ~~pipeline and our capability~~ to ~~develop~~be ~~them.~~re-deployed Weinto ETH, ~~believe~~the ~~that~~Company wealso ~~are~~intends ~~well positioned~~ to ~~capitalize~~maintain onflexibility ~~this~~to ~~demand~~mine ~~by forming one~~ or ~~more~~hold ~~equity~~BTC ~~joint~~when ~~ventures~~market economics ~~with~~and ~~the~~risk-reward ~~aforementioned~~profiles ~~partner~~are attractive. ~~Doing~~Our somanagement ~~would~~has ~~provide~~not usset ~~access~~a tospecific atarget ~~differentiated~~for ~~and~~the ~~non-dilutive source~~amount of ~~private~~BTC ~~equity~~we ~~capital~~seek to ~~fund~~hold and ~~our~~will ~~projects,~~continue ~~and~~to ~~deliver~~monitor amarket ~~durable~~conditions ~~stream~~to ofdetermine ~~cash~~whether ~~flows~~to engage in ~~the~~additional ~~form~~financings ofto ~~management~~purchase ~~fee~~more ~~income for our services~~BTC.

~~Technology~~Digital Asset Mining Operations

We have established formal relationships with leading technology providers, including Nvidia, SuperMicro, Dell, and Hewlett Packard Enterprise. These partnerships enable us to access and deploy the most advanced computing hardware, ensuring that our clients benefit from cutting-edge technology and optimized performance. Our collaboration with these industry leaders allows us to stay at the forefront of high-performance computing and artificial intelligence infrastructure.

In addition, we have a formal agreement with Lepton to offer on-demand computing services powered by Nvidia B200 GPUs. This partnership enhances our ability to provide scalable, high-performance AI and HPC solutions to enterprise customers, enabling them to access state-of-the-art compute resources without the need for upfront infrastructure investment.

Our data center business leverages a diverse mix of vendors across multiple geographies to source equipment cost-effectively while mitigating supply chain disruptions. By maintaining a broad supplier network, we reduce reliance on any single vendor and enhance our ability to procure best-in-class solutions at competitive prices. This approach strengthens our operational resilience and supports our ability to scale efficiently.

Competition

We face significant competition from various data center and cloud services providers. We compete with several prominent data center providers, including Digital Realty, Equinix, Inc., NTT, Bitdeer, Riot Platforms and various private operators in the U.S. Our primary competitors in the cloud service business are Coreweave, Crusoe Energy, Nebius, and Lambda Labs.

Many of our competitors offer locations worldwide and have well-established international operations. Our competitors may also have significant advantages over us, including greater name recognition, longer operating histories, pre-existing relationships with current or potential customers, the capacity to provide the same or additional products and services, more significant marketing budgets and other financial and operational resources, more robust internal controls and systems, and better established, more extensive scale and lower cost suppliers sand supplier relationships.

Materials and Suppliers

Maintaining key supplier relationships is crucial to our business operations, as we rely on these relationships, such as with Dell, NVIDIA, Hewlett Packard Enterprise, and Super Micro, to secure essential computing hardware, infrastructure components, and other materials. The complexity of developing cloud service hardware at scale limits the number of suppliers capable of meeting our requirements. Consequently, we have established purchase orders with leading hardware manufacturers, which include extended delivery schedules spanning several months before the hardware is delivered to our facilities. These fluctuations in delivery timelines necessitate careful planning and advanced purchasing strategies to ensure we can acquire hardware well before their anticipated deployment.

We proactively procure these materials from our suppliers in sufficient quantities to facilitate hardware deployment at scale and on accelerated timelines. To mitigate potential supply chain disruptions and ensure the smooth operation of our facilities, we have established long-term contracts and agreements with key suppliers. These arrangements give us greater certainty regarding the availability and pricing of essential components and materials. Furthermore, we continuously monitor market trends and maintain open lines of communication with our suppliers to anticipate and address potential supply chain challenges.

By proactively managing our supplier relationships, securing necessary materials in advance, and closely monitoring market conditions, we aim to minimize the impact of supply chain fluctuations on our operations. This approach enables us to maintain a steady pace of hardware deployments and facility development, ultimately supporting our goal of expanding our HPC data center and cloud service capabilities and maximizing shareholder value. However, we rely on a limited number of vendors for certain products and services for our data center facilities, and some of our contracts provide a single source of materials. If any of our key suppliers cannot perform under their contracts or satisfy our orders, it could significantly delay our data center development and operations. While we may be able to engage replacement suppliers, this would likely lead to operational delays and increased costs.

Customers

HPC Data Centers

Our HPC data center customer base consists of two primary segments:

● VFX – Visual effects that are created using computers or models. These customers benefit from our high-density solutions, reaching upwards of 50kW per cabinet, to accommodate their VFX workloads and data generation.

● GPU cloud – our GPU cloud customers offer on demand access to their GPUs for tasks like AI, VFX rendering and scientific computing

Currently, we provide HPC data center services at our leased MTL 1 facility, although our customers are based across Canada and Europe.

Cloud Services

Our cloud services customer base also is comprised of two primary segments:

● Direct end users – these customers primarily leverage our compute power for model training and inference

● GPU marketplaces – these platforms resell our computing power to their own end users. Since we do not have direct visibility into their end-user base, there may be some overlap among end users across different marketplaces.

We currently provide cloud services across the U.S., Europe, and Asia.

Global Logistics

Global supply logistics have caused delays across all distribution channels, impacting the HPC and AI markets. Delivery schedules for specialized equipment, such as high-performance computing systems, AI hardware, and necessary infrastructure components, have been affected due to constraints on globalized supply chains. These constraints extend to procuring construction materials and specialized electricity distribution equipment required to develop HPC and AI facilities. Efforts to mitigate delivery delays are ongoing to avoid materially impacting deployment schedules; however, there are no assurances that such mitigation efforts will continue to be successful. To help address global supply logistics and pricing concerns, we have implemented proactive measures such as procuring and holding required materials. We continuously monitor developments in the global supply chain which is necessary to assess their potential impact on the Company’s expansion plans within the HPC and AI markets.

Regulatory Landscape

The regulatory landscape surrounding HPC data centers and cloud services is evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near- and long-term. These developments may have a material adverse effect on our business and financial condition.

There are growing concerns about the ethical implications and potential misuse of AI and machine learning. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines. We are closely monitoring these developments and will dedicate our best efforts to adhere to any upcoming regulations or industry best practices.

As a company operating at the intersection of data center, cloud and HPC hosting services, we are committed to maintaining a proactive and adaptive approach to regulatory compliance. We closely monitor legislative and regulatory developments and engage in dialogue with relevant stakeholders to ensure our business practices align with the evolving legal and regulatory framework. Despite the uncertainties posed by the changing regulatory landscape, we remain committed to delivering innovative and responsible solutions in the data center, cloud and HPC hosting markets while prioritizing compliance and risk management. However, if we fail to comply with applicable laws and regulations, we may be subject to significant liabilities, including fines and penalties, and our business, financial condition, or results of operations could be adversely affected.

Investment Canada Act

All acquisitions of control (whether direct or indirect) of Canadian businesses by non-Canadians may be subject to review on grounds that the investment could be injurious to national security. Following the filing of the required Investment Canada Act notification in respect of our acquisition of Enovum (the “Transaction”), we received written notification from the Minister of Innovation, Science and Industry of Canada (the “Minister”), that the Transaction may be subject to a national security review. Following review information we provided, Bit Digital executed a “Commitment Letter” to the Minister which provides for the following: (i) Commitment to maintain one Canadian on the board of Enovum Inc.; (ii) Commitment to maintain or improve Enovum’s security controls for personnel, physical security and the internal network, and (iii) Commitment to send a list of Enovum’s current clients to Investment Canada on an annual basis.

Digital Asset Business Segment

The digital asset business segment of the Digital Infrastructure Business (the “Digital Asset Business Segment”) is comprised primarily of two distinct but highly complementary operations: (i) digital asset mining (the “Digital Asset Mining Operations”); and (ii) ETH staking (the “ETH Staking Operations”).

Digital Asset Mining Business

We commenced our bitcoin (“BTC”) mining business in February 2020. We initiated limited Ethereum mining operations in January 2022, however discontinued the operations by September 2022 due to Ethereum blockchain switching from proof-of-work (“PoW”) consensus mechanism to proof-of-stake (“PoS”) validation. Our mining operations, hosted by third-party providers, use specialized computers, known as miners, to generate digital assets. Our miners use application specific integrated circuit (“ASIC”) chips. These chips enable the miners to apply high computational power, expressed as “hash rate”, to provide transaction verification services (generally known as “solving a block”) which helps support the blockchain. For every block added, the blockchain provides an award equal to a set number of digital assets per block. Miners with a greater hash rate generally have a higher chance of solving a block and receiving an award.

8We operate our mining assets with the primary intent of accumulating digital assets which we may sell for fiat currency from time to time depending on market conditions and management’s determination of our cash flow needs, and/or exchange into ETH or USD Coin (“USDC”). Our mining strategy was to mine bitcoins as quickly and as many as possible given the fixed supply of bitcoins. In view of historically long delivery lead times to purchase miners from manufacturers like Bitmain Technologies Limited (“Bitmain”) and MicroBT Electronics Technology Co., Ltd (“MicroBT”), and other considerations, we have chosen to acquire miners on the spot market, which can typically result in delivery within a relatively short time.

We ~~operate~~have ~~our~~signed ~~mining~~service ~~assets~~agreements with ~~the~~third-party ~~primary~~hosting partners ~~intent~~in ofNorth ~~accumulating~~America ~~digital~~and ~~assets~~Iceland. ~~which~~These wepartners ~~may~~operate ~~sell~~specialized ~~for~~mining ~~fiat~~data ~~currency~~centers, ~~from~~where ~~time~~they toinstall ~~time~~and ~~depending~~operate onthe ~~market~~miners ~~conditions~~ and ~~management’s~~provide ~~determination~~IT ofconsulting, ~~our~~maintenance, ~~cash~~and ~~flow~~repair ~~needs,~~work ~~and/or~~on ~~exchange~~site ~~into~~for ~~ETH~~us. orOur ~~USD~~mining ~~Coin~~facilities in New York are maintained by Digihost Technologies Inc. (“~~USDC~~Digihost”). Our mining ~~strategy~~facilities ~~has~~in ~~been~~Texas toare ~~mine bitcoins~~maintained asby ~~quickly~~Dory ~~and~~Creek, asLLC, ~~many~~a assubsidiary ~~possible~~of ~~given~~Bitdeer ~~the~~Technologies Group ~~fixed~~(“Bitdeer”) ~~supply~~and ofDigital ~~bitcoins.~~Energy InPartner ~~view~~LLC of(“DEP”), ~~historically~~which ~~long~~was ~~delivery~~formerly ~~lead~~known ~~times~~as toA.R.T ~~purchase miners~~Digital. ~~from~~Soluna ~~manufacturers~~Computing, Inc. ~~like~~and ~~Bitmain~~DVSL ~~Technologies~~ComputeCo, ~~Limited~~LLC (collectively, “~~Bitmain~~Soluna”) ~~and~~previously ~~MicroBT~~maintained ~~Electronics~~our ~~Technology~~mining ~~Co.~~facilities in Kentucky and Texas, ~~Ltd~~and GreenBlocks ehf, an Icelandic private limited company (“~~MicroBT~~GreenBlocks”), ~~and~~ ~~other~~previously ~~considerations,~~maintained weour ~~have~~mining ~~chosen~~facility toin ~~acquire~~Iceland. The ~~miners~~Company’s onservice ~~the~~agreements ~~spot~~partnership ~~market,~~with ~~which~~Soluna ~~can~~and ~~typically~~GreenBlocks ~~result~~concluded inat ~~delivery~~the ~~within~~end aof ~~relatively short~~February ~~time~~2026.

We have signed service agreements with third-party hosting partners in North America and Iceland. These partners operate specialized mining data centers, where they install and operate the miners and provide IT consulting, maintenance, and repair work on site for us. Our mining facilities in New York are maintained by Coinmint LLC (“Coinmint”) and Digihost Technologies Inc. (“Digihost”). Our mining facilities in Texas are maintained by Dory Creek, LLC, a subsidiary of Bitdeer Technologies Group (“Bitdeer”) and A.R.T. Digital Holdings Corp (“KaboomRacks”). Soluna Computing, Inc and DVSL ComputeCo, LLC (collectively “Soluna”) maintained our mining facilities in Kentucky and Texas. Our mining facility in Iceland is maintained by GreenBlocks ehf, an Icelandic private limited company (“GreenBlocks”). We have relocated our miners from our mining facility in Canada maintained by Blockbreakers Inc. (“Blockbreakers”) to Soluna and Coinmint after our service agreement expired in November 2024. From time to time, the Company may change partnerships with hosting facilities to recalibrate its bitcoin mining operations. These terminations are strategic, targeting reduced operational costs, enhanced energy efficiency for a smaller carbon footprint, increased flexibility in operational control, and minimized geopolitical risks. While a short-term decrease in mining output might occur, we expect these changes to yield long-term operational improvements.

We are a sustainability-focused digital asset mining company. On June 24, 2021, we signed the Crypto Climate Accord, a private sector-led initiative that aims to decarbonize the crypto and blockchain sectors. On December 7, 2021, we became a member of the Bitcoin Mining Council (“BMC”), joining MicroStrategy and other founding members to promote transparency, share best practices, and educate the public on the benefits of bitcoin and bitcoin mining.

~~ETH Staking Business~~6

InMarket the fourth quarter of 2022, we formally commenced Ethereum staking operations. We intend to delegate or stake our ETH holdings to an Ethereum validator node to help secure and strengthen the blockchain network. Stakers are compensated for this commitment in the form of a reward of the native network token.Cyclicality

Our ~~native~~results ~~staking operations~~ are ~~enhanced~~influenced by a ~~partnership~~digital ~~with~~asset ~~Blockdaemon, the leading institutional-grade blockchain infrastructure company for node management and staking. In~~price ~~the~~volatility fourth quarter of 2022, following a similar mechanism to native Ethereum staking, we also participated in liquid staking via Portara protocol (formerly known as Harbour), the liquid staking protocol developed by Blockdaemon and ~~StakeWise~~transaction ~~and the first of its kind tailored to institutions. With the introduction of staked ETH withdrawals in April 2023~~activity, weall ~~have reassessed our Ethereum network staking approaches, weighing the advantages~~ of ~~traditional~~which ~~staking~~fluctuate ~~against~~materially ~~liquid staking solutions. The withdrawal feature in native staking, coupled~~ with ~~yields~~ ~~that~~macroeconomic ~~are~~and onregulatory ~~par with those of liquid staking, has encouraged us to expand our collaborations with other service providers in this domain~~developments. ~~As a result~~Historically, ~~we terminated all liquid staking activities with StakeWise in the third quarter of 2023, reclaiming all staked Ethereum~~ ~~along~~our ~~with~~business ~~the~~has ~~accumulated~~not ~~rewards.~~exhibited Inpredictable ~~the~~seasonal ~~fourth quarter of 2023, the Company terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon~~trends.

Our native staking operations with MarsProtocol Technologies Pte. Ltd. (“Marsprotocol”) commenced in the first quarter of 2023 and concluded in July 2023. After ceasing operations with Marsprotocol, we initiated our native staking with MarsLand Global Limited (“MarsLand”) in August 2023. Subsequently, we have ceased our native staking with MarsLand in the first quarter of 2024 and initiated our native staking with Figment Inc.

We started participating in liquid staking via Liquid Collective protocol on the Coinbase platform in the first quarter of 2023. Liquid staking allows participants to achieve greater capital efficiency by utilizing their staked ETH as collateral and trading their staked ETH tokens on the secondary market. In the first quarter of 2024, we have reclaimed all the liquid staked ETH from Liquid Collective protocol.

Miner Deployments

During the year ended December 31, ~~2024~~2025, we continued to work with our hosting partners to deploy our miners in North America and Iceland.

~~During~~As ~~the~~of ~~first~~December ~~quarter~~31, ~~of 2024~~2025, the Company’s ~~deployed~~active anhash ~~additional~~rate 2totals approximately 1.5 EH/s,~~350~~ ~~miners~~with atoperations ~~one~~in ofNorth ~~Coinmint’s~~America ~~hosting~~and ~~facilities~~Iceland.

During the second quarter of 2024, the Company deployed an additional 600 miners at Blockbreakers’ hosting facility.

During the third quarter of 2024, the Company deployed an additional 546 miners at one of Soluna’s hosting facilities.

During the fourth quarter of 2024, the Company reallocated a portion of its mining fleet across hosting facilities as part of its ongoing efforts to recalibrate its bitcoin mining operations. This transition, driven by changes in hosting partnerships, including the transfer of some miners from Blockbreakers and Coinmint to Soluna’s facilities.

As of December 31, 2024, the Company’s active hash rate totals approximately 1.8 EH/s, with operations in North America and Iceland.

Power and Hosting Overview

~~During~~The ~~the~~Company’s ~~year~~subsidiary, ~~ended~~Bit ~~December~~Digital 31Canada, Inc., ~~2024~~entered into a Master Mining Services Agreement (MMSA), ~~our~~effective ~~hosting partners~~September ~~continued~~1, to2022, ~~prepare~~for ~~sites~~Blockbreakers, Inc. to ~~deliver~~provide ~~our~~five ~~contracted~~MW of incremental hosting capacity, ~~bringing~~at ~~additional~~its ~~power~~facility ~~online~~in ~~for~~Canada. ~~our~~The ~~miners~~facility utilizes an energy source that is primarily hydroelectric.

~~The~~On ~~Company’s~~April ~~subsidiary~~5, ~~Bit~~2023, ~~Digital~~the ~~Canada, Inc.,~~Company entered into a letter ~~Mining~~agreement ~~Services~~and ~~Agreement~~MMSA ~~effective~~Amendment ~~September~~with 1,Coinmint ~~2022,~~pursuant ~~for~~to ~~Blockbreakers,~~which ~~Inc.~~Coinmint agreed to provide ~~five~~the Company with up to ten (510) MW of ~~incremental~~ ~~hosting~~additional mining capacity to energize the Company’s mining equipment at ~~its~~Coinmint’s hosting facility in ~~Canada~~Plattsburgh, New York. The agreement was for two years automatically renewing for three (3) months unless terminated by either party on at least ninety (90) days prior written notice. The performance fees under this letter agreement range from 30% to 33% of the net profit. This agreement brought the Company’s total contracted hosting capacity with Coinmint to approximately 30 MW at this facility. ~~utilizes~~On January 3, 2025, the Company received an ~~energy~~additional ~~source~~90-days ~~that~~notice isof ~~primarily~~non-renewal ~~hydroelectric~~of colocation mining services agreement from Coinmint, which informed the Company of its intent not to renew the 10 MW total contracted capacity at its Plattsburgh, New York site, effective April 5, 2025. After the contracts with Coinmint expired, a portion of the miners were transferred to other hosting facilities, and the inefficient units were sold.

On ~~May~~April 827, 2023, the Company entered into a ~~Master~~ ~~Mining~~letter ~~Services~~agreement ~~Agreement~~and MMSA Amendment with ~~Blockbreakers,~~Coinmint pursuant to which ~~Blockbreakers~~Coinmint agreed to provide the Company with ~~four~~up ~~(4)~~to 10 MW of additional mining capacity to energize the Company’s mining equipment at ~~its~~Coinmint’s hosting facility in ~~Canada~~Massena, New York. The agreement was is for ~~two~~one ~~(2)~~year ~~years~~ automatically ~~renewable~~renewing for ~~additional~~three ~~one~~ (13) ~~year terms~~months unless terminated by either party ~~gives~~on at least ~~sixty~~90 ~~(60)~~ days’ ~~advance~~prior written notice. The performance ~~fee~~fees isunder ~~15%~~this ~~of the net profit. Additionally, Bit Digital has secured a side~~ letter agreement ~~with~~are ~~Blockbreakers,~~33% ~~granting~~of the ~~Company~~net ~~the right of first refusal for any future mining hosting services offered by Blockbreakers in Canada~~profit. This new agreement brought the Company’s total contracted hosting capacity with ~~Blockbreakers~~Coinmint to approximately 940 MW. ~~Our service agreement with Blockbreakers expired in November 2024. A portion of the miners were transferred to other hosting facilities, and the inefficient units were sold.~~

On ~~June~~January 726, ~~2022~~2024, wethe Company entered into a ~~Master~~letter ~~Mining Services~~agreement ~~Agreement~~and ~~(the “~~MMSA”) Amendment with Coinmint ~~LLC,~~ pursuant to which Coinmint ~~will~~agreed to provide the ~~required~~Company with up to six MW of additional mining ~~colocation~~capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement ~~services~~was for a one- year ~~period~~ automatically renewing for three~~-month~~ ~~periods~~months unless ~~earlier~~ terminated. ~~The~~by ~~Company~~either ~~will~~party ~~pay~~on ~~Coinmint~~at least 90 days prior written notice. ~~electricity~~The ~~costs,~~performance ~~plus~~fees ~~operating~~under ~~costs~~this ~~required~~letter toagreement ~~operate~~are 28% of the net profit. This agreement brought the Company’s ~~mining~~total ~~equipment,~~contracted hosting ascapacity ~~well~~with asCoinmint ato ~~performance~~approximately ~~fee~~46 ~~equal to 27~~MW.5% ofOn ~~the~~September ~~net~~5, ~~profit~~2024, ~~subject~~the toCompany received a ~~ten~~90-days ~~percent~~notice ~~(10%)~~of ~~reduction~~non-renewal ifof colocation ~~Coinmint~~mining ~~fails~~services toagreement ~~provide~~from ~~uptime~~Coinmint, ofwhich ~~ninety-eight~~informed ~~(98%)~~the ~~percent~~Company ~~or better~~of ~~for~~its ~~any~~intent ~~period.~~not Weto ~~are~~renew ~~not~~27 ~~privy~~MW toof the ~~emissions~~36 ~~rate~~MW total contracted capacity at ~~the~~its ~~Coinmint~~Massena, ~~facility~~New orYork atsite, ~~any~~effective ~~other~~December ~~hosting~~7, ~~facility~~2024. ~~However~~Subsequently, on October 29, 2024, the Company received an additional ~~Coinmint~~90-days ~~facility~~notice ~~operates~~of innon-renewal anof ~~upstate~~colocation ~~New~~mining ~~York~~services ~~region~~agreement ~~that~~from ~~reportedly~~Coinmint, ~~utilizes~~which ~~power~~informed ~~that~~the isCompany ~~99%~~of ~~emissions-free,~~its asintent ~~determined~~to ~~based~~not onrenew the ~~2023~~remaining ~~Load~~9 &MW ~~Capacity~~of ~~Data~~the ~~Report~~36 ~~published~~MW bytotal ~~the~~contracted capacity at its Massena, New York ~~Independent~~site, ~~System~~effective ~~Operator~~January 28, ~~Inc~~2024. ~~(“NYISO”).~~

10In April 2023, we renewed the co-mining agreement with Digihost, previously executed in June 2021. Pursuant to the terms of the new agreement, Digihost provides certain premises to Bit Digital for the purpose of the operation and storage of an up to 20 MW bitcoin mining system to be delivered by Bit Digital. Digihost also provides services to maintain the premises for a term of two years, automatically renewing for a period of one (1) year. Digihost shall also be entitled to 30% of the net profit generated by the miners. As of December 31, 2025, Digihost provided approximately 6.0 MW of capacity for our miners at their facility.

On April 5, 2023, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to ten (10) MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Plattsburgh, New York. The agreement is for two (2) years automatically renewing for three (3) months unless terminated by either party on at least ninety (90) days prior written notice. The performance fees under this letter agreement range from 30% to 33% of the net profit. This new agreement brings the Company’s total contracted hosting capacity with Coinmint to approximately 30 MW at this facility.

On April 27, 2023, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to ten (10) MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement is for one (1) year automatically renewing for three (3) months unless terminated by either party on at least ninety (90) days prior written notice. The performance fees under this letter agreement are 33% of the net profit. This new agreement brings the Company’s total contracted hosting capacity with Coinmint to approximately 40 MW.

On January 26, 2024, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to six (6) MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement is for one (1) year automatically renewing for three (3) months unless terminated by either party on at least ninety (90) days prior written notice. The performance fees under this letter agreement are 28% of the net profit. This new agreement brings the Company’s total contracted hosting capacity with Coinmint to approximately 46 MW.

On September 5, 2024, the Company received a 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent not to renew 27 MW of the 36 MW total contracted capacity at its Massena, New York site, effective December 7, 2024. Subsequently, on October 29, 2024, the Company received an additional 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent to not renew the remaining 9 MW of the 36 MW total contracted capacity at its Massena, New York site, effective January 28, 2024. On January 3, 2025, the Company received an additional 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent to not renew the 10 MW total contracted capacity at its Plattsburgh, New York site, effective April 5, 2025.

After the contracts with Coinmint expire, we plan on selling the inefficient units and replacing the hash rate with newer generation machines. By doing so we can replace the lost hash rate with around 50% less MW. We have already signed contracts for more than enough hosting capacity to replace that hash rate. As of December 31, 2024, Coinmint provided approximately 18.5 MW of capacity for our miners at their facilities.

In June 2021, we entered into a strategic co-mining agreement with Digihost Technologies in North America. Pursuant to the terms of the agreement, Digihost provides certain premises to Bit Digital for the purpose of the operation and storage of a twenty (20) MW bitcoin mining system to be delivered by Bit Digital. Digihost provides services to maintain the premises for a term of two (2) years. Digihost shall also be entitled to 20% of the net profit generated by the miners.

In April 2023, we renewed the co-mining agreement with Digihost, previously executed in June 2021. Pursuant to the terms of the new agreement, Digihost provides certain premises to Bit Digital for the purpose of the operation and storage of an up to twenty (20) MW bitcoin mining system to be delivered by Bit Digital. Digihost also provides services to maintain the premises for a term of two (2) years, automatically renewing for a period of one (1) year. Digihost shall also be entitled to 30% of the net profit generated by the miners. As of December 31, 2024, Digihost provided approximately 6.0 MW of capacity for our miners at their facility.

On May 9, 2023 (“Effective Date”), the Company entered into a Term Loan Facility and Security Agreement (the “Loan Agreement”) with GreenBlocks. Pursuant to the Loan Agreement, GreenBlocks has requested the Company to extend one or more loans (“Advances”) under a senior secured term loan facility in an aggregate outstanding principal amount not to exceed $5 million. The interest rate of the Loan Agreement is 0% and Advances are to be repaid on the maturity date, which is the thirty-nine-month anniversary of the Effective Date. GreenBlocks will exclusively use the Advances to buy miners that will be operated for the benefit of the Company at a facility in Iceland, with an overall capacity of 8.25 MW. To secure the prompt payment of Advances, the Company has been granted a continuing first priority lien and security interest in all of GreenBlocks’s rights, title and interest to the financed miners. The miners are the sole property of GreenBlocks, of which they are responsible for the purchase, installation, operation, and maintenance.

On May 9, 2023, the Company entered into a Computation Capacity Services Agreement (the “Services Agreement”) with GreenBlocks. Pursuant to the Agreement, GreenBlocks will provide computational capacity services and other necessary ancillary services, such as operation, management, and maintenance, at the facility in Iceland for a term of two (2) years. GreenBlocks will own and operate the miners financed through the Loan Agreement for the purpose of providing computational capacity of up to 8.25 MW. The Company will pay power costs of five cents ($0.05) per kilowatt hour, a pod fee of $22,000 per pod per month, and a depreciation fee equal to 1/36 of the facility size per month. The performance fees under this agreement are 20% of the net profit. The Company submitted to Greenblocks a deposit in the amount of $1,052,100, which was exclusively for the purpose of paying the landlord of the facility for hosting space.7

On ~~June~~May 19, 2023, the Company ~~and GreenBlocks~~ entered ~~the~~ ~~Omnibus~~into ~~Amendment~~a toComputation Capacity ~~Loan~~Services ~~Documents~~Agreement ~~and Other Agreements~~ (the “~~Omnibus~~Services ~~Amendment~~Agreement”). ~~This~~with ~~amendment~~GreenBlocks. ~~revised~~Pursuant ~~both~~to the ~~Loan~~ Agreement, GreenBlocks will provide computational capacity services and ~~the~~other ~~Services~~necessary ~~Agreement~~ancillary ~~previously~~services, ~~entered~~such onas ~~May~~operation, 9management, ~~2023.~~and ~~While~~maintenance, at the ~~core~~facility in ~~terms~~Iceland ~~remained~~for ~~consistent,~~a ~~notable~~term ~~modifications~~of ~~pertained to~~two ~~the~~years. ~~facility~~GreenBlocks ~~size~~will own and ~~contracted~~operate ~~capacity.~~the ~~Specifically,~~miners financed through the ~~facility~~Loan ~~size~~Agreement ~~was~~for ~~increased~~the ~~from~~purpose $5of providing ~~million~~computational capacity of up to $68.725 ~~million~~MW. ~~Moreover~~The Company will pay power costs of $0.05 per kilowatt hour, a pod fee of $22,000 ~~GreenBlocks~~per ~~agreed~~pod toper ~~expand~~month, ~~the~~and ~~computation~~a ~~capacity~~depreciation fee equal to ~~approximately~~1/36 ~~10.7~~of ~~MW.~~the ~~Advances~~facility ofsize $6per month.4 ~~million~~The ~~have~~performance ~~been~~fees ~~financed~~under bythis ~~the~~agreement ~~Company~~are to20% ~~GreenBlocks~~of the net profit. AsThe ofCompany ~~December~~submitted ~~31,~~to ~~2024,~~Greenblocks ~~GreenBlocks~~a ~~provided~~deposit ~~approximately~~in ~~5.0~~the MWamount of ~~capacity~~$1,052,100, which was exclusively for ~~our~~the ~~miners~~purpose of atpaying ~~their~~the landlord of the facility for hosting space.

InOn ~~October~~June 1, 2023, wethe Company and GreenBlocks entered into athe ~~strategic~~Omnibus ~~co-location agreement~~Amendment ~~with~~to ~~Soluna~~Loan ~~Computing,~~Documents ~~Inc.~~and Other Agreements (“~~Soluna~~Omnibus Amendment”). ~~for~~This aamendment ~~term~~revised ofboth the ~~one~~Loan ~~(1)~~Agreement ~~year~~and ~~automatically~~the ~~renewing~~Services onAgreement apreviously ~~month-to-month~~entered ~~basis unless~~on ~~terminated~~May by9, ~~either party~~2023. ~~Pursuant~~While to the core terms ofremained ~~the agreement~~consistent, ~~Soluna~~notable ~~provides~~modifications pertained ~~certain~~to ~~required~~the ~~mining~~facility ~~colocation~~size ~~services to~~and ~~the~~contracted ~~Company~~capacity. ~~for~~Specifically, the ~~purpose~~facility ofsize ~~the~~was ~~operation~~increased ~~and~~from ~~storage~~$5 ofmillion up to 4$6.47 MWmillion. Moreover, ~~bitcoin~~GreenBlocks ~~mining~~agreed ~~system~~ to beexpand ~~delivered~~the bycomputation ~~Bit~~capacity ~~Digital.~~to ~~Soluna shall~~approximately ~~also~~10.7 beMW. ~~entitled~~Advances toof 42$6.5%4 ofmillion ~~the~~have ~~net~~been ~~profit generated~~ financed by the ~~miners.~~Company ~~This~~to ~~agreement expired at the end of October 2024~~GreenBlocks.

In ~~October~~May ~~2024~~2025, we ~~entered~~amended ~~into~~the aServices ~~co-location agreement~~Agreement with ~~Soluna~~Greenblocks, tooriginally executed ~~continue~~in ~~our~~May ~~business~~2023 ~~relationship~~and previously amended in June 2023. ~~Under~~Pursuant ~~this~~to the terms of the amended agreement, ~~Soluna~~Greenblocks ~~provides~~shall ~~certain~~provide ~~required~~services to ~~mining~~support ~~colocation services~~8.9 toMW ~~the~~of ~~Company~~power atcapacity ~~their~~from ~~hosting~~March ~~facility~~1, in2025 ~~Murray~~through April 30, ~~Kentucky~~2025 ~~for~~and ~~the~~5 ~~purpose~~MW of ~~the~~computational ~~operation~~capacity starting May 1, 2025 through December 31, 2025. The Company will pay power costs of $0.067 per kilowatt hour and ~~storage~~a pod fee of ~~bitcoin~~$10,000 ~~mining~~per ~~system~~pod per month, subject to bepro ~~delivered~~rata byadjustment ~~the~~if ~~Company~~usage upfalls tobelow ~~6.6~~2 MW (3.3 MWAll ~~for~~other ~~terms~~provisions of ~~nine~~the ~~(9)~~original ~~months~~agreement and ~~3.3~~previous MWappendices ~~for~~remain in effect. The amended terms ofmay ~~one~~be ~~(1)~~modified ~~year)~~by mutual agreement, ~~automatically renewing~~and oneither aparty may terminate with one month~~-to-month~~’s ~~basis~~notice. ~~unless~~As ~~terminated~~of byDecember ~~either~~31, 2025, ~~party~~GreenBlocks provided approximately 9.1 ~~Soluna~~MW ~~shall~~of ~~also~~capacity befor ~~entitled~~our tominers ~~35%~~at oftheir facility. The Company’s services agreement with GreenBlocks expired in February 2026, and the ~~net~~Company ~~profit~~is ~~generated~~currently evaluating alternative hosting arrangements for the miners previously bydeployed at the GreenBlocks facility. As of the date of this report, such miners are in storage.

In ~~December~~October 2024, we entered into ~~two~~a ~~additional~~ co-location agreement ~~agreements~~ with Soluna ~~pursuant~~SW, Inc. to ~~which~~continue our business relationship. Under this agreement, Soluna ~~agreed~~provides tocertain ~~provide~~required mining colocation services to the Company ~~with~~at their hosting facility in Murray, Kentucky for the purpose of the operation and storage of bitcoin mining system to be delivered by the Company up to 116.6 MW (53.53 MW for terms of nine months and 53.53 MW, ~~respectively). Both~~for ~~agreements~~terms ~~are~~of ~~for~~ one (1) year), automatically renewing on a month-to-month basis unless terminated by either party ~~on at least sixty (60) days prior written notice~~. Soluna shall also be entitled to 35% ~~and 27.5%, respectively,~~ of the net profit generated by the miners. These new agreements bring the Company’s total contracted hosting capacity with Soluna to approximately 17.6 MW. As of December 31, 2024, Soluna provided approximately 11.4 MW of capacity for our miners at their facility.

In ~~November~~December ~~2023~~2024, we entered into atwo ~~hosting~~additional ~~services~~co-location ~~agreement~~agreements with Soluna DVSL ComputerCo, LLC. pursuant to which ~~was~~Soluna ~~amended~~agreed onto ~~March~~provide 7,the ~~2024,~~Company with ~~Dory~~up ~~Creek,~~to ~~LLC,~~11 aMW ~~subsidiary~~(5.5 ofMW ~~Bitdeer Technologies~~and ~~Group~~5.5 ~~(“Bitdeer”~~MW, respectively) at their hosting facility in Silverton, ~~for~~Texas. aBoth ~~term~~agreements ofare for one (1) year automatically renewing on ana ~~annual~~month-to-month basis unless ~~terminated~~ terminated by either party byon ~~giving~~at aleast ~~30-day~~60 days prior written notice. toSoluna ~~the~~shall ~~other~~also ~~Party~~be inentitled ~~writing.~~to ~~Pursuant~~35% toand ~~the~~27.5%, ~~terms~~respectively, of the net profit generated by the ~~agreement,~~miners. ~~Bitdeer provides~~These ~~maintenance~~new ~~and~~agreements ~~operation~~bring ~~services~~the toCompany’s ~~Bit~~total ~~Digital~~contracted tohosting ~~support~~capacity with Soluna to approximately 17.56 MW. As of ~~capacity.~~December ~~Bitdeer~~31, ~~shall~~2025, ~~also~~Soluna beprovided ~~entitled~~approximately to10.0 ~~30%~~MW of ~~the~~ ~~net~~capacity ~~profit~~for ~~generated~~our ~~by the~~ miners. ~~Bit~~at ~~Digital~~their ~~shall~~facility. ~~have~~The Company’s ~~the~~services ~~first~~agreements ~~right,~~with ~~but~~Soluna ~~not~~expired ~~obligation,~~in toFebruary ~~accept~~2026. ~~services~~Following ~~for~~the ~~any~~expiration, ~~extra capacity under~~ the ~~terms~~Company ofrelocated ~~this~~approximately 2,050 ~~Agreement.~~miners Asto ofa ~~December~~third-party ~~31,~~hosting ~~2024~~facility, ~~Bitdeer~~and ~~provided~~the ~~approximately~~Company ~~15.5~~is MWcurrently ofevaluating ~~capacity~~alternative deployment options for ~~our~~the remaining miners atpreviously ~~their~~hosted ~~facility~~by Soluna, which are currently in storage.

12In November 2023, we entered into a hosting services agreement, which was amended on March 7, 2024, with Dory Creek, LLC, a subsidiary of Bitdeer Technologies Group (“Bitdeer”), for a term of one year automatically renewing on an annual basis unless terminated by either party by giving a 30-day prior notice to the other Party in writing. Pursuant to the terms of the agreement, Bitdeer provides maintenance and operation services to the Company to support 17.5 MW of capacity. Bitdeer shall also be entitled to 30% of the net profit generated by the miners. the Company shall have the first right, but not obligation, to accept services for any extra capacity under the terms of this Agreement. As of December 31, 2025, Bitdeer provided approximately 15.5 MW of capacity for our miners at their facility.

In February 2025, we entered into two hosting services agreements with A.R.T. Digital Holdings Corp (“KaboomRacks”) for terms of nine (9) months and three ~~(3)~~ years automatically renewing on an annual basis unless terminated by either party. Pursuant to the terms of the agreements, KaboomRacks provides maintenance and operation services to Bit Digital to support 6 MW and 13 MW of capacity. ~~KaboomRacks~~In ~~shall~~accordance ~~also~~with bethe ~~entitled~~agreements, towe ~~between~~paid ~~19.75%~~a ~~and~~refundable ~~40%~~advance of ~~the~~$1.3 ~~net~~million, ~~profit~~which ~~generated~~will bybe ~~the~~applied ~~miners.~~against ~~Deployment~~monthly ishosting ~~expected~~charges toover ~~begin~~an in18-month ~~the first quarter of 2025~~period.

In May 2022, our hosting partner Blockfusion advised us that the substation at its Niagara Falls, New York facility was damaged by an explosion and fire, and power was cut off to approximately 2,515 of the Company’s bitcoin miners and approximately 710 ETH miners that had been operating at the site immediately prior to the incident. The explosion and fire are believed to have been caused by faulty equipment owned by the power utility. Blockfusion and the Company have entered into a common interest agreement to jointly pursue any claims evolving from the explosion and fire. Prior to the incident, our facility with Blockfusion in Niagara Falls, provided approximately 9.4 MW to power our miners. Power was restored to the facility in September 2022. However, we received a notice dated October 4, 2022 (the “Notice”), from the City of Niagara Falls, which ordered the cease and desist from any cryptocurrency mining or related operations at the facility until such time as Blockfusion complies with Section 1303.2.8 of the City of Niagara Falls Zoning Ordinance (the “Ordinance”), in addition to all other City ordinances and codes. Blockfusion has advised us that the Ordinance came into effect on October 1, 2022, following the expiration of a related moratorium on September 30, 2022. Blockfusion has further advised that it has submitted applications for new permits based on the Ordinance’s new standards and that the permits may take several months to process. Pursuant to the Mining Services Agreement between Bit Digital and Blockfusion dated August 25, 2021, Blockfusion represents, warrants and covenants that it “possesses, and will maintain, all licenses, registrations, authorizations and approvals required by any governmental agency, regulatory authority or other party necessary for it to operate its business and engage in the business relating to its provision of the Services.” On October 5, 2022, Bit Digital further advised Blockfusion that it expects it to comply with the directives of the Notice. Our service agreement with Blockfusion ended in September 2023. On June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion alleging claims for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to Blockfusion, the return of which is owed to the Company. The Company is seeking in excess of $4.3 million. On October 22, 2024, Blockfusion denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Blockfusion is seeking at least $158,000 in damages. A bench trial has been scheduled for June 29, 2026. Refer to Note 19. Contingencies for further details.

On July 1, 2025, we entered into the first amendment to the hosting service agreement for 13 MW of capacity. The amendment modified the existing agreement, identifying the two facilities that will provide maintenance and operations service to Bit Digital to support 5 MW and 8 MW of capacity. KaboomRacks shall also be entitled to respective 40%, 14.75% and 22.5% of the net profit generated by the miners. As of December 31, 2025, DEP provided approximately 17.1 MW of capacity for our miners at their facility. On November 12, 2025, we received communication regarding a change in the contracting entity under its existing hosting arrangements. Effective immediately, Digital Energy Partners LLC (“DEP”) replaced KaboomRacks as the sole contracting counterparty. Under the updated terms, KaboomRacks will return all deposits previously held by it, and we will remit a one-month deposit related to electricity costs to DEP. In connection with the transition, DEP assumed the remaining portion of the $1.3 million loan, with an outstanding balance of approximately $1.0 million as of December 31, 2025.

In May 2022, our hosting partner Blockfusion advised us that the substation at its Niagara Falls, New York facility was damaged by an explosion and fire, and power was cut off to approximately 2,515 of the Company’s bitcoin miners and approximately 710 ETH miners that had been operating at the site immediately prior to the incident. Prior to the incident, our facility with Blockfusion in Niagara Falls, provided approximately 9.4 MW to power our miners. Power was restored to the facility in September 2022. However, we received a notice dated October 4, 2022 (the “Notice”), from the City of Niagara Falls, which ordered the cease and desist from any cryptocurrency mining or related operations at the facility until such time as Blockfusion complies with Section 1303.2.8 of the City of Niagara Falls Zoning Ordinance (the “Ordinance”), in addition to all other City ordinances and codes. Our service agreement with Blockfusion ended in September 2021. On June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion alleging claims for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to Blockfusion, the return of which is owed to the Company. The Company is seeking in excess of $4.3 million. On October 22, 2024, Blockfusion denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Blockfusion filed a motion to dismiss the Company’s Second Amended Complaint. A hearing on the motion was held on January 6, 2026 and the Court granted Blockfusion’s motion to dismiss. The Court dismissed the claims against the individual defendant without prejudice on the ground that it lacked personal jurisdiction, and did not reach the merits of certain substantive issues raised in the motion. The Company’s contract-based claims and related claims for contractual recovery against Blockfusion were not dismissed and remain pending. Refer to Note 21. Commitments and Contingencies for further details.

Miner Fleet Update and Overview

As of December 31, 2023, we had 46,548 miners owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 3.9 EH/s.

On January 25, 2024, we entered into a purchase agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 2,350 S19 Pro miners. As of the date of this report, all miners have been delivered.

On April 15, 2024, we entered into a purchase agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 1,146 S19K Pro miners. As of the date of this report, all miners have been delivered.

On December 10, 2024, we entered into an agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 191 S21 miners. As of the date of this report, none of the miners were delivered.

On December 15, 2024, we entered into an agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 750 S21 miners. As of the date of this report, none of the miners were delivered.

On December 23, 2024, we entered into an agreement with an unaffiliated seller of bitcoin mining computers, from whom we acquired 4,300 S21+ miners. As of the date of this report, none of the miners were delivered.

For the year ended December 31, 2024, the Company disposed of approximately 25,495 bitcoin miners.

As of December 31, 2024, we had 24,239 miners owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 2.6 EH/s.

13For the year ended December 31, 2025, the Company disposed of approximately 7,900 bitcoin miners and wrote off 3 bitcoin miners.

As of December 31, 2025, we had 21,354 miners owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 2.8 EH/s.

Bitcoin Production

From the inception of our bitcoin mining business in February 2020 to December 31, ~~2024~~2025, we earned an aggregate of 7,~~280~~550.18 bitcoins.

The following table presents our bitcoin mining activities for the year ended December 31, ~~2024~~2025:

	Number of bitcoins			Amount (1)
Balance at December 31, 2023		642.4		$	19,818,980
Cumulative effect of the adoption of ASU 2023-08		-			7,341,319
Receipt of BTC from mining services		949.9			58,591,608
Exchange of BTC into ETH		(639.5	)		(40,267,700	)
Exchange of BTC into USDC		(35.0	)		(1,787,535	)
Sales of and payments made in BTC		(175.9	)		(15,316,858	)
Change in fair value of BTC		-			40,939,917
Balance at December 31, 2024		741.9		$	69,319,731
Receipt of BTC from mining services		270.7			27,349,798
Exchange of BTC into ETH		(347.7	)		(37,199,886	)
Exchange of BTC into USDC		(25.0	)		(2,321,750	)
Sales of and payments made in BTC		(635.9	)		(59,295,475	)
Change in fair value of BTC		-			2,497,608
Balance at December 31, 2025		4.0		$	350,026

(1) Receipt of digital assets from mining services are the product of the number of bitcoins received multiplied by the bitcoin price obtained from ~~CoinMarketCap~~Coinbase, calculated on a daily basis. Sales of bitcoin represent the carrying value of bitcoin at the time of sale.

We believe that the bitcoin network and the mining that powers it are important inventions in human progress. The process of problem-solving and verifying bitcoin transactions using advanced computers is energy intensive, and scrutiny has been applied to the industry for this reason. It follows that the environmental costs of mining bitcoin should be surveyed and mitigated by every company in our sector. We aim to contribute to the acceleration of bitcoin’s decarbonization and act as a role model in our industry, responsibly stewarding digital assets.

We worked with Apex Group Ltd, an independent ESG consultancy, to become one the first publicly-listed bitcoin miners to receive an independent ESG rating on our operations, which provides transparency on the environmental sustainability of our operations, as well as other metrics. Apex’s ESG Ratings & Advisory tools allow us to benchmark our ESG performance against international standards and our peers to identify opportunities for improvement and progress over time. We believe this is an integral approach to our sustainability practices and mitigating our environmental impact. By measuring the sustainability and footprint of Bit Digital’s mining, we are able to develop targets to continuously improve as we shift towards our goal of 100% clean energy usage.

Business Profile and Risks

The decision to pursue blockchain and crypto asset businesses exposes BTBT to risks associated with an untested strategic direction. The prices of crypto assets have experienced substantial volatility, which may reflect “bubble” type volatility, meaning that high or low prices may have little or no merit, are subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

Government Oversight

Blockchain networks are a relatively new technological innovation and the regulatory schemes to which crypto assets and their blockchain networks are or may be subject, including both the interpretation and applicability of existing laws and regulations and the potential establishment of new laws and regulations, have not been fully explored or developed.

Actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, are more particularly described under certain “Risk Factors”, demonstrate the SEC’s historical position that many, if not most, crypto assets may be securities and therefore reflect the reality that we will likely face increased government regulation and oversight as our industry and government treatment of the crypto assets on which our operations are based continue to evolve. These developments follow the SEC’s July 25, 2017, DAO Report, wherein its Chairman expressed concerns about the “Wild West” nature of the cryptocurrency market. More recently, the SEC Enforcement Division has taken action against crypto asset focused enterprises, and if the interpretations of federal securities laws are further expanded to apply to the Company, it would adversely affect the Company’s future acquisition of crypto assets by limiting the amount of crypto asset securities (“Digital Securities”) it may acquire, potentially limiting or precluding the use of its blockchain infrastructure and other operations, and creating increased compliance and legal costs. In October 2020 the U.S. Department of Justice (“DOJ”) published a report entitled “Cryptocurrency: An Enforcement Framework” that detailed the DOJ’s strategies and abilities to handle the threats posed by digital assets. In January 2023, the House of Representatives created the Financial Services Subcommittee on Digital Assets with the goal to develop rules and policies covering digital assets. In addition, each state has its own securities laws and regulations with varying provisions and effects, any of which may require us to alter or reduce our current or planned operations in the future.

On January 23, 2025, President Trump issued Executive Order14178 “Strengthening American Leadership in Digital Financial Technology.” This order revoked previous Biden-era frameworks and established five core policy pillars: protecting self-custody and mining, promoting dollar-backed stablecoins, ensuring fair banking access for crypto firms, providing regulatory clarity, and explicitly prohibiting the creation of a Central Bank Digital Currency (CBDC). In addition, the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (the GENIUS Act) was signed into law on July 18, 2025, creating the first comprehensive federal framework for payment stablecoins. The US Senate is also presently considering the Digital Asset Market Clarity Act (the CLARITY Act). This legislation aims to define jurisdictional boundaries between the SEC and CFTC, potentially reclassifying many digital assets from securities to commodities based on network decentralization.

Under the leadership of SEC Chairman Paul Atkins and CFTC Chairman Michael Selig, the agencies launched “Project Crypto” in late 2025. This joint initiative aims to harmonize federal oversight, moving away from “regulation by enforcement.” Consequently, in 2025, the SEC dropped or froze approximately 89 high-profile cryptocurrency enforcement cases, signaling a reset in how the agency polices the market. In addition, in 2026, the SEC is expected to release a formal “token taxonomy” and a package of exemptions to streamline capital formation for digital asset issuers. We continue to monitor legislative matters related to our industry.

Because of the foregoing or other regulatory developments, in the future, before we acquire or transact in crypto assets, we may be required to examine how they were originally offered to determine if they were offered as an investment contract or other type of security. Because of legal uncertainties, careful examination of the results of our compliance review will be required by experienced securities counsel. Because we must stay under the requirement under Investment Company Act of 1940 (the “1940 Act”) that no more than 40% of our assets (excluding cash items) constitute investment securities to avoid being deemed an investment company, we will limit the amount of Digital Securities we acquire. Further, while we believe our operations and platform are meaningfully different than Kraken’s and Coinbase’s custodial staking platforms that were subject to SEC enforcement proceedings in 2023, that development or future positions the SEC may take, including potentially against us and our business, may demonstrate a differing view and require us to adjust, reduce, limit or even cease some or all of our operations or business plans. If our compliance procedures and legal reviews prove to be incorrect, we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs and adverse rulings.

The Company may acquire additional crypto assets and continues to develop and expand upon its platform to enable it to offer a wider range of functions and availability for use with a greater variety of crypto assets. The Company currently owns and plans to expand its crypto asset holdings, both through staking its existing crypto asset holdings on PoS blockchain networks and potentially through other means. To avoid being inadvertently classified as an investment company under the 1940 Act, we actively focus, in consultation with legal counsel, on ensuring that our ownership of assets that are not considered securities under the 1940 Act always exceed 60% of our total assets, excluding cash items. In separate SEC complaints, the SEC identified Cardano, Tezos, Solana, Cosmos, Polygon, Axie Infinity, and NEAR Protocol crypto assets as securities. As a matter of practice, the Company typically targets keeping in excess of 60% of the Company’s total assets (excluding cash and government securities) in Ethereum. Therefore, to the extent the SEC identified all other crypto assets held by the Company excluding Ethereum as securities, the Company would still not meet the definition of an “investment company” under Section 3(a)(1)(C) of the 1940 Act. By doing so, we can avoid being subject to the regulatory requirements and oversight that apply to investment companies.

The Company has conducted a detailed legal analysis which has led us to determine that certain crypto assets that are identified as securities by the SEC should not impact our business, financial condition, and results of operations. Provided, however, if over 40% of our assets are considered securities, excluding cash, we may be considered a 1940 Act company (see the risk factor on page 25 herein). Further, the aforementioned assessments are risk-based judgments and not a legal standard or determination binding on any regulatory body or court. To the extent a regulatory body or court finds that our conclusions are incorrect, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us.

In addition to the securities laws and investment company considerations, as our business model and operations continue to evolve, we may become subject to additional laws and regulations. For example, to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings and transactions, we may become subject to the ever-growing number of data privacy and security laws within and without the U.S. which often have far-reaching implications for businesses. In general these laws require disclosure and preventative measures designed to protect users from unauthorized access or disclosure of their personal information, and impose fines and sanctions for failure to comply with their requirements. On the other hand, because transactions in crypto assets often provide a reasonable degree of anonymity, they are susceptible to misuse for criminal activities, such as money laundering. This misuse, or the perception of such misuse (even if untrue), could lead to greater regulatory oversight of crypto platforms and operations such as ours, and there is the possibility that regulators could close crypto platforms or other crypto asset-related technology and infrastructure with little or no notice or opportunity for challenge, and prevent users of custodial platforms from accessing or retrieving crypto assets held on or connected to such platforms or infrastructure. For example, lawmakers and regulators have in recent years expressed views that government oversight is needed, including with a view to curtailing the use of crypto asset use for malign and illegal activities.

Many PoW crypto assets have also been subject to skepticism due to concerns about the high energy consumption used in mining on blockchain networks. In the U.S., in March 2022 President Biden issued Executive Order 14067 on Ensuring the Responsible Development of Digital Assets, which prioritized the responsible development of crypto assets in a manner which includes reducing negative climate impacts and environmental pollution. However, as noted above, President Trump issued a new Executive Order 14178 on Strengthening American Leadership in Digital Financial Technology, expressly revoking Executive Order 14067. In November 2022, the Governor of New York signed a law banning certain bitcoin mining operations that run on carbon-based power sources for two years. While our focus is currently on PoS blockchain networks which use significantly lower amounts of energy when compared to PoW, future regulations may arise in response to these concerns that could apply to us and the cryptocurrency industry as a whole.

On the basis of the afore-mentioned developments, we believe that both our current and planned operations, and the cryptocurrency industry in general, will continue to be subject to expanding, complex and uncertain government oversight. See “Risk Factors” beginning on page 25 for more information.

As both the regulatory landscape develops and journalistic familiarity with crypto assets increases, mainstream media’s understanding of them and the regulation thereof may improve. Regulation of crypto assets varies from country to country as well as within countries. An increase in the regulation of crypto assets may affect our proposed business by increasing compliance costs or prohibiting certain or all of our proposed activities.

Competition

Our current and future competition is centered on the following areas:

●

Exchange-Based Companies: Companies in the exchange industry that offer both custodial and non-custodial staking solutions as well as other blockchain infrastructure and data analytics pose a significant competitive challenge. These exchanges often boast substantial customer bases, making it easier for them to attract those looking for integrated staking services, portfolio tracking, and position them well to enter blockchain infrastructure operations. Additionally, they may possess greater resources, allowing them to enhance their custodial or non-custodial staking offerings and other offerings in the future.

●

Crypto Asset-Focused Companies and Node Operators: Numerous companies and node operators specializing in crypto assets compete with our non-custodial crypto asset staking services and validator node operation. Key competitors in this space include companies such as Blockdaemon, Allnodes, Everstake, Figment, P2P, Foundry, Stakin, and Stakefish.

●

Analytic Services Providers: Various mobile applications, websites, and niche aggregation sites, such as CoinTracker, Koinly, CoinLedger, and Rotki, offer similar analytic services. These competitors provide tools and insights that may overlap with StakeSeeker’s offerings.

●

Secure Storage Solution Providers: Providers of mobile applications and websites that offer secure storage solutions for crypto assets represent another category of competition.

●

Traditional Financial Service and Data Analytics Firms: Established financial service firms and data analytics companies serving traditional asset markets may choose to enter the market by offering data analytic solutions as well as their own custodial or non-custodial staking for crypto assets. These entities can leverage their extensive resources, market presence, and expertise to enter the market.

●

Cryptocurrency-Focused Companies: Companies specializing in cryptocurrency-related services, including exchanges, payment processing, and financial services, are formidable competitors in the crypto asset space.

●

On-Chain Blockchain Data Providers: Companies offering data analytics and insights services, with accessible on-chain blockchain data and user-friendly interfaces, like Chainalysis and Elliptic, pose competition in providing vital data and insights for crypto assets.

Many of our current and potential competitors enjoy advantages such as greater financial resources, longer operational histories, larger user bases, bigger teams, and stronger brand recognition. Most are also not burdened with the additional costs and time commitments required of being an exchange-listed public company. These competitors may allocate more substantial resources to technology development, infrastructure enhancement, and marketing efforts.

In addition to existing competitors, the Company must contend with the potential of new entrants to the industry and the possibility of industry consolidation through business combinations and alliances, which could further strengthen the competitive positions of our rivals. Given our small team and relative lack of capital to many peers, we acknowledge that we face a competitive disadvantage in this landscape.

Intellectual Property and Trade Secrets

Our business depends in large part on our proprietary technology, the operation of validator nodes as part of our blockchain infrastructure, our efforts and development with respect to our initiatives, and our brand. We rely on, and expect to continue to rely on, a combination of trademark, domain name, and trade secret laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom we have relationships, to establish and protect our brand and intellectual property rights.

Environmental, Social and Governance

Sustainability is a major strategic focus for us. Several of our mining locations ~~in the US and Canada~~ provide access to partially carbon-free energy and other sustainability-related solutions, in varying amounts depending on location, including components of hydroelectric, solar, wind, nuclear and other carbon-free generation sources, based on information provided by our hosts and publicly available data, which we believe helps mitigate the environmental impact of our operations. We work with an independent ESG (Environmental, Social and Governance) consultant to self-monitor and adopt an environmental policy to help us to improve our percentage of green electricity and other sustainability initiatives. As we continue to align ourselves with the future of technology and business, we are dedicated to continuously enhancing sustainability, which we believe future-proofs our operations and the larger bitcoin network. On December 7, 2021, the Company became a member of the Bitcoin Mining Council (“BMC”), joining MicroStrategy and other founding members to promote transparency, share best practices, and educate the public on the benefits of bitcoin and bitcoin mining

WeWhiteFiber believe that the bitcoin network and the mining that powers it are important inventions in human progress. The process of problem-solving and verifying bitcoin transactions using advanced computers is energy intensive, and scrutiny has been applied to the industry for this reason. It follows that the environmental costs of mining bitcoin should be surveyed and mitigated by every company in our fast-growing sector. We aim to contribute to the acceleration of bitcoin’s decarbonization and act as a role model in our industry, responsibly stewarding digital assets.Operations

WeWhiteFiber ~~work~~believes ~~with~~it ~~Apex~~is ~~Group~~a ~~Ltd,~~leading ~~an independent ESG~~provider ~~consultancy, with~~of ~~the~~artificial ~~goal~~intelligence of(“AI”) ~~becoming~~infrastructure ~~one~~solutions. ~~the~~WhiteFiber ~~first~~owns ~~publicly~~high-~~listed~~performance ~~bitcoin~~computing ~~miners to receive an independent ESG rating on our operations,~~(“HPC”) ~~which~~data wecenters ~~anticipate~~and ~~will~~provides ~~provide~~cloud-based ~~transparency~~HPC ongraphics ~~the~~processing ~~environmental~~units ~~sustainability~~(“GPU”) ~~of our operations~~services, aswhich ~~well~~it asterms ~~other~~cloud ~~metrics.~~services, ~~Apex’s~~for ~~ESG~~customers ~~Ratings~~such &as ~~Advisory~~AI ~~tools~~application ~~allow us to benchmark our ESG performance against international standards~~ and ~~our~~machine ~~peers~~learning to(“ML”) ~~identify~~developers ~~opportunities for~~(the ~~improvement~~“HPC ~~and progress over time~~Business”). WeIts ~~believe~~Tier-3 ~~this~~data centers isprovide anhosting ~~integral approach to improving our sustainability practices~~ and ~~mitigating our~~colocation ~~environmental impact~~services. ByWhiteFiber ~~measuring~~cloud ~~the~~services ~~sustainability~~support ~~and~~generative ~~footprint~~AI ~~of Bit Digital’s mining~~workstreams, weespecially ~~are~~training ~~able to develop targets~~and ~~to continuously improve as we shift towards our goal of 100% clean energy usage~~inference.

OnWhiteFiber’s ~~December~~business 7model integrates its data center infrastructure and cloud services to provide scalable, ~~2021~~high-performance computing solutions for enterprises, ~~the~~research institutions, ~~Company~~and ~~became~~AI aand ~~member~~ML driven businesses. Its integrated approach aligns specialized data center operations with GPU-focused cloud ofservices, addressing the ~~Bitcoin~~unique ~~Mining~~requirements ~~Council~~of ~~(“BMC”)~~AI and ML workloads. These workloads demand greater power density, ~~joining~~advanced ~~MicroStrategy~~cooling solutions, and ~~other~~robust ~~founding~~bandwidth ~~members~~ to ~~promote~~handle ~~transparency~~large-scale data transfers. By operating its data centers, ~~share~~it ~~best~~is able to provide the power to support ~~practices,~~its cloud services and ~~educate~~WhiteFiber believes it can better meet the ~~public~~needs onof AI and ML workloads and reduce the ~~benefits~~complexity associated with procuring power and connectivity from external vendors. WhiteFiber can also design its facilities to accommodate the higher heat loads generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of ~~bitcoin~~their computing infrastructure. From a financial standpoint, WhiteFiber’s vertically integrated solution allows it to capture additional margin for both its data center and ~~bitcoin~~cloud ~~mining~~services businesses, avoiding expenses that would otherwise be due to third-party providers.

Colocation/Data center services

WhiteFiber designs, develops, and operates data centers, through which it offers its hosting and colocation services. WhiteFiber’s operational data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than 1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure to support AI workloads.

Based on their collective industry experience, WhiteFiber’s data center team is adept at bringing new sites online on an accelerated timeline. WhiteFiber is aggressively pursuing its development pipeline and intends to achieve an estimated 76 MW (gross) of total data center capacity by the end of the fourth quarter of 2026, a target that is underpinned by assets including its MTL-2, MTL-3, and NC-1 facilities. As of December 31, 2025, its pipeline of potential data center projects represents approximately 1,500 MW (gross) under management review. WhiteFiber follows a disciplined process prioritizing projects that are backed by customer lease commitments. In select cases, WhiteFiber may pursue early-stage acquisitions based on strong customer demand signals and defined commercialization pathways. Accordingly, the foregoing timelines and capacities are subject to change based on many factors, many of which are outside of WhiteFiber’s control.

WhiteFiber uses a well-defined set of criteria to select its data center sites. WhiteFiber typically targets sites with proximity to metro areas and partial infrastructure in place, where it is retrofitting rather than developing greenfield projects. Metropolitan areas are positioned for low-latency to address long-term, specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing and acquiring an existing industrial building with underutilized, in-place power connectivity. The period of time from when a site is purchased until construction can begin varies from location to location depending upon, among other things, obtaining required permits and the availability of construction supplies and contractors. Average build time for retrofits is intended to be approximately six months from commencement of construction, which we believe is approximately one-third to one-half of the industry average development timeline for greenfield projects. This average building time is based upon senior management’s experience at Enovum prior to its acquisition by WhiteFiber, as well as their experience prior to Enovum. WhiteFiber also prioritizes sites offering opportunities to increase site power over time, enabling its data centers to grow with customer demand. In addition, WhiteFiber selectively targets certain larger opportunities with 50 MW (gross) of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, WhiteFiber prioritizes sites powered by sustainable, green energy sources and locked-in power when available. Additionally, to enhance sustainability of certain WhiteFiber data center projects, WhiteFiber is undertaking heat repurposing projects in connection with sustainability and commercial and residential projects.

On October 11, 2024, WhiteFiber acquired Enovum Data Centers Corp (“Enovum”). The transaction included the lease of MTL-1, our 4 MW (gross) Tier-3 high-performance computing (“HPC”) data center in Montreal, Canada, which was fully operational and fully leased to customers at the time of acquisition.

On December 27, 2024, WhiteFiber acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center expansion project near Montreal, Canada, which it refers to as “MTL-2”. MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec. WhiteFiber initially funded the purchase of CAD 33.5 million (approximately $23.3 million) with cash on hand. WhiteFiber expected to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). However, WhiteFiber has prioritized other builds and preserved capital for more time sensitive projects.

On April 11, 2025, WhiteFiber entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, which it refers to as “MTL-3”. The MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed to as a 7 MW (gross) Tier-3 data center. It will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable by December 2025. The lease term is 20 years, with two 5-year extensions at WhiteFiber’s option. In December 2025, WhiteFiber became reasonably certain to exercise the purchase option and notified the lessor of its intent to exercise the purchase option. WhiteFiber had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026 and the purchase of MTL-3 is expected to close during the second quarter of 2026. The facility has been retrofitted to Tier-3 standards and was completed and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately 979 thousand USD) monthly for the duration of the five-year contract.

~~Employees~~On May 20, 2025, WhiteFiber completed the purchase of a former industrial/manufacturing building from Unifi Manufacturing, Inc. (“UMI”). Pursuant to the Purchase Agreement WhiteFiber agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land located in Madison, North Carolina, which WhiteFiber refers to as “NC-1”, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) within two years of May 20, 2025, or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after May 20, 2025. Additionally, the purchase price will increase by an additional $200,000 per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of May 20, 2025. Separately, WhiteFiber entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to NC-1 by September 1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study, that NC-1 may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco, LLC, a subsidiary of WhiteFiber, entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi’s rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke Energy consented to the assignment. Refer to Note 21. Commitments and contingencies for further detail.

~~Over~~RBC ~~the~~Facility ~~past~~Agreement ~~year,~~Executed weon ~~made significant investments~~June ~~in our workforce to attract and retain top-tier employees~~18, ~~significantly growing our employee base, especially in the HPC business. As of March 14,~~ 2025, we and our subsidiaries collectively employed approximately 54 full-time employees, and consultants, across our entire organization. At the group level, our leadership team includes our CEO, Sam Tabar and our CFO, Erke Huang. Our cloud services employed a regional CEO and utilized services provided by our digital assets business. Our HPC data center business employed approximately eight people, including its regional CEO, CFO, CSO, and CTO. Additionally, we engage consultants and contractors as needed to supplement our full-time workforce.

On June 18, 2025, WhiteFiber entered into the Credit Facility with RBC. The Credit Facility provides for an aggregate of up to approximately CAD 60 million (approximately $43.8 million) of financing. The proceeds are to be used primarily to refinance the buildout of MTL-2 as well as $5.8 million of revolving term financing (the “Revolver”). The Credit Facility is non-recourse to the Company. WhiteFiber entered into a three-year USD $18.5 million non-revolving lease facility to finance equipment costs and building improvements to build out the site. The lease facility provides for straight-line amortization of six years and capital moratorium of six months after disbursement is complete. RBC may cancel any unutilized portion of the Credit Facility after March 31, 2026. The interest rate is fixed based on the rental rate determined by RBC for the three-year term of the lease.

As part of the Credit Facility, WhiteFiber entered into a three-year $19.6 million non-revolving real estate term loan facility. The purpose of this facility is to refinance the Company’s purchase of MTL-2. The interest rate of the real estate term loan facility will be determined at the time of borrowing, or a floating interest rate ranging from RBP plus 0.75% to CORRA (“Canadian Overnight Repo Rate Average”) plus 250 bps. Payment of principal and interest is due 30 days after drawdown and is repayable in full on the last day of the three-year term.

The Revolver is being provided by RBC by way of Letters of Credit and Letters of Guaranty with fees to be determined on a transaction by transaction basis. This facility will be available for the 36 month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of $5.8 million and other related supporting documents. WhiteFiber agreed to certain financial covenants included maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than 1.20:1 and a ratio of Net Funded Debt to EBITDA of not greater than 4.25:1 and decreasing to 3.50:1 from December 31, 2027.

In November 2025, our wholly owned subsidiary, Enovum NC-1 Bidco, LLC, entered into the Services Agreement with Nscale Services US Inc. and Nscale Global Holdings Limited (collectively, “Nscale”) for the provision of colocation and related services at our NC-1 facility. The agreement represents a significant commercial milestone for our high-density data center platform and provides long-term contracted revenue visibility. The initial Service Order pursuant to the Services Agreement represents approximately $865 million in total contracted revenue over a 10-year term, inclusive of contractual annual rate escalators and non-recurring installation services (“NRCs”). Electricity and certain other operating costs are structured as pass-through charges to Nscale. Billing for the first 20 MW phase is expected to commence in June 2026, subject to completion of construction and commissioning. As a result, we expect revenue contribution from this agreement to begin in the second quarter of 2026 as the facility reaches full contractual capacity.

Cloud Services

WhiteFiber provides specialized cloud services to support generative AI workstreams, especially training and inference, emphasizing cost-effective utility and tailor-made solutions for each client. WhiteFiber is an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network (“NPN”), an authorized partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider (“CSP”) with Dell (through Dell’s exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and a commercial relationship with Quanta Computer Inc. (“QCT”). Based on management’s knowledge of the industry, WhiteFiber is proud to be among the first service providers to offer H200, B200, and GB200 servers. We provide a high-standard service lease with an Uptime percentage > 99.5%.

WhiteFiber expects to leverage a global network of data centers for hosting capacity for its GPU business, in many instances, by negotiating with third-party providers to seamlessly integrate its cloud services at data centers across key regions in Europe, North America and Asia. WhiteFiber’s initial data center partnership through which it leases capacity is at Blönduós Campus, Iceland, offering a world-class operations team with certified technicians and reliable engineers. The facility has a 45 kW rack density and 6 MW (gross) total capacity. WhiteFiber has executed contracts for 5.5 MW IT load at the data center. The center’s energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner of an IHA Blue Planet Award in 2017. In addition, WhiteFiber have leased additional capacity to install our data center in Atlanta, Georgia, USA to expand our cloud services offering. The capacity leases commenced in February 2026. We also intend to lease additional capacity to expand our cloud services offering.

In April 2025, WhiteFiber received its first shipment of NVIDIA GB200 NVL72 GPU server powered NVIDIA GB200 Grace Blackwell Superchips from Quanta Cloud Technology, a global leading Original Design Manufacturer (ODM). WhiteFiber believes that support with proof of concept (POC) access from Quanta will enable it to meet and exceed expectations around delivery and timeline, performance and reliability.

The following summaries reflect selected GPU cloud service agreements that we consider to be material or representative. We have entered into additional agreements that are not individually material and are not included below.

On October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support the customer’s GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.

In the second quarter of 2024, we finalized an agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer’s request, we agreed with the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.

In January 2025, the Company entered into a new agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months. This new agreement replaces the prior agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. The customer elected to defer the commencement date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced on August 20, 2025, using the Company’s inventory of B200 GPUs.

In October 2025, Bit Digital’s existing guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November 2025, the customer will provide a service deposit to WhiteFiber in lieu of the Bit Digital parent guaranty. The deposit will be funded through fifteen consecutive monthly payments of approximately $0.24 million each, totaling $3.6 million, payable from November 2025 through January 2027. The deposit will serve as security for the customer’s performance obligations under the amended service agreements. Each monthly payment is expected to be invoiced on the first day of the month and paid within thirty days. The Company will be required to return the deposit in cash upon termination or expiration of the service agreements, provided that all obligations have been fully satisfied and no payment defaults or material breaches exist.

As of the report date, WHiteFiber and the Initial Customer are engaged in discussions regarding a potential resolution of the existing service agreements following the agreed pause of services. No definitive termination or settlement agreement has been executed. In connection with these discussions, the parties are negotiating the treatment of the remaining non-refundable prepayment, service deposit, outstanding receivables, and a potential early termination fee, which the Company believes would be equal to 40% of the fees that would have accrued for services during the remainder of the term of the MSA and applicable purchase orders. Following the service pause, WhiteFiber has redeployed the GPUs previously allocated to the Initial Customer to three other customers and continues to evaluate the related financial and operational implications. There can be no assurance as to the timing, terms, or final outcome of these discussions.

On November 6, 2024, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six-month period, representing total contracted value of approximately $160,000 for the term. The deployment commenced on November 7, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, the Company signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, of which 80 remained in deployment as of the date of this report.

In February 2026, WhiteFiber entered into another service order with the customer to provide services utilizing a total of 10 H200 GPU servers. The service order has an initial term of 14 months beginning on the services commencement date. The service order represents an aggregate revenue opportunity of approximately $1.3 million. The deployment and revenue generation began in March 2026.

In March 2026, WhiteFiber entered into another service order with the customer to provide services utilizing a total of 256 H100 GPU servers. The service order has an initial term of 24 months beginning on the services commencement date, with an option to renew for an additional twelve months. The service order represents an aggregate revenue opportunity of approximately $50.2 million. The deployment and revenue generation is expected to begin during the second quarter of 2026.

On November 14, 2024, we entered into a Terms of Supply and Service Level Agreement (together, the “Agreement”) and an Order Form with a new customer. The order form provides for services utilizing a total of 64 H200 GPUs on a month-to-month basis, which either party may terminate upon at least 14 days’ written notice prior to any renewal date. It represents annual revenue of approximately $1.2 million. The deployment commenced and revenue generation began on November 15, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in December 2024.

On December 30, 2024, we entered into a Master Services Agreement (“MSA”) with an AI Compute Fund managed by DNA Holdings Venture Inc. (“DNA Fund”). The MSA had a minimum purchase commitment of 32 GPUs, along with an associated purchase order. The purchase order provides for services utilizing a total of 576 H200 GPUs over a 25-month period and terminable by either party upon at least 90 days’ written notice prior to any renewal date. Concurrently, we placed a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in February 2025.

In April 2025, we signed two additional cloud services agreements with DNA Fund. The first agreement includes 104 NVIDIA H200 GPUs under a 23-month term and was deployed in May 2025. The second agreement includes 512 H200 GPUs under a 24-month term and was deployed in July 2025. With these additions, DNA Fund’s total contracted deployment increased to 1,192 GPUs.

In November 2025, we terminated the MSA and all related purchase orders with DNA Fund in accordance with the terms of the contract. At the time of termination, we had approximately $7.3 million in outstanding accounts receivable. Pursuant to the termination agreement, the customer agreed to repay the outstanding balance. As of the date of this report, we have collected $2.1 million of the outstanding amount.

On January 6, 2025, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer. The purchase order provided for services utilizing a total of 32 H200 GPUs over a minimum of six-month period, representing total revenue of approximately $300,000 for the term. The deployment commenced and revenue generation began on January 8, 2025, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in April 2025 following a change in the customer’s ownership, and the customer paid the remaining contract value as an early termination penalty.

In January 2025, we entered into a Master Services Agreement (“MSA”), along with two associated purchase orders, from a new customer. The purchase orders provide for services utilizing a total of 24 H200 GPUs over a minimum 12-month period, representing total revenue of approximately $450,000 for the term. The deployment commenced and revenue generation began on January 27, 2025, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in March 2025 after the customer ceased operations.

On January 30, 2025, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using the Company’s existing inventory of H200 GPUs. In October 2025, the purchase order was amended to reduce the number of H200 GPUs from 40 to 8 and to extend the term of service through May 2027. Between April and July 2025, the Company signed four additional agreements on a month-to-month basis for a total of 184 H200 GPUs, which were terminated in August 2025.

In March 2025, we entered a strategic partnership with Shadeform, Inc., the premier multi-cloud GPU marketplaces, to bring on-demand NVIDIA B200 GPUs to customers beginning in May 2025.

In August and September 2025, WhiteFiber entered into three service orders with a new customer. Each order form provides for services utilizing a total of 64 B200 GPUs on a weekly basis, which either party may terminate by not extending it with mutual written agreement. In September, the customer renewed one order form for an additional week for services utilizing a total of 64 B200 GPUs. As of the reporting date, no additional renewals have occurred.

In September 2025, WhiteFiber entered into a service order with a new customer, which provides services utilizing a total of 16 B200 GPUs on a monthly basis, automatically renewing for an additional one month period unless and until otherwise terminated upon at least seven days’ prior written notice. The deployment commenced and revenue generation began on September 23, 2025. The agreement was not renewed after the initial term.

In October 2025, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 48 H200 GPUs. The service order had an initial term of 36 months. The deployment commenced and revenue generation began on October 21, 2025. The contract was terminated in December 2025.

In October 2025, WhiteFiber entered into a two-week service order with a new customer to provide services utilizing a total of 72 B200 GPUs. In January 2026, WhiteFiber entered into an additional two-week service order with this customer for 72 B200 GPUs.

In February 2026, WhiteFiber entered into a further service order with this customer to provide services utilizing a total of 384 B200 GPUs. This service order has an initial term of 24 months commencing on the service commencement date, after which it will automatically renew for successive one-month periods unless terminated by either party. The service order represents an aggregate revenue opportunity of approximately $18.1 million. Deployment and revenue generation commenced on January 27, 2026.

In November 2025, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 128 B200 GPUs. The service order has an initial term of 12 months, representing total contracted value of approximately $3.0 million, after which it automatically renews for successive one-month periods unless terminated by either party. Deployment and revenue generation began on December 1, 2025.

In February 2026, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 256 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began on February 1, 2026.

In March 2026, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began on March 7, 2026.

In August 2024, WhiteFiber executed a binding term sheet with Boosteroid Inc. (“Boosteroid”), a global cloud gaming provider pursuant to which, we finalized initial orders of 489 GPUs, projected to generate approximately $7.9 million in contracted value in the aggregate through November 2029. The GPUs were delivered to respective data centers across the U.S. and Europe and began earning fees in November 2024. On October 9, 2024, WhiteFiber executed a Master Services and Lease Agreement (the “MSA”) with Boosteroid, pursuant to which Boosteroid may, from time to time, lease certain equipment, including GPUs, from WhiteFiber upon delivery of a purchase order. The MSA provides the general terms and conditions for such equipment leases. Pursuant to the MSA, we are granted a right of first refusal with respect to the next 5,000 servers that Boosteroid leases during the term of the MSA. The MSA provides Boosteroid with the option to expand in increments of 100 servers, up to 50,000 servers, representing a potential contract value of approximately $700 million over the five-year term assuming Boosteroid utilizes the GPUs and services at full capacity for the duration of the contract. Expansion depends upon the internal development roadmap of Boosteroid. Boosteroid has full discretion to decide when and the quantity to pursue separate source orders (for GPU servers) under the MSA. In the third quarter of 2025, the Company finalized additional purchase orders for 302, 120, and 279 GPUs, totaling approximately $10.4 million in contracted value over a five-year term.

WhiteFiber was incorporated by Bit Digital as a Cayman Islands exempted company on August 15, 2024 under the name Celer, Inc., as a holding company for the HPC Business. It changed its name to WhiteFiber, Inc. on October 17, 2024.

On August 6, 2025, WhiteFiber issued 27,043,749 ordinary shares, par value $0.01 per share (our “Ordinary Shares”, and such shares, the “Contribution Shares”), to Bit Digital pursuant to the terms of a Section 351 Contribution Agreement (the “Contribution Agreement”) entered into with Bit Digital on July 30, 2025. Pursuant to the Contribution Agreement, Bit Digital contributed its HPC Business through the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, WhiteFiber, upon the effectiveness of the registration statement filed in connection with its IPO and prior to the consummation of the IPO, in exchange for the Contribution Shares. WhiteFiber refers to this transaction as the “Reorganization”. WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber, Inc. and Bit Digital became the direct shareholder of WhiteFiber after the Reorganization.

On August 8, 2025, WhiteFiber completed its initial public offering (our “IPO”) of 9,375,000 Ordinary Shares, at a public offering price of $17.00 per share. The gross proceeds to WhiteFiber from the IPO were approximately $159.4 million, before deducting underwriting discounts and commissions and offering expenses. On September 2, 2025, B. Riley Securities, Inc. and Needham & Company, LLC, as representatives of the several underwriters of the IPO, fully exercised their option to purchase an additional 1,406,250 Ordinary Shares at the public offering price of $17.00 per share, resulting in additional gross proceeds to WhiteFiber of approximately $23.9 million. After giving effect to the IPO and the full exercise by the underwriters of their over-allotment option, Bit Digital held approximately 71.5% of WhiteFiber’s issued and outstanding Ordinary Shares.

Following WhiteFiber’s IPO, certain of its directors, executive officers and other members of senior management continue to serve as directors, officers and employees of Bit Digital. WhiteFiber has added additional executive officers and senior management to its senior executive team apart from those serving as officers and employees of Bit Digital. WhiteFiber has assembled a senior operating team with approximately 15 years of experience on average for each individual in the data center and cloud services industries. WhiteFiber also appointed additional independent directors upon the commencement of trading of its Ordinary Shares on Nasdaq.

Industry Overview

WhiteFiber competes in the large and rapidly growing data center and cloud services markets. The data center market refers to the industry dedicated to designing, building, and managing data centers, essential for storing, processing, and managing vast amounts of digital information, including for AI and ML applications. These centers house servers, networking equipment, power and cooling and storage systems, ensuring seamless and secure data operation.

The cloud services market represents the transmission of computer services, including storage, analytics, databases, networking, and intelligence, via the internet (referred to as “the cloud”). WhiteFiber’s cloud services business is a NeoCloud provider, with differentiated services supporting AI workloads and specializing in deploying optimized infrastructures that include not just GPU fleets but also network accelerators, high-speed storage, software solutions, advanced orchestration tools, high-performance interconnects, edge computing capabilities, innovative cooling solutions, security and compliance features, 24/7 managed services, and hybrid cloud integrations. This infrastructure is essential for managing the massive data and computing demands of AI and ML training and inference tasks.

It is standard for GPU hardware clusters, used in the rendering of cloud services, to be remotely housed in data centers, making these two segments highly related and synergistic. Specially designed data centers host the hardware needed to provide HPC cloud services, and these are commonly referred to as HPC data centers. According to experts at Schneider Electric, the industry is shifting away from traditional data centers that typically hosted 10kW racks to newer 100kW racks that support HPC needs. WhiteFiber only designs and develops HPC data centers, giving us a competitive advantage over operators of traditional data center capacity.

Colocation/Data Center Services

According to McKinsey & Company, power demand for data centers in the U.S. — driven by the need for digital and AI capabilities — is expected to reach 298 gigawatts by 2030, up from 60 gigawatts in 2024. McKinsey estimates that data centers will amount to 11.7% of total U.S. power demand in 2030. Based on WhiteFiber’s knowledge of the industry, it believes it is a leader in the markets that are critical for these capabilities, and, as a result, it believes it is well positioned to benefit from the growth of this sector.

According to Prescient and Strategic Intelligence, Data-Center Market Size and Analysis, Trends, Drivers, Competitive Landscape and Forecast (2024-2030), the global data center market was valued at $342 billion in 2023 and is anticipated to reach $622.4 billion by 2030, expanding at a CAGR of 10.5% during 2024-2030. As of 2023, the data center services segment, which provides a range of offerings including consulting, maintenance, and management to optimize the performance and reliability of data center infrastructure, represented about 34.2% of the industry. The solutions segment, which refers to the technological offerings that fulfill key functions within data center infrastructure, comprised about 65.8% of the industry. The solutions segment represents both hardware and software elements, encompassing servers, storage systems, advanced power systems, infrastructure networking equipment, and management software.

The data center market is propelled by growing demands for cloud computing services, big data analytics, and digital transformation. According to McKinsey & Company, by 2030, 70% of data centers expected to be developed will be for advanced AI, and 92% of companies plan to increase AI investments across the board. Key contributors to this dynamic landscape are technology firms, real estate developers, and service providers. Together, they play a vital role in the ongoing evolution of data center infrastructure, adapting to meet the expanding requirements of the digital era and ensuring the seamless operation of critical digital services across various industries. The increasing global demand for cloud computing, where WhiteFiber competes as a cloud services provider, is a major driver of data centers, underlining the inherent synergies between its businesses.

Cloud Services

The global cloud AI infrastructure market is forecasted to grow from $60.5 billion in 2024 to $363.4 billion in 2030, a compound annual growth rate of approximately 35%, according to research published by Mordor Intelligence. The major factors driving cloud services market growth are increasing digital transformation across businesses, growing internet and mobile device adoption across the globe, and, most notably, increasing usage of large data sets. Moreover, cloud services are favored by customers due to low capital investment, resource scalability, and a high degree of accessibility. The rise of the system of connected devices, edge computing, 5G, and real-time analytics driven by AI and ML is anticipated to increase the market value of cloud technology across different businesses.

Sustainability

Sustainability and energy efficiency are increasingly important considerations for the data center and cloud services markets due to high energy consumption and carbon emissions. The sustainability movement for data centers is driven by organizations’ environmental, social and governance commitments and the rise of laws and regulations supporting sustainability. For example, the Paris Accord, which was entered into force on November 4, 2016, is currently in effect across 174 countries apart from the United States and aims to curb long-term global warming. WhiteFiber’s facilities in Quebec and Iceland benefit from clean, hydroelectric power generation, and WhiteFiber will seek to offer comprehensive HPC data center and cloud services solutions while prioritizing sustainability and energy efficiency.

Strategic Relationships

Financing

Based on WhiteFiber’s knowledge of the industry, we believe that there is market demand from institutional private equity investors for exposure to the types of projects in our data center pipeline and our capability to develop them. We believe that we are well positioned to capitalize on this demand by forming one or more equity joint ventures. Doing so would provide us access to a differentiated and non-dilutive source of private equity capital to fund our projects, and deliver a durable stream of cash flows in the form of management fee income for our services.

In June 2025 we entered into the Credit Facility with RBC, which provides for up to a CAD $60 million (approximately USD $43.8 million, based on the CAD/U.S. $ rate of exchange of CAD 1.00/U.S. $0.7308, as reported by Bloomberg on June 18, 2025) RBC and the Company have since entered into discussions to amend the Credit Facility to utilize the proceeds CAD $24.5 million (approximately USD $17.9 million) from the mortgage loan to purchase the MTL-3 facility, however, we cannot assure you that the parties will reach an agreement that is acceptable to the Company or at all. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview” for more information.

On January 26, 2026, we completed a private offering of $230.0 million aggregate principal amount of 4.500% Convertible Senior Notes due 2031 (the “Notes”), including the exercise in full of the initial purchasers’ option to purchase an additional $20.0 million aggregate principal amount of Notes. We used approximately $120.0 million of the net proceeds from the Notes offering to pay the cost of the zero-strike call option transaction we entered into simultaneously with such option, and the remaining net proceeds of the offering primarily for data center expansion, including to partially fund the lease or purchase of additional property or properties on which to build additional data centers, to construct those facilities, to enter into additional energy service agreements for each additional site, to purchase related equipment, and for potential acquisitions, partnerships and joint ventures related thereto, and for working capital and general corporate purposes. WhiteFiber will require additional project financing (e.g., construction loans) in order to fully accomplish such initiatives. WhiteFiber also may elect to raise additional capital opportunistically.

On March 25, 2026, WhiteFiber Iceland ehf. (the “Borrower”), a subsidiary of WhiteFiber, entered into a secured term loan facility agreement (the “Facility”) with Landsbankinn hf, which provides for borrowings of up to $20 million. Borrowings under the Facility bear interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum. The Facility is secured by first-ranking security over (i) 100% of the WhiteFiber’s shareholding in WhiteFiber Iceland ehf., (ii) designated assets (including GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement, and (iii) material assets acquired thereafter (to be secured within 60 days), in each case until all obligations are fully satisfied.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.

Technology

WhiteFiber has established formal relationships with leading technology providers, including NVIDIA, Super Micro, Dell, Hewlett Packard Enterprise, Super Micro and Quanta Computing. These partnerships enable WhiteFiber to access and deploy the most advanced computing hardware, ensuring that its clients benefit from cutting-edge technology and optimized performance. WhiteFiber’s collaboration with these industry leaders allows it to stay at the forefront of high-performance computing and AI infrastructure.

In addition, WhiteFiber has a formal agreement with Shadeform to offer on-demand compute services powered by NVIDIA B200 GPUs. This partnership enhances our ability to provide scalable, high-performance AI and HPC solutions to enterprise customers, enabling them to access state-of-the-art computing resources without the need for upfront infrastructure investment.

WhiteFiber’s data center business leverages a diverse mix of vendors across multiple geographies to source equipment cost-effectively while mitigating supply chain disruptions. By maintaining a broad supplier network, WhiteFiber reduces reliance on any single vendor and enhance its ability to procure best-in-class solutions at competitive prices. This approach strengthens its operational resilience and supports its ability to scale efficiently.

Competition

WhiteFiber faces significant competition from various data center and cloud services providers. WhiteFiber competes with several prominent data center providers, including Digital Realty, Equinix, Inc., NTT, Cyrus One, Inc., STACK Infrastructure, Inc., Aligned Data Centers, LLC, Iron Mountain and various private operators in the U.S. WhiteFiber’s primary competitors in the cloud service business are CoreWeave, Crusoe Energy, Nebius, and Lambda Labs.

Many of WhiteFiber’s competitors offer locations worldwide and have well-established international operations. WhiteFiber’s competitors may also have significant advantages over WhiteFiber, including greater name recognition, longer operating histories, pre-existing relationships with global developers, utilities and local authorities, which may give them an advantage in securing real estate or power for new sites, particularly in constrained regions, the capacity to provide the same or additional products and services, more significant marketing budgets and other financial and operational resources, more robust internal controls and systems, and better established, more extensive scale and lower cost suppliers sand supplier relationships. In addition, as WhiteFiber develops proprietary technology and software solutions to support AI and HPC workloads, it faces competitive risks from larger incumbents with greater R&D resources and established ecosystems. The competitors may bring similar offerings to market faster or with deeper integration into existing platforms, potentially limiting our market share or pricing power.

Materials and Suppliers

Maintaining key supplier relationships is crucial to WhiteFiber’s business operations, as it relies on these relationships, such as with Dell, NVIDIA, Hewlett Packard Enterprise, Super Micro and Quanta Computing, to secure GPUs, servers, essential computing hardware, infrastructure components, and other materials. The complexity of developing cloud service hardware at scale limits the number of suppliers capable of meeting WhiteFiber’s requirements. The development of new data center capacity is subject to supply chain constraints and long lead times for critical infrastructure components such as power distribution equipment, generators, and cooling systems. WhiteFiber works with experienced vendors and maintains forward-looking procurement plans to mitigate these risks, but delays could still impact project timelines. Consequently, WhiteFiber has established purchase orders with leading hardware manufacturers that include extended delivery schedules spanning several months before the hardware is delivered to its facilities. These fluctuations in delivery timelines necessitate careful planning and advanced purchasing strategies to ensure WhiteFiber can acquire hardware well before their anticipated deployment.

WhiteFiber proactively procures these materials from its suppliers in sufficient quantities to facilitate hardware deployment at scale and on accelerated timelines. To mitigate potential supply chain disruptions and ensure the smooth operation of its facilities, WhiteFiber has established long-term contracts and agreements with key suppliers. This includes multi-quarter purchase commitments for critical hardware such as GPUs, power distribution units, and networking equipment, as well as ongoing service agreements with construction, electrical, and facility operations vendors. These relationships help secure allocation priority, stabilize pricing, and reduce lead-time risk for both cloud infrastructure and data center development. These arrangements give WhiteFiber greater certainty regarding the availability and pricing of essential components and materials. Furthermore, WhiteFiber continuously monitors market trends and maintains open lines of communication with its suppliers to anticipate and address potential supply chain challenges.

By proactively managing its supplier relationships, securing necessary materials in advance, and closely monitoring market conditions, WhiteFiber aims to minimize the impact of supply chain fluctuations on its operations. This approach enables WhiteFiber to maintain a steady pace of hardware deployments and facility development, ultimately supporting WhiteFiber’s goal of expanding its HPC data center and cloud service capabilities and maximizing shareholder value. However, WhiteFiber relies on a limited number of vendors for certain products and services for WhiteFiber’s data center facilities, and some of its contracts provide a single source of materials. If any of its key suppliers cannot perform under their contracts or satisfy its orders, it could significantly delay its data center development and operations. While WhiteFiber may be able to engage replacement suppliers, this would likely lead to operational delays and increased costs.

Power Supply

In the province of Quebec where MTL-1, MTL-2, and MTL-3 are located, all of the hydroelectric power is provided by a crown corporation, Hydro Quebec, which has predetermined rates depending on the customers’ industry and based on the power demand.

As set forth above, WhiteFiber has entered into a Capacity Agreement with Duke Energy for it to receive 24 MW of service to NC-1 by September 1, 2025, an additional 40 MW by April 1, 2026 and an additional 99 MW within four years of May 16, 2025. The actual rates will be determined when the facilities are turned on.

Customers

WhiteFiber generates a large portion of its revenue from a small number of customers. There are inherent risks whenever a large percentage of total revenue is concentrated with a limited number of customers. If WhiteFiber were to lose one or more of its customers, its operating results could be materially adversely affected.

WhiteFiber data centers

WhiteFiber’s HPC data center customer base consists of two primary types of customers:

Enterprise clients — current and prospective enterprise clients are active in multiple industries, including healthcare, finance, and various technologies that rely on computers or models. These customers benefit from WhiteFiber’s high-density solutions, reaching upwards of 50kW per cabinet, to accommodate their workloads and data generation.

GPU cloud — WhiteFiber’s GPU cloud customers offer on demand access to their GPUs for tasks like AI, VFX rendering and scientific computing.

Currently, WhiteFiber provides HPC data center services at its leased MTL-1 and MTL-3 facilities, although its customers are based across Canada and Europe. As of December 31, 2025, WhiteFiber’s leased MTL-1 and MTL-3 facilities served fifteen customers. No one customer accounted for in excess of 50% of data center revenue in the 12 months ended December 31, 2025 or 2024.

Cloud Services

WhiteFiber’s cloud services customer base also is comprised of two primary types of customers:

●

Direct end users — these customers primarily leverage WhiteFiber’s computing power for model training and inference.

●

GPU marketplaces — these platforms resell WhiteFiber’s computing power to their own end users. Since WhiteFiber does not have direct visibility into their end-user base, there may be some overlap among end users across different marketplaces.

WhiteFiber currently provides cloud services at Blönduos Campus, Iceland, where it leases capacity to house its GPUs. During 2025, our HPC data center in Iceland had contracts with 21 customers. DNA Fund accounted for approximately 11.5% of our revenue during the 12 months ended December 31, 2025. We did not generate any revenue from DNA Fund in 2024.

Our Initial Customer accounted for approximately 70.7% of its revenue during the 12 months ended December 31, 2025 and 96.6% of its revenues through December 31, 2024. As of the report date, WhiteFiber and the Initial Customer are engaged in ongoing discussions regarding a potential resolution of the existing service agreements following the agreed pause of services. No definitive agreement has been reached. Following the service pause, WhiteFiber has redeployed the GPUs previously allocated to the Initial Customer to three other customers. Based on WhiteFiber’s current customer mix and contracted capacity for 2026, a limited number of customers are expected to represent a significant portion of WhiteFiber’s cloud services revenue. While WhiteFiber is actively expanding and diversifying it’s customer base, WhiteFiber’s results may continue to be influenced by the performance and contractual arrangements of these customers.

WhiteFiber has leased additional capacity to install our data center in Atlanta, Georgia, USA to expand our cloud services offering. The capacity leases commenced in February 2026. WhiteFiber also intends to lease additional capacity to expand our cloud services offering

Global Logistics and Tariffs

Global supply logistics have caused delays across all distribution channels, impacting the HPC, AI and ML markets. Delivery schedules for specialized equipment, such as high-performance computing systems, AI hardware, and necessary infrastructure components, have been affected due to constraints on globalized supply chains. These constraints extend to procuring construction materials and specialized electricity distribution equipment required to develop HPC, AI and ML facilities. Efforts to mitigate delivery delays are ongoing to avoid materially impacting deployment schedules; however, there are no assurances that such mitigation efforts will continue to be successful. To help address global supply logistics and pricing concerns, WhiteFiber has implemented proactive measures such as procuring and holding required materials. WhiteFiber continuously monitors developments in the global supply chain which is necessary to assess their potential impact on its expansion plans within the HPC, AI and ML markets. This monitoring includes evaluating the impact of international trade policies and tariffs, which may affect the cost or availability of key components source from abroad and, in turn, impact its expansion timelines or capital expenditure.

Data center construction relies heavily on steel, copper, aluminum, electrical components and HVAC systems, some of which WhiteFiber is sourcing from Mexico and Canada. The tariffs the U.S. has imposed, or has considered imposing, on Canadian steel, aluminum and copper imports, are expected to increase the cost of WhiteFiber’s potential projects in the U.S. Similarly, reciprocal tariffs imposed by Canada on WhiteFiber’s projects in Canada on U.S. exports could see cost increases for imported power infrastructure, networking hardware, and construction equipment.

Regulatory Landscape

The regulatory landscape surrounding WhiteFiber data centers and cloud services is evolving rapidly, and WhiteFiber anticipates increased scrutiny and potential regulation in the near- and long-term. These developments may have a material adverse effect on WhiteFiber’s business and financial condition.

WhiteFiber is subject to the laws and regulations of various jurisdictions and governmental agencies affecting its operations and the sale of its infrastructure and services in areas including, but not limited to: AI, intellectual property; tax; import and export requirements; anti-corruption; economic and trade sanctions; national security and foreign investment; foreign exchange controls and cash repatriation restrictions; data privacy and security requirements; competition; advertising; employment; product regulations; environment, health and safety requirements; and consumer laws.

Although there is no assurance that existing or future governmental laws and regulations applicable to its operations and the sale of its infrastructure services will not have a material adverse effect on WhiteFiber’s capital expenditures operating results and competitive position, it does not currently anticipate material expenditures for complying with government regulations. Nevertheless, WhiteFiber believes that global trade regulations could potentially have a material impact on its business.

As a global company, the import and export of WhiteFiber’s infrastructure services and technology are subject to laws and regulations including international treaties, U.S. export controls and sanctions laws, customs regulations, and local trade rules around the world. For example, all acquisitions of control (whether direct or indirect) of Canadian businesses by non-Canadians may be subject to review on grounds that the investment could be injurious to national security. Following the filing of the required Investment Canada Act notification in respect of WhiteFiber’s acquisition of Enovum, WhiteFiber received written notification from the Minister of Innovation, Science and Industry of Canada (the “Minister”), that the acquisition may be subject to a national security review. Following review of information we provided, Bit Digital executed a “Commitment Letter” to the Minister which provides for the following: (i) commitment to maintain one Canadian on the board of Enovum Inc.; (ii) commitment to maintain or improve Enovum’s security controls for personnel, physical security and the internal network, the terms of the Commitment Letter the Company is complying with (iii) commitment to send a list of Enovum’s current clients to office of the Minister of Innovation, Science and Industry on an annual basis. The Company is complying with the terms of the Commitment Letter.

The scope, nature, and severity of such controls varies widely across different countries and may change frequently over time. Such laws, rules, and regulations may delay the introduction of WhiteFiber’s infrastructure and services or impact its competitiveness through restricting its ability to do business in certain places or with certain entities and individuals. For example, the U.S. Department of Commerce continues to add firms to the Entity List. These export restrictions, which would require that WhiteFiber obtain licenses from the U.S. Department of Commerce to allow it to export infrastructure services to such listed firms, which could limit or prevent it from doing business with certain potential customers or potential suppliers. Additionally, although the U.S. Department of Commerce has withdrawn its AI diffusion rules, which would have imposed worldwide limits on AI chip exports used to create computer clusters, it plans to issue a replacement rule in the future and continues to strengthen other existing export controls on advanced AI chips. These restrictive governmental actions, and any similar measures that may be imposed on U.S. companies by other governments, could limit its ability to conduct business globally.

Additionally, there are growing concerns about the ethical implications and potential misuse of AI and machine learning. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines. WhiteFiber is closely monitoring these developments and will dedicate its best efforts to adhere to any upcoming regulations or industry best practices.

As a company operating at the intersection of data center, cloud and HPC hosting services, WhiteFiber is committed to maintaining a proactive and adaptive approach to regulatory compliance. WhiteFiber closely monitors legislative and regulatory developments and engages in dialogue with relevant stakeholders to ensure its business practices align with the evolving legal and regulatory framework. Despite the uncertainties posed by the changing regulatory landscape, WhiteFiber remains committed to delivering innovative and responsible solutions in the data center, cloud and HPC hosting markets while prioritizing compliance and risk management. However, if WhiteFiber fails to comply with applicable laws and regulations, it may be subject to significant liabilities, including fines and penalties, and its business, financial condition, or results of operations could be adversely affected.

Human Capital / Employees

As of December 31, 2025, we and our subsidiaries collectively employed 104 full-time employees, across our entire organization. All employees work full-time, none of whom are covered by a collective bargaining agreement. We engage third-party contractors and consultants on an as-needed basis. At the parent company level, our management includes our CEO, Samir Tabar, our CFO, Erke Huang, and our CAO, Justin Zhu with 21 employees. WhiteFiber employed 83 full-time employees who support cloud and data center operations, infrastructure development, and corporate functions. The Company also engages consultants for advisory services to support our business activities. We focus on attracting and retaining skilled technical and operational personnel through competitive compensation, benefits, and performance-based incentives aligned with our business objectives. Management oversees human capital matters, with an emphasis on workforce safety, operational reliability, and compliance with applicable labor and employment laws. We also engage consultants and other third-party providers to support our business activities.

We are a remote-first Company. We believe that allowing our employees to work in the location that best suits them provides us access to a larger talent pool and a sustained advantage in hiring and retaining employees and consultants in the United States and worldwide.

Human capital management is critical to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work, and have opportunities for growth and development. We are committed to creating and maintaining a work environment in which employees are treated with respect and dignity. We value our diverse employees, and provide career and professional development opportunities that foster the success of our Company.

We are committed to the principles of equal employment and complying with all federal, state, and local laws providing equal employment opportunities, and all other employment laws and regulations. It is our intent to maintain a work environment that is free of harassment, discrimination, or retaliation because of age, race, color, national origin, ancestry, religion, sex, sexual orientation (including transgender status, gender identity or expression), pregnancy (including childbirth, lactation, and related medical conditions), physical or mental disability, genetic information (including testing and characteristics), veteran status, uniformed servicemember status, or any other status protected by federal, state, or local laws. We are dedicated to the fulfillment of this policy in regard to all aspects of employment, including but not limited to recruiting, hiring, placement, transfer, training, promotion, rates of pay, and other compensation, termination, and all other terms, conditions, and privileges of employment.

Our Compensation Committee is also actively involved in reviewing and approving executive compensation, and succession plans so that we have leadership in place with the requisite skills and experience to deliver results the right way. We offer fair, competitive compensation and benefits appropriate for a company of our size that supports our employees. While we do not offer health benefits, we do offer 401(k) plans with 100% matching of employees’ contributions subject to IRS limitations.

Available Information

Our ~~internet~~Annual ~~address~~Reports ~~is https://www.bit-digital.com/. We post links~~ on ~~our website to the following filings as soon as reasonably practicable after they are electronically filed or furnished to the SEC: annual reports on~~ Form 10-K, ~~quarterly~~Quarterly Reports ~~reports~~ on Form 10-Q, ~~current~~Current ~~reports~~Reports on Form 8-K, ~~proxy statements on Schedule 14D,~~ and ~~any~~amendments ~~amendment~~ to ~~those~~ reports filed ~~or furnished~~ pursuant to Section 13(a) or 15(d) of the ~~Securities~~ Exchange Act, ofare ~~1934,~~filed aswith ~~amended~~the U.S. ~~All~~Securities ~~such~~and ~~filings~~Exchange ~~are~~Commission ~~available~~(the ~~through~~“SEC”). ~~our~~We ~~website~~are ~~free~~subject to the informational requirements of ~~charge.~~the ~~The~~Exchange Act and file or furnish reports, proxy statements, and other information onwith ~~our~~the ~~Internet~~SEC. ~~website~~Such reports and isother ~~not~~information ~~incorporated~~filed by ~~reference~~us ~~into~~with ~~this~~the ~~Form 10-K~~SEC ~~or our~~are ~~other~~available ~~securities~~free ~~filings~~of ~~and~~charge ison ~~not~~our awebsite ~~part~~at ofwww.bit-digital.com when such ~~filings~~ reports are available on the SEC’s website at www.sec.gov.

~~Information~~We ~~about~~announce ~~the~~material ~~operation~~information ofto the ~~Public~~public ~~Reference~~through ~~Room~~filings ~~can~~with bethe ~~obtained~~SEC, bythe ~~calling~~investor ~~the~~relations ~~SEC~~page aton ~~1-800-SEC-0330~~our orwebsite 1at www.bit-~~202-551-8090~~digital.com, ~~You~~press ~~can~~releases, ~~also~~public ~~access~~conference ~~our~~calls and ~~filings~~public webcasts. The information disclosed through the ~~SEC’s internet~~foregoing ~~address~~channels ~~site:~~are ~~www~~intended to be sources of material information about the Company.~~sec.gov~~ As such, ~~under~~we ~~our~~encourage ~~Nasdaq~~investors, ~~ticker~~the ~~BTBT~~media and others to follow the channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

The information contained on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website. You should not rely on our website or any such information in making your decision whether to purchase our Ordinary Shares.

Item 1A. Risk Factors

AnOwnership ~~investment~~of in our ~~Ordinary~~ ~~Shares~~securities involves a high degree of risk. You should carefully consider the risks ~~and uncertainties~~ described below, together with all other information contained in ~~this~~or ~~report,~~incorporated ~~including~~by reference ~~the~~into ~~matters~~this ~~discussed~~Annual ~~under~~Report ~~the~~on ~~heading~~Form ~~“Forward~~10-~~Looking~~K, ~~Statements” before~~including ~~you decide to invest in~~ our ~~Ordinary~~audited ~~Shares. The~~financial ~~Company~~statements ~~may be subject to various legal~~ and ~~operational risks as a result of its previously being a China-based Issuer with substantial amounts of~~ the ~~Company’s~~notes ~~operations~~thereto, ~~previously in China~~ and ~~Hong Kong.~~“Management’s ~~The~~Discussion ~~legal~~ and ~~regulatory~~Analysis ~~environment in China is in many respects different from the United States. These risks and others could result in a material change in the value~~ of ~~our~~Financial ~~securities~~Condition and~~/or~~ ~~significantly~~Results ~~limit or completely limit or completely hinder our ability to offer or continue to offer our securities to investors and cause the value~~ of ~~such securities to significantly decline or be worthless~~Operations. If” ~~any~~The ~~of the~~ following ~~risks,~~discussion orhighlights ~~any~~material ~~other~~ risks ~~and uncertainties~~ that could ~~are~~adversely ~~not~~affect ~~presently foreseeable to us, actually occur,~~ our business, financial condition, results of operations, ~~liquidity~~cash ~~and~~flows, ~~our~~liquidity, ~~future growth~~ prospects ~~could~~and bethe ~~materially~~trading ~~and~~price of ~~adversely~~our ~~affected~~Ordinary Shares.

The Company ismay ~~not~~be ~~required~~subject to ~~provide~~various ~~the information~~legal ~~called~~and ~~for~~operational inrisks ~~this~~as ~~item~~a ~~due~~result toof its ~~status~~previously asbeing a ~~Smaller~~China-based ~~Reporting~~Issuer ~~Company,~~with ~~however~~substantial weamounts ~~describe below some~~ of the ~~risks~~Company’s weoperations previously ~~believe~~in ~~are~~China ~~material to~~and ~~our~~Hong ~~business~~Kong. ~~You~~The ~~should~~legal ~~carefully~~and ~~consider~~regulatory ~~the~~environment ~~following risks~~ in ~~evaluating~~China usis ~~and~~in ~~our~~many ~~business.~~respects ~~You~~different ~~should~~from ~~also refer to~~ the ~~other~~United States. ~~information~~These ~~set~~risks ~~forth~~and inothers ~~this~~could ~~report,~~result ~~including~~in ~~the~~a ~~information~~material ~~set~~change ~~forth~~ in ~~“Business”~~the ~~and~~value ~~“Management’s Discussion and Analysis~~ of ~~Financial~~our ~~Condition~~securities and/or ~~Results~~significantly oflimit ~~Operations”~~or ascompletely ~~well~~limit or ascompletely inhinder our ~~consolidated~~ability ~~financial~~to ~~statements~~offer ~~and~~or ~~the~~continue ~~related notes.~~to ~~Our~~offer ~~business~~our ~~prospects,~~securities ~~financial~~to ~~condition~~investors orand ~~results~~cause ofthe ~~operations~~value ~~could~~of besuch ~~adversely~~securities ~~affected~~to significantly bydecline ~~any~~or ofbe ~~the following risks~~worthless.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the risks actually occur, our business could be materially harmed and the market price of our ordinary shares could decline, and you could lose all or part of your investment.

General Risks

We have a history of operating losses, and we may not be able to sustain profitability; we have recently shifted our emphasis from our digital assets mining business, to ~~cloud~~the ~~services~~ETH staking and ~~HPC~~treasury ~~data~~business ~~centers~~ and we may not be continuously successful in this business.

~~For the year ended December 31, 2023 (“Fiscal 2023”), as a result of the decline in revenue from digital assets mining, we recognized a net loss of $13.9 million.~~ Although we have experienced profitability from our cloud services and HPC data centers ~~for the year ended December 31~~, ~~2024 (“Fiscal~~which ~~2024”),~~are wepresently ~~may~~operated ~~incur~~by ~~losses as we continue to work to shift and grow~~ our ~~cloud~~subsidiary ~~services~~WhiteFiber, ~~and HPC data centers businesses~~Inc. ~~Our~~, our current business, including our growth strategy for our business, involves industries that are ~~itself~~ new and constantly evolving and is subject risks, many of which are discussed below. See “Risks Related to Digital ~~Assets~~Asset ~~Related~~Prices, ~~Risks~~Network Dynamics and Treasury Holdings” below.

1525

Our results of operations may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our results of operations, including the levels of our net revenues, expenses, net loss and other key metrics, may vary significantly in the future due to a variety of factors, some of which are outside of our control, and period-to-period comparisons of our operating results may not be meaningful, especially given our limited ~~cloud~~operating ~~services~~history ~~and~~in ~~HPC~~the ~~data~~area ~~centers~~of ~~operating~~digital ~~history~~assets. As a result of adverse factors described below, there can be no assurance we will achieve and maintain profitability.

The results for any one quarter are not necessarily an indication of future performance. Fluctuations in quarterly results may adversely affect the market price of our Ordinary Shares. Factors that may cause fluctuations in our annual financial results include:

●

the amount and timing of operating expenses related to our new business operations and infrastructure; and

●

general economic, industry and market conditions.

We may acquire other businesses, form joint ventures or acquire other companies or businesses that could negatively affect our operating results, dilute our shareholders’ ownership, increase our debt or cause us to incur significant expense; notwithstanding the foregoing, our growth may depend on our success in uncovering and completing such transactions.

We seek to ~~enter~~acquire ~~cloud services~~digital ~~and~~asset-related ~~HPC data centers~~ businesses around the globe. However, we cannot offer any assurance that acquisitions of businesses, assets and/or entering into strategic alliances or joint ventures will be successful. We may not be able to find suitable partners or acquisition candidates and may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing infrastructure. In addition, in the event we acquire any existing businesses, we could assume unknown or contingent liabilities.

Any future acquisitions also could result in the issuance of shares, incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration of an acquired company may also disrupt ongoing operations and require management resources that otherwise would be focused on developing and expanding our existing business. We may experience losses related to potential investments in other companies, which could harm our financial condition and results of operations. Further, we may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture if such investments do not materialize.

To finance any acquisitions or joint ventures, we may choose to issue Ordinary Shares, ~~preference~~Preference ~~shares~~Shares or a combination of debt and equity as consideration, which could significantly dilute the ownership of our existing shareholders or provide rights to such preferred shareholders in priority over our Ordinary Shareholders. Additional funds may not be available on terms that are favorable to us, or at all. If the price of our Ordinary Shares is low or volatile, we may not be able to acquire other companies or fund a joint venture project using shares as consideration.

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

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

From time to time we may evaluate and potentially consummate strategic investments, combinations, joint-ventures, acquisitions or alliances, which could require significant management attention, disrupt our business and adversely affect our financial results.

We may evaluate and consider strategic investments, combinations, joint-ventures, acquisitions or alliances in the ~~bitcoin~~digital ~~mining,~~asset ~~cloud~~“ecosystem” ~~services or HPC data centers~~ and related businesses around the globe. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction.

Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including:

●

difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business;

●

inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits;

●

difficulties in retaining, training, motivating and integrating key personnel;

●

diversion of management’s time and resources from our normal daily operations;

●

difficulties in successfully incorporating licensed or acquired technology and rights into our businesses;

●

difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations;

●

difficulties in retaining relationships with customers, employees and suppliers of the acquired business;

●

risks of entering markets, in parts of the United States or abroad, in which we have limited or no prior experience;

●

regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability;

●

failure to successfully further develop the acquired technology;

●

liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

●

potential disruptions to our ongoing businesses; and

●

unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.

We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we cannot assure you that any future investment in or acquisition of new businesses or technology will achieve market acceptance or prove to be profitable.

To finance any acquisitions or joint ventures, we may choose to issue ~~ordinary~~Ordinary ~~shares~~Shares, ~~preference~~Preference ~~shares~~Shares or a combination of debt and equity as consideration, which could significantly dilute the ownership of our existing shareholders. Additional funds may not be available on terms that are favorable to us, or at all. If the price of our ordinary shares is low or volatile, we may not be able to acquire other companies or fund a joint venture project using shares as consideration.

1727

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

The loss of any member of our management team, our inability to execute an effective succession plan, or our inability to attract and retain qualified personnel could adversely affect our business.

Our success and future growth will depend to a significant degree on the skills and services of our management team, including Mr. Sam Tabar, our Chief Executive Officer, ~~and~~ Mr. Erke Huang, our Chief Financial Officer. Weand ~~have~~Mr. ~~recently~~Justin ~~hired several key members of Senior Management including executive officers~~Zhu, ~~Billy~~our ~~Krassakopoulos, CEO of Enovum, and Thomas Sanfilippo,~~ Chief ~~Technology~~Accounting Officer, inand ~~order~~Senior toVice ~~grow~~President ~~WhiteFiber’s~~of ~~business~~Finance. We will need to continue to grow our management in order to alleviate pressure on our existing team and in order to continue to develop our business. If our management team, including any new hires that we may make, fails to work together effectively and to execute our plans and strategies on a timely basis, our business could be harmed. Furthermore, if we fail to execute an effective contingency or succession plan with the loss of any member of management, the loss of such management personnel may significantly disrupt our business.

The loss of key members of management could inhibit our growth prospects. Our future success also depends in large part on our ability to attract, retain and motivate key management and operating personnel. As we continue to develop and expand our operations, we may require personnel with different skills and experiences, and who have a sound understanding of our business and the digital asset industry. The market for highly qualified personnel in this industry is very competitive, and we may be unable to attract or retain such personnel. If we are unable to attract or retain such personnel, our business could be harmed.

We incur significant costs and demands upon management and accounting and finance resources as a result of complying with the laws and regulations affecting public companies; if we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements and otherwise make timely and accurate public disclosure could be impaired, which could harm our operating results, our ability to operate our business and our reputation.

As a public company, we are required to, among other things, maintain a system of effective internal control over financial reporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis which is a costly and time-consuming effort that needs to be re-evaluated frequently. Substantial work will continue to be required to further implement, document, assess, test and remediate our system of internal controls.

If our internal control over financial reporting or our disclosure controls are not effective, we may be unable to issue our financial statements in a timely manner, we may be unable to obtain the required audit or review of our financial statements by our independent registered public accounting firm in a timely manner or we may be otherwise unable to comply with the periodic reporting requirements of the SEC, our Ordinary Shares listing on Nasdaq could be suspended or terminated and our share price could materially suffer. In addition, we or members of our management could be subject to investigation and sanction by the SEC and other regulatory authorities and to shareholder lawsuits, which could impose significant additional costs on us and divert management attention.

As of December 31, ~~2023~~2025, ~~previous deficiencies in disclosure controls and procedures were remediated, and controls were found to be operating effectively. As of December 31, 2024,~~ we concluded that our internal control over financial reporting contained no material weaknesses. We will continue to periodically review our internal control over financial reporting as part of our ongoing efforts to ensure compliance with the requirements of Section 404 of the Sarbanes-Oxley Act.

If we cannot maintain our corporate culture as we grow, we could lose the innovation, collaboration and focus that contribute to our business.

We believe that a critical component of our success is our corporate culture, which we believe fosters innovation, encourages teamwork and cultivates creativity. As we continue to grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure to preserve our culture could negatively impact our future success, including our ability to attract and retain employees, encourage innovation and teamwork and effectively focus on and pursue our corporate objectives.

We do not have any business interruption or disruption insurance coverage.

Currently, we do not have any business liability or disruption insurance to cover our operations, other than director’s and officer’s liability insurance. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured business disruptions may result in our incurring substantial costs and the diversion of resources, which could have an adverse effect on our results of operations and financial condition.

Cyberattacks and security breaches of ~~cloud~~our ~~services~~systems, or those impacting our third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition.

Our cloud services involve the collection, storage, processing, and transmission of confidential information, employee, service provider, and other personal data. We have built our cloud services on the premise that we maintain a secure way to secure, store, and transact in cloud services. As a result, any actual or perceived security breach of usour systems or our third-party partners may:

●

harm our reputation and brand;

● ~~result in our cloud services being unavailable and~~ interrupt our operations;

●

result in improper disclosure of data and violations of applicable privacy and other laws;

●

result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;

●

cause us to incur significant remediation costs;

●

divert the attention of management from the operation of our business; and

●

adversely affect our business and operating results.

Further, any actual or perceived breach or cybersecurity attack, whether or not we are directly impacted, could lead to a general loss of customer confidence in the digital asset industry or in the use of technology to conduct financial transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures and technology infrastructure.

An increasing number of organizations, including large merchants, businesses, technology companies, and financial institutions, as well as government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile applications, and infrastructure.

Attacks upon systems across a variety of industries, including cloud services, are increasing in their frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper, or illegal access to systems and information (including customers and partners’ personal data, AI algorithms, disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our cloud services or those of our third-party service providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed. For example, attacks may be designed to deceive employees and service providers into releasing control of our systems to a hacker, while others may aim to introduce computer viruses or malware into our cloud services with a view to stealing confidential or proprietary data. Additionally, certain threats are designed to remain dormant or undetectable until launched against a target and we may not be able to implement adequate preventative measures.

Although we have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. We have experienced from time to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems and facilities, as well as those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees, service providers, and our customers) into disclosing usernames, passwords, payment card information, or other sensitive information, which may, in turn, be used to access our cloud services. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.29

19Although we have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. We have experienced from time to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to its systems and facilities, as well as those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees, service providers, and our customers) into disclosing usernames, passwords, payment card information, or other sensitive information, which may, in turn, be used to access our cloud services. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.

Our operations may be negatively affected if we are unable to obtain, develop and retain key personnel and skilled labor forces.

We must attract, develop and retain executive officers and other professional, technical and labor forces with the skills and experience necessary to successfully manage, operate and grow. We have recently hired certain key personnel for ~~WhiteFiber, as well as~~ the ~~management team of Enovum~~Company. However, competition for these employees is high, due, in part, to the nascent ~~HPC~~workforce ~~Business~~in ~~workforce~~the digital asset “ecosystem.” In some cases, competition for these employees is on a regional, national, or global basis. At times of low unemployment, it can be difficult for us to attract and retain qualified and affordable personnel. A shortage in the supply of skilled personnel creates competitive hiring markets, increased labor expenses, decreased productivity and potentially lost business opportunities to support our operating and growth strategies. Additionally, if we are unable to hire employees with the requisite skills, we may be forced to incur significant training expenses. As a result, our ability to maintain productivity, relationships with customers, competitive costs, and quality services is limited by the ability to employ, retain and train the necessary skilled personnel and could negatively affect its results of operations, financial position and cash flows.

Supply chain disruptions may adversely affect WhiteFiber’s operations.

WhiteFiber is a provider of Graphic Processing Units (“GPUs”) compute and purchases NVIDA H100 servers, as well as other servers, through OEMS for example, Supermicro, Dell, Hewlett Packard and ASUSTeK Computer Inc. Disruptions, shortages or delays in WhiteFiber’s ability to source GPUs and price increases from suppliers have and may continue to occur, which would be expected to adversely affect WhiteFiber’s results of operations, financial condition, cash flows and harm customer relationships. Any material disruption at WhiteFiber’s facilities or those of its customers or suppliers or otherwise within its supply chain, whether as a result of downtime, work stoppages or facility damage could prevent WhiteFiber from meeting customer demands or expected timelines, require it to incur unplanned capital expenditures, or cause other material disruptions to its operations, any of which could have a material adverse effect on WhiteFiber’s operations, financial position and cash flows. Further, supply chain disruptions can occur from events out of the WhiteFiber’s control such as environmental incidents or other catastrophes.

We operate in a capital-intensive industry and are subject to capital market and interest rate risks.

Our operations require significant capital investment to purchase and maintain the property and equipment required to provide specialized infrastructures to support generative AI work streams. In addition, WhiteFiber’s operations include a significant level of fixed and semi-fixed costs. Consequently, we will rely on capital markets, as sources of liquidity for capital requirements for growth. If we are unable to access capital at competitive rates, the ability to implement business plans, make capital expenditures or pursue acquisitions it would otherwise rely on for future growth may be adversely affected. Market disruptions may increase the cost of borrowing or adversely affect our ability to access one or more financial markets. Such market disruptions could include:

● A significant economic downturn.

● The financial distress of unrelated industry leaders in the same line of business.

● Deterioration in capital market conditions.

● Turmoil in the financial services industry.

● Volatility in GPU prices.

● Terrorist attacks.

● War.

● Cyberattacks.

If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests, and the per share value of our ordinary shares could decline. Furthermore, if we engage in debt financing, the holders of debt likely would have priority over the holders of our ordinary shares on order of payment preference. We may be required to accept terms that restrict or limit our ability to, among other things:

● Pay cash dividends to our shareholders, subject to certain limited exceptions;

● Redeem or repurchase our ordinary shares or other equity;

● Incur additional indebtedness;

● Permit liens on assets;

● Make certain investments (including through the acquisition of stock, shares, partnership or limited liability company interests, any loan, advance or capital contribution);

● Sell, lease, license, lend or otherwise convey an interest in a material portion of our assets; and

● Sell or otherwise issue ordinary shares or other capital stock subject to certain limited exceptions.

These restrictions may limit our ability to obtain additional financing, withstand downturns in our business or take advantage of business opportunities.

We have an evolving business model which is subject to various uncertainties.

As ~~cloud~~digital ~~services~~asset ~~and~~platforms ~~HPC data centers~~ become more widely available, we expect the services and products associated with them to evolve. In order to stay current with the industry, our business model requires us to evolve as well. From time to time, we have modified and will continue to modify aspects of our business model relating to our strategy. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to our business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. Further, we cannot provide any assurance that we will successfully identify all emerging trends and growth opportunities in this business sector, and we may lose out on those opportunities. Such circumstances could have a material adverse effect on our business, prospects or operations.

We may be negatively impacted by future litigation, claims or investigations.

We may become party to, among other things, environmental, commercial, contract, warranty, antitrust, tax, property entitlements and land use, product liability, health and safety, and employment claims. The outcome of any future lawsuits, claims, investigations or proceedings is often difficult to predict and could be adverse and material in amount. In addition to the monetary cost, litigation can divert management’s attention from its core business opportunities. Development of new information in these matters can often lead to changes in management’s estimated liabilities associated with these proceedings including the judge’s rulings or judgements, jury verdicts, settlements or changes in applicable law. The outcome of such matters is often difficult to predict and unfavorable outcomes could have a material impact to our results of operations, financial position and cash flows.

Changes in tax law may negatively affect our business.

Changes to federal, state, local and foreign tax laws have the ability to benefit or adversely affect our earnings and our customer costs. Significant changes to corporate tax rates could result in the impairment of deferred tax assets that are established based on existing law at the time of deferral. A number of factors may increase WhiteFiber’s future effective income tax rate, including:

●

Governmental authorities increasing taxes or eliminating deductions, particularly the depletion deduction.

●

The jurisdictions in which earnings are taxed.

●

The resolution of issues arising from tax audits with various tax authorities.

●

Changes in the valuation of our deferred tax assets and liabilities.

●

Adjustments to estimated taxes upon finalization of various tax returns.

●

Changes in available tax credits.

●

Changes in stock-based compensation.

●

Other changes in tax laws.

●

The interpretation of tax laws and/or administrative practices.

● Our operations could be negatively impacted by import tariffs and/or other government mandates.

We operate in or provides services to capital-intensive industries in which federal trade policies could significantly impact the availability and cost of materials. Imposed and proposed tariffs by the Trump administration could significantly increase the prices and delivery lead times on GPUs that are critical to WhiteFiber and its customers. WhiteFiber faces competition from source providers both in the U.S. and around the world. Prolonged lead times on the delivery of GPUs and further tariff increases could adversely affect WhiteFiber’s business, financial condition and results of operations.

Our operations are subject to environmental laws and regulations that may increase costs of operations, impact or limit business plans, or expose us to environmental liabilities.

We are subject to environmental laws and regulations affecting many aspects of ~~its~~our operations, including those affecting the operation of ~~its~~digital ~~data~~asset ~~centers~~platforms. These laws and regulations can increase capital, operating and other costs; cause delays as a result of litigation and administrative proceedings; and create environmental compliance, remediation, containment, monitoring and reporting obligations for construction materials facilities. Environmental laws and regulations can also require us to install pollution control equipment at facilities where it operates, and correct ~~environmental~~ environmental hazards, including payment of all or part of the cost to remediate sites where activities of other parties, caused environmental contamination. These laws and regulations generally require us to obtain and comply with a variety of environmental licenses, permits, inspections and other approvals. Although we strive to comply with all applicable environmental laws and regulations, public and private entities and private individuals may interpret our legal or regulatory requirements differently and seek injunctive relief or other remedies ~~against~~ against us. We cannot predict the outcome, financial or operational, of any such litigation or administrative proceedings.

Existing environmental laws and regulations may be revised and new laws and regulations seeking to protect the environment may be adopted or become applicable to us. These laws and regulations could require us to limit the use or output of certain facilities; prohibit or restrict new or existing services; retire and replace certain facilities; install pollution controls; remediate environmental impacts; remove or reduce environmental hazards; or forego or limit the development of resources and certain facilities where it operates. Revised or new laws and regulations that increase compliance and disclosure costs and/or restrict operations could adversely affect our results of operations, financial conditions and cash flows.

General risk factors that could impact our businesses.

The following are additional factors that should be considered for a better understanding of the risks to us. These factors may negatively impact our financial results in future periods:

●

Acquisition, disposal and impairments of assets or facilities.

●

The cyclical nature of large infrastructure projects.

●

Labor negotiations or disputes.

●

Inability of contract counterparties to meet their contractual obligations.

●

The inability to effectively integrate the operations and the internal controls of any acquired companies.

We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks that exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, on March 10, 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S., or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis.

Failure to manage our liquidity and cash flows may materially and adversely affect our financial conditions and results of operations. As a result, we may need additional capital, and financing may not be available on terms acceptable to us, or at all.

~~Since~~In ~~May~~July ~~4, 2022 until March 7,~~ 2025, we ~~have~~ sold an aggregate of 8122,~~990~~000,~~654~~000 ordinary shares ~~of common stock for an aggregate purchase price of~~ at $~~288~~3.106 ~~million~~per ~~net~~share ~~of offering costs~~ pursuant to ~~an at-the-market offering. We had~~ a ~~net~~registered ~~income~~direct ~~of $28~~offering.3 ~~million~~In ~~for~~October ~~Fiscal~~2025, ~~2024~~we .sold Wean ~~incurred~~aggregate ~~a net loss~~ of $~~13.9~~150 million ~~for Fiscal 2023, which included $6.6 million impairment~~ of ~~digital assets~~4.0% Weconvertible ~~had~~senior notes ~~negative~~due ~~cash~~2030 ~~flows~~pursuant ~~for~~to ~~our~~a ~~operating~~registered ~~activities of $13~~offering.0 ~~million for~~During ~~Fiscal~~the ~~2024.~~year Weended ~~had~~December ~~positive~~31, ~~cash~~2025, ~~flows~~we ~~from~~sold ~~our~~an ~~operating~~aggregate ~~activities~~ of ~~$1.1 million for Fiscal 2023. Negative cash flow during Fiscal 2024 resulted~~30, ~~in part~~189,161 ~~from~~ordinary shares ~~gains~~for onan ~~digital~~aggregate ~~assets~~price of $552.715, ~~million~~net ~~and~~of ~~revenue~~offering ~~from~~costs ~~bitcoin~~pursuant ~~mining~~to ofan ~~$58~~at-the-market offering.6 ~~million,~~We ~~offset~~had byproceeds ~~depreciation and amortization expenses~~ of $3263.34 million~~. Positive cash flow during Fiscal 2023 resulted~~, ~~in part, from gain from exchange of digital~~ ~~assets~~net of ~~$18.8~~offering ~~million~~costs ~~offset~~pursuant byto ~~$6.6~~an ~~million~~at-the-market ~~impairment of digital assets~~offering.

We cannot assure you our business model will allow us to continue to generate positive cash, given our substantial expenses in relation to our revenue at this stage of our Company’s development. Our inability to offset our expenses with adequate revenue will adversely affect our liquidity, financial condition and results of operations. Although we believe we have adequate cash on hand and have ~~drawn down on~~ an effective $~~500~~2.5 ~~million~~billion at-the-market shelf registration statement and anticipated cash flows from operating activities are expected to be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months, we cannot assure you that will be the case. We expect to need additional cash resources in the future as we wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions in order to implement our business plan. We may evaluate financing opportunities from time to time, including through ETH-collateralized financing arrangements, related-party or other investor financing, and other debt or equity financings. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Further, if we seek to obtain financing through ETH-collateralized financing arrangements, we may be required to pledge a substantial portion of our ETH and satisfy margin maintenance and other collateral requirements. If the value of the pledged collateral declines, we could be required to post additional collateral, repay indebtedness earlier than anticipated or permit the liquidation of pledged ETH, which could adversely affect our liquidity, financial condition and results of operations.

2232

Our cash balances are held at a number of financial institutions that expose us to their credit risk

We maintain our cash and cash equivalents at financial or other intermediary institutions. The combined account balances at each institution located in the United States typically exceed FDIC insurance coverage of $250,000 per depositor. The combined account balances at each institution located in Iceland typically exceed the deposit guarantee schemes of the equivalent of €100,000 in Icelandic Krona per depositor. As a result, there is a concentration of credit risk related to amounts on deposit in excess of the deposit insurance coverage amounts. At December 31, ~~2024~~2025, substantially all of our cash and cash equivalent balances held at financial institutions exceeded deposit insured limits. While we did not have any direct exposure to Silicon Valley Bank, Signature Bank, or First Republic, which suffered severe liquidity losses during 2023, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability, and the ability of our customers, clients and vendors, to access existing cash, cash equivalents and investments, or to access existing or enter into new banking arrangements or facilities, may be threatened and could have a material adverse effect on our business and financial condition.

~~Cloud~~Risks ~~Service~~Related ~~Development~~to Digital Asset Prices, ~~Related~~Network ~~Risks~~Dynamics and Treasury Holdings

~~Our~~Volatility ~~cloud~~in ~~service~~the ~~technology~~prices ~~and~~of ~~infrastructure~~ ETH may ~~not~~materially and ~~operate~~adversely ~~properly~~affect orour ~~as we expect them to~~business, ~~which~~financial ~~could~~condition ~~cause us to incur fines~~ and ~~monetary penalties, adversely affecting our business,~~ results of operations~~, and financial condition~~.

~~The~~Our ~~continuous development~~revenues, ~~maintenance,~~ ~~and~~gross ~~operation~~margins, ofliquidity ~~our~~and ~~cloud~~ability to service ~~technology~~obligations ~~and~~depend ~~infrastructure~~significantly ison ~~expensive~~prevailing ~~and~~ETH ~~complex~~prices and. ~~may~~Prolonged ~~involve~~or ~~unforeseen~~sharp ~~difficulties, including~~price ~~material performance problems~~declines, ~~undetected defects,~~ or ~~errors,~~heightened ~~particularly with new capabilities and system integrations. We~~volatility, may ~~encounter~~impede ~~technical~~ETH ~~obstacles,~~ecosystem ~~and~~growth itor isrender ~~possible~~BTC ~~that~~mining weactivities ~~may~~unprofitable, ~~discover~~reduce ~~additional~~the ~~problems~~carrying ~~that~~value ~~prevent our technology~~ and ~~systems from~~liquidity ~~operating~~of ~~properly.~~digital ~~If our cloud services do not function reliably~~assets held, ~~we may incur fines~~ and ~~monetary~~decrease ~~penalties,~~investor asdemand ~~well~~for asour ~~regulatory orders requiring remedial, injunctive, or other corrective actions~~securities.

~~Regulators~~The ~~may~~future ~~limit~~development ~~our~~and ~~ability to~~growth ~~develop~~of ordigital assets ~~implement~~are ~~our~~subject ~~cloud~~to ~~service~~a ~~technology~~variety ~~and~~of ~~infrastructure~~factors ~~and/or~~that ~~may~~are ~~eliminate~~difficult orto ~~restrict~~predict ~~the~~and ~~confidentiality~~evaluate. ofIf ~~our~~digital ~~technology, which~~assets ~~could~~do ~~have~~not agrow ~~material~~as ~~adverse~~we ~~effect~~expect, on our business, operating results and financial condition ~~and~~could ~~results~~be ofadversely ~~operations~~affected.

~~Our~~Digital ~~future~~assets ~~success~~built ~~depends~~ on ~~our~~blockchain ~~ability~~technology were toonly ~~continue~~introduced toin ~~develop~~2008 and ~~implement~~remain ~~our~~in ~~cloud~~the ~~service~~early ~~technology~~stages ~~and~~of todevelopment. ~~maintain~~In ~~the~~addition, ~~confidentiality~~different ofdigital ~~this~~assets ~~technology~~are designed for different purposes. Ethereum, for instance, was designed to serve as a smart contract and decentralized application platform, while Bitcoin was ~~Changes~~designed to ~~existing~~serve ~~regulations~~as a peer-to-peer electronic cash system. Many other blockchain networks, ~~their~~ranging ~~interpretation~~from orcloud ~~implementation~~computing to tokenized securities networks, orhave ~~new~~only ~~regulations~~recently ~~could~~been ~~impede~~established. ~~our~~The ~~use~~further growth and development of ~~this~~any ~~technology~~digital orassets and their underlying ~~require~~networks ~~that~~and weother ~~disclose~~cryptographic ~~our~~and ~~technology~~algorithmic toprotocols ~~our~~governing ~~competitors~~the creation, ~~which~~transfer ~~could~~and ~~impair~~usage ~~our~~of ~~competitive~~digital ~~position~~assets and ~~result~~related inassets represent a ~~material~~new ~~adverse effect~~and onevolving ~~our~~paradigm ~~business,~~that ~~results~~is subject to a variety of ~~operations,~~factors ~~and~~that ~~financial~~are ~~condition.~~difficult to evaluate, including:

~~Cloud~~● ~~service~~many ~~technology~~digital assets and ~~infrastructure may~~networks ~~not~~have ~~operate~~limited ~~properly~~operating orhistories, ashave wenot ~~expect~~been ~~them~~validated toin production, ~~which~~and ~~could~~are ~~cause~~still usin tothe ~~incur~~process ~~fines~~of developing and ~~monetary~~making ~~penalties~~significant ~~adversely~~decisions ~~affecting~~that ~~our~~will ~~business~~affect the design, ~~results~~ supply, issuance, functionality, and governance of ~~operations~~their respective digital assets and ~~financial~~underlying ~~condition.~~blockchain networks, any of which could adversely affect their respective digital assets;

~~The~~● ~~continuous~~many ~~development, maintenance~~blockchain ~~and~~networks ~~operation~~are ofin ~~our~~the ~~cloud~~process ~~service~~of ~~technology~~implementing ~~and~~software ~~infrastructure~~upgrades ~~is expensive~~ and ~~complex,~~other ~~and~~changes ~~may~~to ~~involve~~their ~~unforeseen difficulties including material performance problems~~protocols, ~~undetected~~which ~~defects~~could orintroduce ~~errors~~bugs, ~~for~~security ~~example~~risks, ~~with~~or ~~new~~adversely ~~capabilities~~affect ~~and~~the ~~systems~~respective ~~integration.~~blockchain We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our technology and systems from operating properly. If our cloud services do not function reliably, we may incur fines and monetary penalties, as well as regulatory orders requiring remedial, injunctive, or other corrective action.networks;

23● several large networks, including Ethereum and Bitcoin, are developing new features to address fundamental speed, scalability, and energy usage issues. If these issues are not successfully addressed, or if these networks do not achieve widespread adoption, it could adversely affect the underlying digital assets;

~~Regulators~~● ~~may~~security ~~limit~~issues, ~~our~~bugs, ~~ability to~~and ~~develop~~software orerrors ~~implement~~have ~~our~~been ~~cloud~~identified ~~services~~with ~~technology~~many digital assets and ~~infrastructure~~their underlying blockchain networks, some of which have been exploited by malicious actors. There are also inherent security weaknesses in some digital assets, such as when creators of certain blockchain networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a digital asset could adversely affect its price, security, liquidity, and/ adoption rate. If one or ~~may~~more ~~eliminate~~malicious actors obtain a majority of the compute or ~~restrict~~staking power on a digital asset network, as has happened in the ~~confidentiality~~past, ofit ~~our~~may ~~technology~~be able to engage in illicit activity, which could ~~have~~cause afinancial ~~material~~losses ~~adverse~~to ~~effect~~holders, ondamage ~~our~~the ~~financial~~network’s ~~condition~~reputation and ~~results~~security, ofand ~~operations.~~adversely affect its value;

Our future success depends on our ability to continue to develop and implement our cloud services technology, and to maintain the confidentiality of this technology. Changes to existing regulations, their interpretation or implementation, or new regulations could impede our use of this technology, or require that we disclose our technology to our competitors, which could impair our competitive position and result in a material adverse effect on our business, results of operations, and financial condition.33

We● ~~use~~blockchain ~~certain open~~networks ~~source~~may ~~technology in our~~have ~~business.~~consolidated Wepoints ~~may~~of ~~face~~failure ~~claims~~(such ~~from~~as ~~open~~concentrated ~~source~~ownership ~~licensors~~or ~~claiming~~an ~~ownership~~“admin ofkey”), orallowing ~~demanding~~a ~~the~~small ~~release~~group of, ~~the~~holders ~~technology~~to have significant unilateral control and ~~any other~~influence ~~intellectual~~over ~~property~~key ~~that~~decisions werelated ~~developed~~to ~~using~~their orblockchain ~~derived~~networks, ~~from~~such as governance decisions and protocol changes, as well as the market price of such ~~open-source~~ ~~technology.~~digital assets;

We● ~~utilize~~if arewards ~~combination of open-source~~ and ~~licensed~~transaction ~~third-party~~fees ~~technologies~~for inminers ~~the~~or ~~development~~validators ~~and~~on ~~operation~~any ofparticular ~~our~~digital ~~cloud~~asset ~~services.~~network ~~While~~are ~~open-source~~not ~~technologies enable~~sufficiently ~~rapid~~high ~~development~~to attract and ~~cost~~retain ~~efficiencies,~~miners ~~they~~or ~~also pose potential risks~~validators, ~~such~~a asblockchain network’s security ~~vulnerabilities, lack of long-term support,~~ and ~~legal~~speed ~~risks related to licensing terms. Similarly, reliance on licensed third-party technologies~~ may ~~expose~~be usadversely ~~to risks associated with changes in licensing terms~~affected, ~~costs,~~increasing orthe ~~discontinuation~~likelihood of ~~the~~a ~~licensed~~malicious ~~products.~~attack;

We● ~~will~~the ~~continue~~governance toof ~~use open-source technology in~~many ~~the~~decentralized ~~future.~~blockchain ~~There~~networks is aby ~~risk~~voluntary ~~that open-source~~consensus ~~technology licenses~~and ~~could~~open becompetition, ~~construed~~and inmany adevelopers ~~manner~~are ~~that~~not ~~imposes unanticipated~~directly ~~conditions~~compensated orfor ~~restrictions~~their ~~on our ability to offer our products~~contributions. ~~Open~~As ~~source~~a ~~licensors may also decide to change the conditions on which they make their open-source technology available for our use. Additionally~~result, wethere may ~~face~~be ~~claims~~a ~~from~~lack ~~open-source licensors claiming ownership~~ of, orconsensus ~~demanding the public release~~ or ~~free~~clarity ~~license~~on ~~of,~~ the ~~technology~~governance ~~and~~of any ~~other~~particular ~~intellectual~~digital ~~property~~asset ~~that~~network, ~~it developed~~a ~~using~~lack ~~or derived from such open source technology. The terms~~ of ~~many~~incentives ~~open~~for ~~source~~developers ~~licenses~~to ~~have~~maintain ~~not been interpreted by United States courts. There is a risk that these licenses could be construed in a way that could impose unanticipated conditions~~ or ~~restrictions~~develop onthe ~~our~~network, ~~ability~~and toother ~~commercialize~~unforeseen ~~our~~issues, ~~services~~any .of ~~These~~which ~~claims~~ could result in ~~litigation~~unexpected ~~and~~or ~~could~~undesirable ~~require~~errors, ~~that we make our technology freely available~~bugs, ~~purchase a costly license~~ or ~~cease~~changes, ~~offering the implicated products~~ or ~~services~~stymie ~~unless~~such ~~and~~network’s ~~until~~utility ~~we can re-engineer them to avoid infringement. This re-engineering process could require significant technology~~ and ~~product~~ability ~~development resources, and we may not be able~~ to ~~complete~~respond ~~the process successfully. Failure~~ to ~~adequately~~challenges ~~manage these risks could result in operational disruptions, legal liabilities,~~ and ~~adverse~~grow; ~~impacts on our business, results of operations,~~ and ~~financial condition.~~

~~Impact~~● ofmany ~~advancements~~blockchain innetworks ~~artificial~~are ~~intelligence on~~in ~~demand for AI and HPC data centers may reduce~~ the ~~need~~early ~~for~~stages ~~high-performance~~of ~~computing~~developing ~~(HPC)~~partnerships and ~~AI-specific~~collaborations, ~~data~~any ~~center~~or ~~infrastructure,~~ all of which ~~could~~may ~~have~~not ansucceed ~~adverse~~and ~~effect~~adversely onaffect ~~our~~the ~~business,~~usability ~~results~~and adoption of ~~operations,~~the ~~and~~respective ~~financial~~digital ~~condition~~assets.

~~The~~Various AIother ~~industry~~technical isissues ~~rapidly evolving,~~have ~~with~~also ~~continuous~~been uncovered ~~improvements~~from intime ~~algorithms,~~to ~~software~~time ~~efficiencies,~~that ~~and~~resulted ~~hardware~~in ~~capabilities.~~disabled ~~Emerging~~functionalities, AIexposure ~~technologies,~~of ~~such as~~certain ~~demonstrated~~users’ bypersonal ~~DeepSeek~~information, ~~may~~theft ~~allow~~of users’ ~~for~~assets, ~~complex~~and AIother ~~operations~~negative toconsequences, beand ~~executed~~which ~~with significantly less computing power than is currently~~ required. ~~This~~resolution ~~reduction~~with inthe ~~computational~~attention ~~intensity~~and ~~could~~efforts ~~decrease~~of ~~the~~their ~~demand~~global ~~for~~miner, user, ~~specialized compute~~ and ~~HPC~~development ~~data center services~~communities. If AI ~~developers~~any ~~are~~such ~~able~~risks ~~to achieve the same~~ or ~~better~~other ~~performance~~risks ~~outcomes with more energy-efficient~~materialize, ~~cost-effective,~~and orin ~~less~~particular ~~resource-intensive technologies,~~if they ~~may~~are ~~adjust~~not ~~their need for large-scale~~resolved, ~~high~~the ~~capacity data center solutions. This shift could have an adverse effect~~development onand ~~our~~growth ~~business, results~~ of ~~operations,~~digital ~~and~~assets ~~financial~~may ~~condition.~~be Wesignificantly ~~continuously~~affected ~~monitor industry trends~~ and ~~invest in innovation to mitigate these risks. However~~, ~~there~~as isa ~~no assurance that we will be able to anticipate or respond effectively to such changes~~result, ~~which could have an adverse effect on~~ our business, ~~results~~operating ~~of operations~~results, and financial condition could be adversely affected.

~~Our~~Ethereum-specific ~~cloud~~market, ~~services~~technology ~~business~~and ~~is subject to~~regulatory ~~complex~~developments ~~and~~may ~~evolving~~adversely ~~U.S.~~affect ~~and~~the ~~foreign~~value ~~laws~~ and ~~regulations~~liquidity ~~regarding~~of ~~AI,~~our ~~machine~~ETH ~~learning,~~holdings and ~~automated~~our ~~decision~~Treasury ~~making~~Strategy.

InThe ~~recent~~Ethereum ~~years~~network ~~the~~is ~~use~~subject ~~of machine~~to ~~learning,~~rapidly ~~AI and automated decision making~~evolving technology, ~~has~~competitive ~~come~~dynamics ~~under~~(including ~~increased~~alternative ~~regulatory~~Layer ~~scrutiny,~~1 and ~~governments~~Layer ~~and~~2 ~~regulators in the United States~~networks), ~~European Union,~~ and ~~other~~changing ~~places~~regulatory ~~have~~and ~~announced~~market-structure ~~the~~frameworks. Adverse ~~need~~developments—including ~~for~~protocol ~~greater~~upgrades ~~regulation~~with ~~regarding~~unintended ~~the~~consequences, ~~use~~forks ofor ~~machine~~chain ~~learning~~instability, ~~and AI~~validator ~~generally. New laws~~concentration, consensus ~~guidance~~failures, ~~and~~smart ~~decisions~~contract invulnerabilities, ~~this~~L2 ~~area~~settlement ~~may~~failures, ~~limit~~bridge ~~WhiteFiber’s cloud services business~~exploits, or ~~require~~regulatory ~~the~~restrictions—could ~~company~~reduce tothe ~~make~~value ~~changes~~or toliquidity ~~its~~of ~~clouds~~ETH ~~service technology~~ and ~~infrastructure~~impair ~~and~~ our ~~operations~~treasury ~~that may decrease our operational efficiency, result in an increase to operating costs and/or hinder our ability to improve our cloud services~~strategy.

24Our ETH treasury business model has multiple layers of corporate finance risks.

~~For~~Our ~~example,~~ETH ~~certain~~Treasury ~~global privacy~~Strategy ~~laws~~has regulate the use of automated decision making and may require that the existence of automated decision making be disclosed to the data subject with a meaningful explanation of the logic used in such decision making in certain circumstances, and that safeguards must be implemented to safeguard individual rights, including the right to obtain human intervention and to contest any decision. Other global privacy laws allow individuals the right to opt out of certain automated processing of personal data and create other requirements that impact automated decision-making. At the federal level, the President of the United States recently issued an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which charges multiple ~~agencies, including The National~~layers ~~Institute~~ of Standards and Technology, with producing guidelines in connection with the development and use of AI. In the European Union, there was political agreement on the EU AI Act, which establishes a comprehensive, risk- based ~~governance framework for AI in the EU market. The EU AI Act entered in force~~ on ~~August~~corporate 1,finance ~~2024,~~principles and ~~the~~blockchain ~~majority of the substantive requirements will apply two years later (beginning 2026). The EU AI Act will apply to companies that develop~~mechanics, ~~use~~including ~~and/or~~but ~~provide~~not AIlimited in the European Union and includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose AI and foundation models, and proposes fines for breach of up to ~~7% of worldwide annual turnover (revenue). Additionally, in September of 2022,~~ the European Commission proposed two Directives seeking to establish a harmonized civil liability regime for AI in the European Union, in order to facilitate civil claims in respect of harm caused by AI and to include AI-enabled products within the scope of the European Union’s existing strict liability regime. Once fully applicable, the EU AI Act will have a material impact on the way AI is regulated in the European Union, and together with developing guidance and/or decisions in this area, may affect our use of AI and our ability to provide, improve, or commercialize our cloud services, and could require additional compliance measures and changes to our operations and processes.following:

~~Moreover,~~● ~~the~~Potential ~~intellectual property~~Premium ~~ownership~~Collapse: ~~and~~Our ~~license~~digital ~~rights,~~asset ~~including~~treasury ~~copyright,~~relies ~~surrounding~~on AIequity ~~technologies~~premiums ~~has~~to ~~not~~raise ~~been~~capital ~~fully~~accretively. ~~addressed~~If byshare ~~courts~~prices orfall ~~laws or~~below ~~regulations~~NAV, ~~and~~treasury ~~the~~accumulation ~~use~~on ~~or adoption of AI technologies into~~ our ~~offerings~~balance sheet may ~~result~~slow indown ~~exposure to claims of copyright infringement~~ or ~~other intellectual property misappropriation~~halt. AsDecreasing ~~the~~premiums ~~legal~~paid ~~and regulatory framework~~ for ~~AI and automated decision making evolves, we may not always be able to anticipate how to respond to these laws or regulations, and compliance may adversely impact~~ our ~~operations~~shares ~~and involve significant expenditure and resources. Any failure by us to comply~~ may ~~result~~signal ina ~~significant~~lack ~~liability, potential increases in civil claims against us, negative publicity, an erosion~~ of ~~trust,~~investor ~~and/or~~enthusiasm ~~increased~~for ~~regulation and could materially adversely affect~~ our ~~business,~~ ~~results~~ETH ofTreasury ~~operations, and financial condition~~Strategy.

We● ~~face~~Liquidity ~~intense~~and ~~competition~~Macro inSensitivity: ~~the~~Digital ~~cloud services~~asset ~~industry~~treasury ~~and~~company ~~may~~equities ~~not~~are betypically ~~able~~high-beta ~~to compete with other companies~~assets. IfFor ~~we do not continue to innovate and provide cloud services to our customers and partners~~example, wea ~~may~~20% ~~not~~ETH ~~remain~~correction ~~competitive,~~can ~~which~~result ~~could~~in ~~harm~~50% ~~our~~equity ~~business,~~drawdowns ~~financial~~due ~~condition,~~to ~~cloud~~leverage ~~service~~ and ~~operating results~~collapsing premiums.

~~We may~~● ~~not~~Dilution beFatigue: ~~able~~Repeated tocapital ~~compete~~raises successfully against present or future competitors. We do not have the resources to compete with larger providers of similar products or services at this time. Our cloud services business environment is rapidly evolving and intensely competitive, it faces changing cloud service technologies, shifting customer needs, and frequent introductions of rival products and services. To compete successfully, we must accurately anticipate cloud service technology developments and deliver innovative, relevant and useful products, services, and technologies in a timely manner. As our cloud services business evolves, the competitive pressure to innovate will encompass a wider range of products and services. We must continue to invest significant resources in technical infrastructure and R&D, including through ~~acquisitions, in order to enhance our cloud service technology, and services. With the limited resources we have available, we~~ may ~~experience~~desensitize ~~difficulties in expanding and improving our colocation data center, services and colocation to remain competitive~~investors. ~~Competition~~Without ~~from~~yield ~~existing~~growth ~~and~~or ~~future~~NAV ~~competitors particularly those better capitalized~~accretion, ~~could~~new ~~result~~issuances inrisk ~~our~~being ~~inability~~seen to secure acquisitions and partnerships that we may need to expand our business in the future. This competition from other entities with greater resources, experience and reputations may result in our failure to maintain or expand our business, as weopportunistic ~~may~~liquidity ~~never~~events berather ~~able~~than tolong-term ~~successfully execute our business plan~~expansion. If we are unable to expand and remain competitive, our business could be negatively affected which would have an adverse effect on the trading price of our ordinary shares, which would harm our investors.

25Together, these risks form the structural challenges of our ETH Treasury Strategy. Its success depends on maintaining perpetual premium expansion in a market that is inherently cyclical.

Our current and potential domestic and international competitors range from large and established companies to emerging start-ups. Some competitors have longer operating histories and well-established relationships in various sectors. They can use their experience and resources in ways that could affect our competitive position, including by making acquisitions and entering into other strategic arrangements; continuing to invest heavily in cloud services technical infrastructure, R&D, and in talent; initiating intellectual property and competition claims (whether or not meritorious). Further, discrepancies in enforcement of existing laws may enable our lesser known competitors to aggressively interpret those laws without commensurate scrutiny, thereby affording them competitive advantages. Our competitors may also be able to innovate and provide cloud services faster than we can or may foresee the need for products and services before we do.34

~~We are~~Our ~~expanding~~ETH ~~our~~Treasury ~~investment~~Strategy ~~in research~~ and ~~developed~~any ~~companywide. This includes generative AI and continuing to integrate AI capabilities~~decision ~~into our products and services. Cloud service technology and services are highly competitive, rapidly evolving, and require significant investment, including development and operational costs,~~ to ~~meet~~hold ~~the~~digital ~~changing~~assets ~~needs~~may ~~and~~increase ~~expectations of~~ our ~~existing~~exposure ~~users and attract new users. Our ability~~ to ~~deploy~~market ~~certain~~volatility ~~cloud service technologies critical for our products~~ and ~~services~~potential ~~and~~uninsured ~~for our business strategy may depend on the availability and pricing of third-party equipment and technical infrastructure~~losses. Additionally, other companies may develop cloud service products and technologies that are similar or superior to our technologies or more cost-effective to deploy. Other companies may also have, or in the future may obtain, patents or other proprietary rights that would prevent, limit, or interfere with our ability to make, use, or sell our own cloud services.

~~Our financial~~Market ~~condition~~conditions and ~~operating~~operational ~~results~~needs may ~~also~~necessitate longer ~~suffer~~holding ifperiods, ~~our~~increasing ~~cloud~~exposure ~~services are not responsive~~ to ~~the~~price ~~evolving~~swings. ~~needs~~If ~~and~~we ~~desires~~hold ~~of our~~ETH ~~customers~~or ~~and~~other ~~partners.~~digital Asassets ~~new~~under ~~and~~our ~~existing~~treasury ~~cloud~~strategy, ~~service~~we ~~technologies~~would be ~~continue~~exposed to ~~develop~~additional volatility, ~~competitors~~regulatory, and ~~new~~market ~~entrants~~structure ~~may~~risks bespecific ~~able~~ to ~~offer~~those ~~experiences~~assets. ~~that~~We are, orcurrently ~~that~~exposed ~~are seen~~ to ~~be, substantially similar to or better than ours. These technologies could reduce usage~~potential ofuninsured ~~our~~losses ~~products and services, and force us~~ to ~~compete~~the inextent ~~different~~digital ~~ways~~asset ~~and~~balances ~~expend~~exceed ~~significant~~the ~~resources to develop and operate equal or better products and services. Competitors~~custodian’s ~~success~~applicable ininsurance ~~providing compelling products and services or in attracting and retaining customers and partners could harm our financial condition and operating results~~coverage.

Our ~~ongoing~~strategic ~~investment~~exposure into ~~new~~ETH ~~cloud~~may ~~services,~~subject ~~and~~us ~~technologies~~to isETH-specific ~~inherently risky~~market, ~~and could divert management attention and harm our business~~technology, ~~financial condition,~~ and ~~operating results~~regulatory risks.

~~Our ongoing~~The ~~investments~~Ethereum ~~that~~network wehas ~~are~~distinct ~~making~~market ~~in research and development augment our cloud service capabilities~~structure, ~~reflect our ongoing efforts~~ totechnology, ~~innovate~~regulatory and ~~provide~~liquidity ~~products~~considerations ~~and~~compared ~~services that are helpful~~ to ~~our customers~~Bitcoin. ~~However,~~Adverse ~~these~~developments ~~investments~~specific ~~may~~to ~~not~~ETH—including ~~be commercially viable~~protocol orchanges, ~~may~~forks, ~~not~~validator ~~result~~dynamics, inmarket ~~an adequate return of capital. These endeavors involve significant risks and uncertainties~~dislocations, ~~including~~bridge ~~diversion~~or ~~of resources~~DeFi ~~and management attention from current operations~~exploits, ~~different~~or ~~monetization~~regulatory ~~models,~~actions—could ~~and~~impair the ~~use of alternative investment, governance,~~value or ~~compensation~~liquidity ~~structures~~of ~~that~~our ~~may~~ETH ~~fail~~holdings toand ~~adequately~~related ~~align incentives across the company or otherwise accomplish their objectives~~strategies.

~~Regulatory restrictions that target AI~~Operational, ~~including,~~ ~~but~~Cybersecurity ~~not~~and ~~limited to, export restrictions may have a material adverse impact on our intended operations.~~Custody Risks

~~The increasing~~Any ~~focus~~ETH onstaking ~~the strategic importance of AI technologies has already resulted in regulatory restrictions that target products~~ and ~~services~~ ~~capable~~related ofactivities ~~enabling or facilitating AI, and~~ may ~~in the future result in additional restrictions impacting some or all of our~~ ~~service~~expose offerings. Such restrictions could include additional unilateral or multilateral export controls on certain products or technology, including, but not limited to, cloud service technologies. As geopolitical tensions have increased, semiconductors associated with AI, including GPUs and associated products, are increasingly the focus of export control restrictions proposed by stakeholders in the U.S. and its allies, and it is likely that additional unilateral or multilateral controls will be adopted. Such controls may be very broad in scope and application, prohibit us ~~from exporting our services~~ to ~~any or all customers in one or more markets or could impose other conditions that limit our ability to serve demand abroad and could negatively and materially impact our business~~slashing, ~~revenue~~lock-ups, ~~and financial results. Export controls targeting GPUs and semiconductors associated with AI~~liquidity, ~~which~~counterparty ~~are increasingly likely, would restrict our ability to export our technology, services even though competitors may not be subject to similar restrictions, creating a competitive disadvantage for us~~ and ~~negatively~~operational ~~impacting our business and financial results~~risks. Increasing use of economic sanctions may also impact demand for our services, negatively impacting our business and financial results. Additional unilateral or multilateral controls are also likely to include deemed export control limitations that negatively impact the ability of our research and development teams to execute our roadmap or other objectives in a timely manner. Additional export restrictions may not only impact our ability to serve overseas markets, but also provoke responses from foreign governments, including China, that negatively impact our ability to provide our services to customers in all markets worldwide, which could also substantially reduce our revenue.

26Staking requires operational reliability and adherence to protocol rules. Validators that act maliciously or suffer extended downtime can be “slashed,” resulting in a partial loss of staked principal. Staking may also involve unbonding or lock-up periods that reduce liquidity and flexibility, and, where conducted through third-party providers, introduces counterparty and operational risk. Liquid staking or restaking mechanisms may involve additional smart contract risk, rehypothecation or correlation risks, and market liquidity considerations for derivative tokens. Any failure in our validator operations or at a third-party staking provider could result in losses and reputational harm.

~~Management of~~Smart ~~the requirements of the supply chain is complicated and time consuming. Our results and competitive position may be harmed if we are restricted in offering our services~~contract, ~~if customers purchase services from competitors~~bridge, iforacle ~~customers~~and ~~develop their own cloud services, if~~protocol wevulnerabilities ~~are~~could ~~unable~~result toin ~~provide~~loss ~~contractual~~of ~~warranty~~digital assets or ~~other~~business ~~extended service obligations~~interruption.

~~Issues~~Decentralized protocols and token standards underpin many Ethereum-based activities. Exploits or failures—whether in ~~the~~widely ~~development~~used ~~and~~standards, ~~use~~core ofprotocol AIimplementations, bridges, ~~may~~or ~~result~~oracles—can incause ~~reputational~~material losses or ~~competitive~~network ~~harm~~instability. Even if we are not directly exposed to a compromised protocol, contagion effects can depress market prices, reduce liquidity, and disrupt counterparties or ~~liability~~service providers on which we rely.

~~We continue~~Market tostructure ~~incorporate AI into our cloud services~~ and ~~infrastructure,~~liquidity ~~and we are also providing computing power~~ for ~~our~~ETH ~~customers to~~could ~~use in solutions that they build. We are providing supporting/computing power to clients~~deteriorate, ~~including~~impacting our ~~strategic~~ability ~~partners who develop AI systems. We expect this integration of AI into our offerings and our business in general~~ to ~~grow.~~transact ~~AI presents risks and challenges that could affect its adoption, and therefore our business. AI algorithms~~ or training methodologies may be flawed. Datasets may be overbroad, insufficient, or contain biased information. Content generated by AI systems may be offensive, illegal, or otherwise harmful. Ineffective or inadequate AI development or deployment practices by others could result in incidents that impair the acceptance of AI solutions or cause harm to ~~individuals,~~accurately ~~customers,~~value ~~or society, or result in~~ our ~~services not working as intended~~holdings. Human review of certain outputs may be required. As a result of these and other challenges associated with innovative technologies, our implementation of cloud services could subject us to competitive harm, regulatory action, legal liability, including under new proposed legislation regulating AI in jurisdictions, new applications of existing data protection, privacy, intellectual property, and other laws, and brand or reputational harm. Some AI scenarios present ethical issues or may have broad impacts on society. If we provide supporting/cloud services that have unintended consequences, unintended usage or customization by our customers and partners, or are controversial because of their impact on human rights, privacy, employment, or other social, economic, or political issues, we may experience brand or reputational harm, adversely affecting our business and consolidated financial statements.

AWe ~~curtailment~~rely oron ~~disruption~~a inlimited ~~energy~~number ~~supply~~of venues for price indiscovery ~~Iceland~~and orliquidity. ~~Canada~~Market ~~due~~events—including toexchange ~~regulations~~or ~~and~~market-maker ~~policies~~disruptions, ~~implemented~~de-platforming of digital asset participants by ~~their~~banks ~~respective~~or ~~governments~~service providers, ~~which~~stress ~~prioritize~~in ~~energy~~stablecoin ~~supply~~markets, ~~may cause~~or aregulatory ~~substantial~~actions ~~disruption~~that oraffect ~~discontinuance~~trading ofvenues—could ~~WhiteFiber’s~~reduce ~~colocation~~liquidity and ~~business~~increase ~~operations~~volatility. ~~based~~A inlack ~~Iceland~~of orreliable ~~Canada,~~liquidity ~~and therefore~~may impair ~~WhiteFiber’s~~valuation, ~~financial~~hedging, ~~condition~~ or ~~results~~the ofability ~~operations~~to rebalance our treasury.

Through WhiteFiber Iceland ehf, the Company established and has been operating its colocation data center since November 2023, developing cloud service servers at a data center located in Northern Iceland. Through WhiteFiber’s subsidiary Enovum was acquired in October 2024 and has since been operating its colocation data center located in Canada.35

~~In order~~ETH toprice ~~maintain~~declines ~~its~~or ~~HPC~~prolonged ~~data centers operational, WhiteFiber will need to acquire sufficient supplies of electricity generated by hydroelectric~~underperformance ~~and~~versus ~~geothermal~~other ~~energy.~~digital Inassets ~~addition,~~could ~~WhiteFiber’s~~adversely ~~colocation~~affect ~~facilities~~our ~~need~~financial ~~also~~position ~~to maintain reliable~~ and ~~adequate~~capital ~~infrastructure and cooling systems to ensure optimal performance~~access.

~~Currently, Icelandic~~Our ~~and~~strategy ~~Canadian-based~~is ~~data~~focused ~~centers~~on ~~and~~ETH ~~similar~~as ~~facilities,~~our ~~including~~primary treasury ~~the~~asset. ~~ones~~Sustained ~~contracted~~price ~~with~~declines ~~the~~in ~~Company,~~ETH ~~may face significant risks of energy disruption, curtailment~~ or ~~discontinuance~~underperformance ~~due~~relative to ~~low~~other ~~water~~assets ~~level~~could inreduce ~~Icelandic~~the ~~reservoirs~~carrying ~~utilized~~value byof ~~hydropower~~our ~~plants,~~digital ~~which~~assets, ~~provide~~increase ~~hydro-generated energy in~~ the ~~country.~~frequency Inor ~~the~~magnitude ~~event~~ of aimpairment ~~water~~charges ~~shortage,~~under ~~and~~applicable ~~therefore~~accounting ~~a shortage of hydro-generated energy~~policies, ~~the~~ ~~prioritization framework for Icelandic energy favors residential~~ and ~~certain~~diminish ~~business~~our ~~uses~~ability ~~over~~to ~~data centers and similar facilities.~~raise Incapital ~~addition,~~or ~~volcanic~~maintain ~~eruptions~~compliance ~~might~~with ~~interrupt~~exchange ~~the~~listing ~~generation of electricity from geothermal energy, as occurred several times in 2023~~standards.

~~Accordingly, the~~Restaking ~~energy supply for WhiteFiber’s HPC data centers may be subject to disruption~~ and ~~could~~correlated ~~become~~risk ~~insufficient~~exposures ~~to support our operations. WhiteFiber’s financial condition or results of operations~~ may ~~be adversely affected if its HPC data centers are disrupted or discontinued~~ ~~due~~amplify tolosses aduring ~~curtailment~~stress ~~or interruption of the energy supply~~events.

27If we engage in restaking or similar activities that create stacked security obligations or re-use of staked collateral across protocols, we may face correlated losses across multiple positions in a single adverse event. Losses at one protocol could affect the security or liquidity of positions at another, and recovery pathways may be uncertain or prolonged.

~~Our~~Concentration ~~business~~and ~~may~~governance berisks ~~adversely affected by future changes~~ in the Ethereum ~~European~~ecosystem ~~Union’s regulations related to AI, which~~ could becreate ~~reflected~~systemic ~~in Icelandic and European Union countries’ domestic laws and regulations~~vulnerabilities.

~~While no~~Concentration ~~current~~of ~~Icelandic~~validators ~~legislation~~among ~~directly~~a ~~impacts~~small ~~colocation~~number of ~~operations~~providers, ~~Iceland,~~reliance ~~being~~on a ~~member~~limited set of ~~the~~client ~~European Economic Area~~implementations, isor ~~likely to~~governance becapture ~~influenced~~ by ~~forthcoming~~large ~~European~~stakeholders ~~Union~~could ~~acts~~increase ~~such~~systemic risk. asA ~~the~~critical ~~Artificial~~bug ~~Intelligence~~in ~~Act~~a ~~and~~dominant ~~the~~client, AIor ~~Liability~~adverse ~~Directive.~~decisions ~~These~~by ~~acts may~~influential ~~shape~~governance ~~the~~participants, ~~future~~could ~~regulatory~~affect ~~landscapes~~network instability, validator ~~Iceland~~incentives, ~~and~~or ~~lead~~ETH ~~the Icelandic government to adopt such regulations domestically~~economics.

~~The potential~~Our ~~adoption~~treasury ofstrategy ~~said~~and AIany ~~regulatory~~decision ~~framework~~to hold ~~could~~digital ~~introduce~~assets ~~new~~may ~~compliance~~increase ~~requirements~~our ~~for~~exposure ~~HPC~~to ~~data~~market ~~centers,~~volatility ~~as well as other legal~~ and ~~regulatory~~potential ~~obligations,~~uninsured ~~impacting operational practices and liability considerations for the Company’s HPC data centers~~losses. ~~This could ultimately adversely affect our Company’s business and financial results.~~

~~Risks~~When ~~Related~~we hold ETH or other digital assets under our treasury strategy, we are exposed to ~~Our~~additional ~~Data~~volatility, ~~Center~~regulatory, ~~Operations~~and market structure risks specific to those assets. We are currently exposed to potential uninsured losses to the extent digital asset balances exceed the custodian’s applicable insurance coverage.

WeOur ~~are~~failure atto ansecurely ~~early~~store ~~stage~~and ofmanage ~~development~~our offiat ~~our~~currencies ~~business,~~and ~~currently~~digital ~~have~~assets ~~limited~~could ~~sources~~adversely ofaffect ~~revenue~~our business, ~~and~~operating ~~may~~results ~~not~~and ~~become~~financial ~~profitable in the future~~condition.

We ~~are~~ ~~subject~~hold tocash ~~the risks~~ and ~~uncertainties~~store ofdigital aassets ~~new~~for ~~business, with limited sources of revenue. We began generating revenue from~~ our ~~colocation~~ ~~data~~treasury ~~center~~and ~~operations~~hold ~~when~~fiat ~~our~~and ~~first~~digital ~~colocation~~assets ~~facility~~for ~~came~~corporate ~~online~~investment inand ~~Iceland~~operating ~~in January 2024~~purposes. WeIn ~~completed an acquisition of Enovum in October 2024. Accordingly~~addition, we ~~have~~store ~~only~~the amajority ~~limited history upon which an evaluation~~ of ~~our~~digital assets ~~prospects~~at ~~and~~third-party ~~future~~custodians ~~performance~~for ~~can~~asset bemanagement ~~made~~products.

~~As we~~Securely ~~grow~~storing cash and ~~develop~~digital asassets ais ~~business, we are attempting~~ integral to ~~reduce~~ the ~~impact~~trust ofwe ~~variability~~build onwith our ~~revenue~~stockholders and ~~colocation~~our ~~costs by entering into long-term contracts at each site~~customers. InWe believe our ~~colocation~~policies, ~~services~~procedures, ~~Enovum’s~~operational ~~contracts~~controls ~~with~~and ~~its 14 customers range from month to~~controls ~~month~~over tofinancial 60reporting ~~months.~~protect Inus ~~our~~from ~~cloud~~material ~~service~~risks ~~business,~~surrounding wethe ~~provide~~storing ~~cloud~~of ~~infrastructure~~these ~~for~~assets ~~highly~~and ~~scalable~~conflicts ~~Graphic~~of ~~Processing~~interest. ~~Unit~~Our ~~(“GPU”)~~controls ~~accelerated~~over ~~applications,~~financial orreporting ~~GPU clusters~~include, toamong ~~our~~others, ~~customers~~controls ~~under~~over ~~contracts~~the ~~spanning~~segregation ~~from~~of ~~month~~corporate todigital ~~month~~assets, tocontrols 36over ~~months.~~the Asinvestment and ~~these~~staking ~~are~~processes ~~new services~~of inour ~~the industry~~treasury, ~~the value~~ and ~~longevity~~controls ofover ~~the~~digital ~~GPUs~~asset ~~remain uncertain in this rapidly evolving market~~withdrawals. ~~Given~~Our ~~that~~financial westatements ~~have~~and ~~only a~~disclosures, ~~limited~~as ~~history of operating~~ a ~~colocation data center~~whole, will ~~the long-term profitability of these contracts cannot~~ be ~~presently~~available ~~determined. If~~through weperiodic ~~are~~filings ~~unable~~on toa ~~successfully~~quarterly ~~implement~~basis, ~~our~~and ~~development~~compliant ~~plan~~with orannual toaudit ~~increase~~requirements ~~our generation~~ of ~~revenue,~~Article we3 ~~will~~of ~~not remain profitable~~Regulation ~~in the future~~S-X.

~~We intend~~Any toinability ~~continue~~by ~~scaling~~us ~~our company~~ to ~~increase~~maintain our ~~customer base and implement initiatives~~procedures, ~~including new business lines and global~~ ~~expansion.~~perceived ~~These~~or ~~efforts~~otherwise, ~~may~~could ~~prove~~harm ~~more~~our ~~expensive~~business, ~~than~~operating weresults ~~currently anticipate~~ and ~~may~~financial ~~not~~condition. ~~result~~Any inmaterial ~~increased~~failure ~~revenue~~by us or ~~profitability~~our partners into maintain the ~~short~~necessary ~~term~~controls, orpolicies, atprocedures ~~all.~~or Weto ~~will~~manage ~~also~~the ~~incur~~digital ~~increased~~assets ~~compliance~~we ~~costs~~hold ~~associated~~for ~~with growth, expanding~~ our ~~customer~~own ~~base,~~investment and ~~being~~operating apurposes ~~public~~could ~~company.~~also ~~Our~~adversely ~~efforts~~affect ~~to grow~~ our business ~~may be costlier than we expect~~, oroperating ~~the~~results ~~revenue~~and ~~growth~~financial ~~rate may be slower than we expect~~condition. As ~~we pivot towards new markets such as cloud services and colocation data center operations~~Further, weany ~~realize~~material ~~that~~failure ~~our~~by ~~limited~~us ~~experience in~~or ~~these areas may impact~~ our ~~ability~~partners to ~~accurately~~maintain ~~assess~~the ~~our~~necessary ~~prospects.~~controls ~~The~~or ~~likelihood~~to ofmanage ~~our~~digital ~~success~~assets ~~must~~and befunds ~~considered~~appropriately and in ~~light~~compliance ofwith ~~the~~applicable ~~expenses,~~regulatory ~~difficulties,~~requirements ~~complications,~~could ~~problems~~result ~~and~~in ~~delays~~reputational ~~frequently~~harm, ~~encountered~~litigation, inregulatory ~~connection~~enforcement ~~with~~actions, ~~the~~significant ~~expansion~~financial ~~of a business~~losses, ~~operating~~ aand ~~business~~result in asignificant ~~competitive~~penalties ~~industry,~~ and ~~the~~fines ~~continued~~and ~~development~~additional ofrestrictions, ~~expanding~~which ~~our~~could ~~customer~~adversely ~~base.~~affect ~~There~~our ~~can~~business, beoperating ~~no assurance that we~~results ~~will~~and ~~operate~~financial ~~profitably in the future~~condition.

2836

WeReliance ~~may~~on bemining ~~unable~~pools toand ~~access~~other ~~sufficient additional~~third-party ~~capital~~service ~~needed~~providers may expose us to ~~grow~~counterparty ~~our~~failures, ~~business~~operational issues, and losses.

~~We expect~~Our torewards ~~need~~are totypically ~~raise~~earned ~~substantial~~via ~~additional~~pooled ~~capital to expand our data center operations, pursue our growth strategies and to respond to competitive pressures or unanticipated working capital requirements~~mining. ~~However, market conditions may limit our ability to raise funds~~ inWe arely ~~timely manner, in sufficient quantities, or~~ on ~~terms~~pool ~~acceptable~~operators to ~~us,~~honestly ~~if at all, which could impair our growth~~ and ~~adversely~~accurately ~~affect our~~account ~~existing~~for ~~operations. If we raise additional equity financing,~~ our ~~shareholders~~pro ~~may~~rata ~~experience significant dilution of their ownership interests, and the per~~ share ~~value~~ of ~~our ordinary shares could decline. Furthermore~~rewards, ifmaintain weoperational ~~engage in debt financing~~security, ~~the~~and ~~holders of debt~~remit ~~would have priority over the holders of our ordinary shares on order of payment preference~~proceeds. WePools may belack ~~required~~insurance tofor ~~accept~~theft ~~terms~~or ~~that restrict our ability to incur additional indebtedness~~loss, ~~pay~~and ~~dividends~~rewards ~~to our shareholders, or take other actions. We~~ may ~~also~~ be ~~required~~held tofor ~~maintain specified~~varying ~~liquidity or other ratios that could otherwise not be in the interests of our stockholders~~durations. IfAny wefailure, ~~are~~insolvency, ~~unable~~cyber ~~to raise the additional~~event, ~~capital needed to execute our future strategic growth initiatives~~mispricing, weor ~~may~~suspension beby ~~less~~a ~~competitive~~pool inoperator ~~our industry and the results of these provisions~~ could ~~make~~delay ~~investing~~or inreduce our ~~securities~~receipts ~~less~~or ~~attractive~~result toin ~~investors~~losses. ~~and~~A ~~could~~change ~~limit~~in ~~our~~pool ~~ability~~fee ~~to obtain adequate financing~~structures ~~on a timely basis~~ or ~~on acceptable~~ terms ~~in the future, which~~ could ~~have~~adversely ~~significant~~affect ~~harmful effects on our financial condition and business and could include substantial limitations on our ability to continue to conduct operations~~yields.

WeThe ~~are~~theft, ~~subject~~loss toor adestruction ~~highly~~of ~~evolving regulatory~~private ~~landscape~~keys ~~and~~required to access any ~~adverse~~digital ~~changes~~assets toheld in custody for our own account or for our ~~colocation~~operational ~~customers’~~partners ~~failure~~may be irreversible. If we are unable to ~~comply~~access ~~with~~our ~~any~~private ~~laws~~keys or ~~regulations~~if ~~could~~we ~~adversely affect~~experience a hack or other data loss relating to our ~~business~~ability to access any digital assets, ~~prospects~~it orcould ~~operations~~cause regulatory scrutiny, reputational harm, and other losses.

~~Our~~Digital assets are generally controllable only ~~customers’~~by ~~businesses~~the possessor of the unique private key relating to the digital wallet in which the digital assets are ~~subject~~held. While blockchain protocols typically require public addresses to ~~extensive~~be ~~laws,~~published ~~rules,~~when ~~regulations~~used in a transaction, ~~policies~~private ~~and~~keys ~~legal~~must be secured and ~~regulatory~~kept ~~guidance,~~private ~~including~~in ~~those~~order ~~governing~~to ~~securities,~~prevent ~~commodities,~~a ~~exchange~~third ~~and~~party ~~transfer,~~from ~~data~~accessing ~~governance,~~the ~~data~~digital ~~protection,~~assets ~~cybersecurity~~held ~~and~~in ~~tax~~such a wallet. ~~Many~~To the extent that any of ~~these~~the ~~legal~~private keys relating to our wallets containing digital assets held for our own account or for our customers is lost, destroyed, or otherwise compromised or unavailable, and ~~regulatory~~no ~~regimes~~backup ~~were~~of ~~adopted~~the ~~prior~~private key is accessible, we will be unable to access the ~~advent~~digital ofassets held in the ~~Internet~~related wallet. Further, ~~mobile~~we ~~technologies,~~cannot AIprovide assurance that our wallets will not be hacked or compromised. Digital assets and ~~related~~blockchain technologies, ~~cloud services~~have been, and ~~data~~may ~~center~~in ~~operations~~the future be, subject to security breaches, hacking, or other malicious activities. AsAny aloss ~~result~~of private keys relating to, ~~they~~or dohack ~~not~~or ~~contemplate~~other compromise of, digital wallets used to store our customers’ digital assets could adversely affect our customers’ ability to access or ~~address~~sell ~~unique~~their ~~issues~~digital ~~associated~~assets, ~~with~~require AIus to reimburse our customers for their losses, ~~are~~and subject us to significant ~~uncertainty,~~financial ~~and~~losses ~~vary~~in ~~widely~~addition ~~across~~to ~~U.S.,~~losing ~~Iceland~~customer trust in us and ~~Canada~~our products. ~~These~~As ~~legal~~such, ~~and~~any ~~regulatory~~loss ~~regimes,~~of ~~including~~private ~~the~~keys ~~laws,~~due ~~rules~~to ~~and~~a ~~regulations thereunder~~hack, ~~evolve~~employee or ~~frequently~~service ~~and~~provider ~~may~~misconduct beor ~~modified~~error, ~~interpreted~~or ~~and~~other ~~applied~~compromise inby anthird ~~inconsistent~~parties ~~manner~~could ~~from~~hurt ~~one~~our ~~jurisdiction~~brand toand ~~another~~reputation, result in significant losses, and ~~may~~adversely ~~conflict~~affect ~~with~~our ~~one~~business, ~~another~~operating results, and financial condition.

~~Moreover, the~~We ~~complexity~~utilize ~~and~~custodians ~~evolving~~to ~~nature~~mitigate ofthe ~~our~~risks ~~business~~associated with ~~and~~ the ~~significant~~loss ~~uncertainty~~or ~~surrounding~~theft ~~the regulation~~ of ~~AI,~~keys. ~~requires~~Cold uswallet toprivate ~~exercise our~~key ~~judgment~~materials asare tostored ~~whether certain laws, rules~~ and ~~regulations~~secured ~~apply~~at tofacilities uswithin orthe ~~our~~United ~~customers,~~States and ~~it is possible that governmental bodies~~internationally. ~~and~~We ~~regulators~~store ~~may disagree with our or our customers’ conclusions. To~~ the ~~extent~~substantial wemajority orof our ~~customers~~own ~~have~~digital ~~not~~asset ~~complied~~holdings ~~with~~utilizing ~~such laws,~~market-standard ~~rules~~storage ~~and regulations, we could be subject to significant fines and other regulatory consequences, which could adversely affect our business, prospects or financial condition~~solution.

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

~~Our~~WhiteFiber’ s business depends upon the demand for data centers.

~~We are~~WhiteFiber is in the business of owning, acquiring, developing and operating data centers. A reduction in the demand for data center space, power or connectivity would have a greater adverse effect on ~~our~~its business and financial condition than if ~~our~~its assets were devoted to a less specialized use. ~~Our~~WhiteFiber’s substantial development activities make usit particularly susceptible to general economic slowdowns, as well as adverse developments in the data center, Internet, AI and data communications and broader technology industries. ~~Our colocation customers who are crypto miners are subject to the risks relating to their crypto mining business.~~ It is not possible for us WhiteFiber to predict the future level of demand for ~~our~~its services that will be generated by these customers or the future demand for the products and services of these customers. Any such slowdown or adverse development could lead to reduced corporate IT spending or reduced demand for data center space. Changes in industry practice or in technology could reduce demand for the physical data center space weWhiteFiber ~~provide~~provides. In addition, ~~our~~ WhiteFiber’s customers may choose to develop new data centers or expand their own existing data centers or consolidate into data centers that weWhiteFiber does do not own or operate, which could reduce demand for ~~our~~WhiteFiber’s newly developed data centers or result in the loss of one or more key customers. If any of ~~our~~WhiteFiber’s key customers were to do so, it could result in a loss of business to us orWhiteFiber or put pressure on ~~our~~its pricing. Mergers or consolidations of technology companies could reduce further the number of ~~our~~ its customers and potential customers and make usWhiteFiber more dependent on a more limited number of customers. If ~~our~~WhiteFiber’s customers merge with or ~~are~~ are acquired by other entities that are not ~~our~~its customers, they may discontinue or reduce the use of ~~our~~WhiteFiber’s data centers in the future. ~~Our~~ WhiteFiber’s financial condition, results of operations, cash flow, cash available for distribution and ability to satisfy its ~~our~~ debt service obligations could be materially adversely affected as a result of any or all of these factors.

2937

~~Our~~WhiteFiber ~~business~~depends ~~has~~upon third-party suppliers for power, and is ~~expected~~vulnerable to ~~continue~~ service failures and price increases by such suppliers and to ~~have~~volatility ~~significant~~in ~~customer~~the ~~concentration~~supply and price of power in the open market.

WeWhiteFiber relies on third parties to provide ~~generate~~power ato ~~large~~its ~~portion~~data ofcenters, ~~our~~and ~~revenue~~it ~~from~~cannot aensure ~~small~~that ~~number~~these ofthird ~~customers.~~parties ~~There~~will ~~are~~deliver ~~inherent~~such ~~risks~~power ~~whenever~~in adequate quantities or on a ~~large~~consistent basis. ~~percentage~~WhiteFiber is also reliant on third parties to deliver additional power capacity to support the growth of ~~total~~our business. If the ~~revenue~~amount of power available to WhiteFiber is ~~concentrated~~inadequate ~~with~~to asupport ~~limited~~its ~~number~~customer ofrequirements, it may be unable to satisfy its obligations to its customers or grow its business. IfIn weaddition, ~~were~~WhiteFiber’s data centers may be susceptible to ~~lose~~power ~~one~~shortages and planned or ~~more~~unplanned ofpower ~~our~~outages ~~customers~~caused by these shortages. Power outages may last beyond WhiteFiber’s backup and alternative power arrangements, which ~~our~~would ~~operating~~harm ~~results~~its customers and its business. Any loss of services or equipment damage could adversely affect both WhiteFiber’s beability ~~materially~~to ~~adversely~~generate ~~affected~~revenues and its operating results, harm its reputation and potentially lead to customer disputes or litigation.

~~HPC~~WhiteFiber’s purchase orders with ~~data~~hardware ~~centers~~manufacturers include extended delivery schedules.

~~Enovum~~WhiteFiber relies on third parties to timely obtain an adequate delivery of hardware. WhiteFiber’s ~~data~~ ~~center~~purchase inorders ~~Montreal~~with hardware manufacturers include extended delivery schedules spanning several months before the hardware is ~~currently~~delivered ~~serving~~to 14our ~~customers~~facilities. NoThese ~~one~~fluctuations ~~customer~~in ~~has~~delivery ~~accounted~~timelines ~~for~~necessitate incareful ~~excess~~planning ofand ~~50%~~advanced purchasing ofstrategies ~~revenue~~to inensure ~~2024~~WhiteFiber can acquire hardware well before their anticipated deployment. ~~During~~Failure to adequately plan for ~~fiscal~~such ~~year~~fluctuations ~~2023,~~could 12have ~~customers~~a ~~accounted~~material ~~for~~adverse ~~100%~~effect ofon ~~Enovum~~WhiteFiber’s ~~revenue~~business, prospects, results of operations and financial condition.

~~Cloud~~WhiteFiber depends on third parties to ~~Service~~provide ~~Business~~network connectivity to the customers in its data centers and any delays or disruptions in connectivity may materially adversely affect its operating results and cash flow.

~~During~~WhiteFiber is not a telecommunications carrier. ~~2024,~~WhiteFiber ~~our~~believes ~~HPC~~that ~~data~~the ~~center~~availability inof ~~Iceland~~carrier ~~had~~capacity ~~contracts~~will ~~with~~directly ~~three~~affect ~~customers~~its ability to achieve its projected results. ~~Our~~Any carrier ~~initial~~may ~~customer~~elect not to offer its services within WhiteFiber’s data centers. Any carrier that has ~~accounted~~decided to provide network connectivity to WhiteFiber’s data centers may not continue to do so for ~~almost~~any ~~100%~~period of ~~our~~time. ~~revenues~~Further, some carriers are experiencing business ~~through~~difficulties ~~December~~or 31have announced consolidations. As a result, ~~2024~~some carriers may be forced to downsize or terminate connectivity within WhiteFiber’s data centers, which could have an adverse effect on the business of WhiteFiber’s customers and, in turn, its own operating results.

~~We expect~~WhiteFiber’s ~~that~~data ~~the~~centers ~~limited~~may ~~number~~require construction and operation of ~~customers~~a ~~will~~sophisticated ~~continue~~redundant tofiber ~~account~~network. ~~for~~The aconstruction ~~high~~required ~~percentage~~to ofconnect ~~our~~multiple ~~revenue~~carrier ~~for~~facilities ~~the~~to ~~foreseeable~~data ~~future.~~centers Inis ~~addition,~~complex ~~demand~~and ~~for~~involves ~~our~~factors ~~services~~outside ~~generated~~of byWhiteFiber’s ~~these~~control, ~~customers~~including ~~may~~regulatory ~~fluctuate~~requirements ~~significantly~~and ~~from~~the ~~quarter~~availability toof ~~quarter~~construction resources. ~~The~~WhiteFiber ~~concentration of~~has ~~our~~obtained ~~customer~~the ~~base~~right ~~increases risks related~~ to ~~the~~use ~~financial~~network ~~condition~~resources ofowned ~~our~~by ~~customers~~other companies, ~~and~~in ~~the~~order ~~deterioration~~to inattract ~~financial condition~~telecommunications ofcarriers aand ~~single~~customers ~~customer~~to orits portfolio. If the ~~failure~~establishment of ahighly ~~single~~diverse ~~customer~~network connectivity to ~~perform~~WhiteFiber’s ~~its~~data ~~obligations~~centers does ~~could~~not ~~have~~occur, ais ~~material~~materially ~~adverse~~delayed ~~effect~~or onis ~~our~~discontinued, ~~results of~~or ~~operations~~is ~~and~~subject ~~cash~~to ~~flow.~~failure, InWhiteFiber’s ~~the~~operating ~~event~~results ~~that~~and ~~any~~cash offlow may ~~our~~be ~~customers~~materially ~~experience~~adversely aaffected. ~~decline~~Additionally, ~~in their equipment usage for~~ any ~~reason,~~hardware or ~~decide to~~fiber ~~discontinue~~failures ~~the~~on ~~use~~this ofnetwork ~~our~~may ~~facilities,~~result wein ~~may~~significant beloss ~~compelled~~of connectivity to ~~lower~~WhiteFiber’s ~~our~~data ~~prices~~centers. orThis ~~risk~~could ~~losing~~negatively aaffect ~~significant~~WhiteFiber’s ~~customer.~~ability ~~Such~~to ~~developments could~~attract ~~adversely~~new ~~affect~~customers ~~our~~or retain ~~profit~~existing ~~margins~~customers, ~~and~~which ~~financial~~could ~~position,~~have ~~leading~~an toadverse aeffect ~~negative~~on ~~impact~~its onbusiness, ~~our~~financial ~~revenue~~condition and ~~operational~~ results of operations.

~~Failure~~Any tofailure ~~attract,~~of ~~grow~~WhiteFiber’s ~~and~~physical or ~~retain~~information atechnology ~~diverse and~~or ~~balanced~~operational ~~customer~~technology ~~base,~~infrastructure or services could ~~adversely~~lead ~~affect~~to ~~our~~significant ~~business~~costs and ~~operating results~~disruptions.

~~Our ability~~WhiteFiber’s tobusiness ~~attract,~~depends ~~grow~~on ~~and~~providing customers ~~retain~~with ahighly ~~diverse~~reliable ~~and~~services, ~~balanced~~including ~~customer~~with ~~base,~~respect ~~consisting~~to ofpower ~~enterprises~~supply, ~~cloud~~physical ~~service providers~~security, ~~network service providers~~cybersecurity, and ~~digital~~maintenance ~~economy~~of environmental ~~customers,~~conditions. WhiteFiber may ~~affect~~fail ~~our ability~~ to ~~grow~~provide ~~our~~such ~~business.~~services ~~Currently~~because ~~our~~its ~~data center~~ operations are ~~limited~~ tovulnerable ~~Iceland and Montreal, Canada which enables us~~ to ~~better generate significant interconnection revenues~~, ~~which~~among inother ~~turn increases~~things, ~~our~~mechanical ~~overall~~or ~~revenues.~~telecommunications ~~Our~~failure, ~~ability~~power tooutage, ~~attract~~human ~~customers~~error, tophysical ~~our~~or ~~data~~electronic ~~centers~~security ~~will~~breaches, ~~depend on a variety of factors~~cyberattacks, ~~including our product~~ransomware ~~offerings~~attacks, ~~the~~war, ~~presence of carriers~~terrorism, ~~the overall mix of customers~~fire, ~~the presence of key customers attracting business through ecosystems~~earthquake, ~~the~~ ~~data center’s operating reliability and security and our ability to effectively market our product offerings. Our inability to develop~~pandemics, ~~provide or effectively execute any of these factors may adversely affect the development~~hurricane, ~~growth~~flood and ~~retention~~other ofnatural ~~a diverse and balanced customer base and adversely affect our business~~disasters, ~~financial~~sabotage ~~condition~~ and ~~results of operations~~vandalism.

~~Our~~Substantially ~~new~~all ~~services~~of ~~and~~WhiteFiber’s ~~changes~~customer agreements include terms requiring it to ~~existing services~~meet ~~could~~certain ~~fail~~service level commitments. Any failure to ~~attract~~meet these or ~~retain~~other ~~users~~commitments or ~~generate~~any equipment ~~revenue~~damage in WhiteFiber’s data centers due to any reason could subject us to contractual liability, including service level credits against customer rent payments, legal liability and ~~profits~~monetary damages, regulatory sanctions, or, ~~otherwise~~in ~~adversely~~certain ~~affect~~cases of repeated failures, the right by the customer to terminate the agreement. Service interruptions, equipment failures or security breaches could also materially impact our ~~business~~brand and reputation globally and lead to customer contract terminations or non-renewals and an inability to attract customers in the future.

Our ability to retain, increase, and engage our customer base and to increase our revenue depends heavily on our ability to continue to evolve our existing services and to create successful new services, both independently and in conjunction with developers or other third parties. We may introduce significant changes to our existing services or acquire or introduce new and unproven services, including using technologies with which we have little or no prior development or operating experience. These efforts, including the introduction of new services or changes to existing services, may result in new or enhanced governmental or regulatory scrutiny, litigation, ethical concerns, or other complications that could adversely affect our business, reputation, or financial results. If our new services fail to engage users or developers, or if our business plans are unsuccessful, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, and our business may be adversely affected.38

30Any disruption of service experienced by certain of WhiteFiber’s third-party service providers, or its ineffective management of relationships with third-party service providers could harm its business, financial condition, operating results, cash flows and prospects.

WeWhiteFiber ~~depend~~relies ~~upon~~on several third-party ~~suppliers~~service providers for services that are essential to its business model, the most important of which are its suppliers of power, electrical equipment (including GPU servers), building materials, and weconstruction ~~are~~services. ~~vulnerable~~Additionally, toas WhiteFiber builds its cloud service ~~failures~~business, it also expects to rely on third parties to lease or sell us equipment which it then leases to certain of its cloud service and ~~price~~colocation data ~~increases~~center bycustomers. ~~such~~In ~~suppliers~~addition, it may depend upon outside advisors who may not be available on reasonable terms as needed, or at all. To supplement the business experience of its officers and directors, WhiteFiber may be required to ~~volatility~~employ intechnical experts, appraisers, attorneys, or other consultants or advisors. If these third parties or other outside advisors experience difficulty providing the services WhiteFiber requires, or if they experience disruptions or financial distress or cease operations temporarily or permanently, or if the products they supply ~~and~~are ~~price~~defective ofor ~~power~~cease to operate for any reason, it could make it difficult for WhiteFiber to execute its operations. If WhiteFiber is unsuccessful in ~~the~~identifying ~~open~~or ~~market~~finding highly qualified third-party service providers or employees, if WhiteFiber fails to negotiate cost-effective relationships with them or if WhiteFiber is ineffective in managing and maintaining these relationships, it could materially and adversely affect WhiteFiber’s business and its financial condition, operating results, cash flows and prospects.

~~We rely~~Any ondelays ~~third~~or ~~parties~~unexpected tocosts ~~provide power to our data centers, and we cannot ensure that these third parties will deliver such power~~ in ~~adequate quantities or on a consistent basis. We are also reliant on third parties to deliver additional power capacity to support~~ the ~~growth of~~development ~~our business. If the amount~~ of ~~power~~any ~~available~~new toproperties usacquired isfor ~~inadequate~~development ~~to support our customer requirements, we~~ may bedelay ~~unable to satisfy our obligations to our customers or grow our business. In addition, our data centers may be susceptible to power shortages~~ and ~~planned~~harm ~~or unplanned~~WhiteFiber’s ~~power~~growth ~~outages caused by these shortages. Power outages may last beyond our backup and alternative power arrangements~~prospects, ~~which would~~future ~~harm our customers and our business. Any loss of services or equipment damage could adversely affect both our ability to generate revenues and our~~ operating results, ~~harm our reputation~~ and ~~potentially lead to customer disputes or litigation~~financial condition.

~~In addition,~~WhiteFiber weintends ~~may be subject~~ to ~~risks~~build ~~and~~out ~~unanticipated~~additional ~~costs associated with obtaining power from various utility companies. Utilities~~WhiteFiber ~~that serve our~~ data centers ~~may~~in bethe ~~dependent~~future based on, ~~and~~signed ~~sensitive~~letters ~~to price increases for, a particular type~~ of ~~fuel,~~intent ~~including~~at ~~hydroelectric. In~~significant ~~addition, the total~~ cost. ofWhiteFiber’s ~~delivered~~successful ~~electricity~~development ~~could increase as a result~~ of: ~~regulations~~this ~~intended to regulate carbon emissions~~ and future ~~other~~projects ~~pollutants,~~is ~~ratepayer~~subject ~~surcharges related~~ to ~~recovering~~many ~~the~~risks, ~~cost of extreme weather events and natural disasters (~~including volcanoes in Iceland), geopolitical conflicts, military conflicts, grid modernization charges, as well as other charges borne by ratepayers. Increases in the cost of power at any of our data centers could put those ~~locations~~associated ~~at a competitive disadvantage relative to data centers that are supplied power at a lower price.~~with:

We depend on third parties to provide network connectivity to the customers in our data centers and any delays or disruptions in connectivity may materially adversely affect our operating results and cash flow.

We are not a telecommunications carrier. We believe that the availability of carrier capacity will directly affect our ability to achieve our projected results. Any carrier may elect not to offer its services within our data centers. Any carrier that has decided to provide network connectivity to our data centers may not continue to do so for any period of time. Further, some carriers are experiencing business difficulties or have announced consolidations. As a result, some carriers may be forced to downsize or terminate connectivity within our data centers, which could have an adverse effect on the business of our customers and, in turn, our own operating results.

Our data centers may require construction and operation of a sophisticated redundant fiber network. The construction required to connect multiple carrier facilities to data centers is complex and involves factors outside of our control, including regulatory requirements and the availability of construction resources. We have obtained the right to use network resources owned by other companies, in order to attract telecommunications carriers and customers to our portfolio. If the establishment of highly diverse network connectivity to our data centers does not occur, is materially delayed or is discontinued, or is subject to failure, our operating results and cash flow may be materially adversely affected. Additionally, any hardware or fiber failures on this network may result in significant loss of connectivity to our data centers. This could negatively affect our ability to attract new customers or retain existing customers, which could have an adverse effect on our business, financial condition and results of operations.

Any failure of our physical or information technology or operational technology infrastructure or services could lead to significant costs and disruptions.

Our business depends on providing customers with highly reliable services, including with respect to power supply, physical security, cybersecurity, and maintenance of environmental conditions. We may fail to provide such services because our operations are vulnerable to, among other things, mechanical or telecommunications failure, power outage, human error, physical or electronic security breaches, cyberattacks, war, terrorism, fire, earthquake, pandemics, hurricane, flood and other natural disasters, sabotage and vandalism.

Substantially all of our customer agreements include terms requiring us to meet certain service level commitments. Any failure to meet these or other commitments or any equipment damage in our data centers due to any reason could subject us to contractual liability, including service level credits against customer rent payments, legal liability and monetary damages, regulatory sanctions, or, in certain cases of repeated failures, the right by the customer to terminate the agreement. Service interruptions, equipment failures or security breaches could also materially impact our brand and reputation globally and lead to customer contract terminations or non-renewals and an inability to attract customers in the future.

Any disruption of service experienced by certain of our third-party service providers, or our ineffective management of relationships with third-party service providers could harm our business, financial condition, operating results, cash flows and prospects.

We rely on several third-party service providers for services that are essential to our business model, the most important of which are our suppliers of power, electrical equipment (including GPU servers), building materials, and construction services. Additionally, as we build our cloud service business, we also expect to rely on third parties to lease or sell us equipment which we then lease to certain of our cloud service and colocation data center customers. In addition, we may depend upon outside advisors who may not be available on reasonable terms as needed, or at all. To supplement the business experience of our officers and directors, we may be required to employ technical experts, appraisers, attorneys, or other consultants or advisors. If these third parties or other outside advisors experience difficulty providing the services we require, or if they experience disruptions or financial distress or cease operations temporarily or permanently, or if the products they supply are defective or cease to operate for any reason, it could make it difficult for us to execute our operations. If we are unsuccessful in identifying or finding highly qualified third-party service providers or employees, if we fail to negotiate cost-effective relationships with them or if we are ineffective in managing and maintaining these relationships, it could materially and adversely affect our business and our financial condition, operating results, cash flows and prospects.

Any delays or unexpected costs in the development of any new properties acquired for development may delay and harm our growth prospects, future operating results and financial condition.

We intend to build out additional HPC data centers in the future based on signed letters of intent at significant cost. Our successful development of this and future projects is subject to many risks, including those associated with:

●

delays in construction, or changes to the plans or specifications;

●

budget overruns, increased prices for raw materials or building supplies, or lack of availability and/or increased costs for specialized data center components, including long lead time items such as generators;

●

construction site accidents and other casualties;

●

financing availability, including our ability to obtain construction financing and permanent financing, or increases in interest rates or credit spreads;

●

labor availability, costs, disputes and work stoppages with contractors, subcontractors or others that are constructing the project;

●

failure of contractors to perform on a timely basis or at all, or other misconduct on the part of contractors;

●

access to sufficient power and related costs of providing such power to our customers;

●

environmental issues;

●

supply chain constraints;

●

fire, flooding, earthquakes and other natural disasters;

●

pandemics;

●

geological, construction, excavation and equipment problems; and

● delays or denials of entitlements or permits, including zoning and related permits, or other delays resulting from requirements of public agencies and utility companies, including as a result of local community resistance or protests in response to the development of new data centers.

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

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

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

Similarly, we have entered into multi-year contract commitments with our service providers in Iceland and Canada. If we overestimate our capacity requirements and therefore secure excess capacity and have excess capital expenditures, our operating margins could be materially reduced.

Certain natural disasters or other external events, including climate change or mechanical failures, could harm our business, financial condition, results of operations, cash flows, and prospects.

We may also experience disruptions due to mechanical failure, human error, physical or electronic security breaches, war, terrorism, fire, earthquake, pandemics, hurricane, flood and other natural disasters, sabotage and vandalism. Our systems may be susceptible to damage, interference, or interruption from modifications or upgrades, power loss, telecommunications failures, computer viruses, ransomware attacks, computer denial of service attacks, phishing schemes, or other attempts to harm or access our systems. Such disruptions could materially and adversely affect our business and our financial condition, operating results, cash flows, and prospects.

In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business. With the energy demand of our business, we may become a target for future environmental and energy regulation. New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Further, any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

Given the political significance and uncertainty around the impact of climate change and how it should be addressed, and energy disclosure and use regulations, we cannot predict how legislation and regulation will affect our financial condition and results of operations in the future in the U.S. as well as in Iceland and Canada. Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change or energy use by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business and financial condition.

If we fail to effectively manage our growth, our business, financial condition and results of operations could be harmed.

We are a development stage company with a small management team and are subject to the strains of ongoing development and growth, which will place significant demands on our management and our operational and financial infrastructure. Although we may not grow as we expect, if we fail to manage our growth effectively or to develop and expand our managerial, operational and financial resources and systems, our business and financial results would be materially harmed.

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

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

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

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

However, WhiteFiber is committed to continuously embrace the sustainability of our HPC infrastructure with the majority of the GPUs running on carbon-free renewable energy. The SEC has proposed rule changes that would require companies to include certain climate-related disclosures such as climate-related risks that are reasonably likely to have a material impact on business, results of operations, or financial conditions. Should such proposed rules be adopted, increased public scrutiny of our business may affect our operations, competitive position, and financial condition.

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

Digital Assets Related Risks

Our operating results have fluctuated due to the highly volatile nature of digital assets.

Due to the highly volatile nature and the prices of digital assets, our operating results have, fluctuated from quarter to quarter in accordance with market sentiments and movements in the broader digital assets economy. Our operating results fluctuated significantly prior to our introduction of cloud services and HPC data centers as a result of a variety of factors, many of which are unpredictable and in certain instances are outside of our control, including, but not limited to:

● our ability to continue to mine bitcoin and acceptance of digital assets as a result of reputational harm from bankruptcies and regulatory proceedings; ● changes in the legislative or regulatory environment, or actions by governments or regulators, including fines, orders, or consent decrees;

● regulatory changes that impact our ability to mine various digital assets;

● our ability to diversify and grow our business;

● investments we make in the development of our business as well as technology offered to our industry partners and sales and marketing;

● mining new digital assets in compliance with the Federal securities laws and other compliance regulations;

● macroeconomic conditions;

● adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs;

● increases in operating expenses that we expect to incur to grow and expand our operations and to remain competitive;

● breaches of security or privacy;

● our ability to attract and retain talent; and

● our ability to compete with our competitors.

As a result of these factors, it is difficult for us to forecast growth trends in our digital assets business. In view of the rapidly evolving nature of our business and the digital assets industry, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. Quarterly and annual expenses reflected in our financial statements may be significantly different from historical or projected rates. Our operating results in one or more future quarters may fall below the expectations of securities analysts and investors. As a result, the trading price of our Ordinary Shares may increase or decrease significantly. See “The price of digital assets may be affected by the sale of such digital assets by other vehicles investing in digital assets or tracking bitcoin markets.”

Unfavorable Digital Asset Market Conditions

The prices of digital assets, including bitcoin, have experienced substantial volatility, as described above. During the year 2022, a number of companies in the digital assets industry declared bankruptcy, including Core Scientific, Celsius Network, Voyager Digital Ltd., Three Arrows Capital, BlockFi, and FTX Trading Ltd. (“FTX”) and concerning us, Compute North, as described in the following risk factor. Such bankruptcies have contributed, at least in part, to further price decreases in bitcoin and other digital assets, a loss of confidence in the participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. The bankruptcies also led to various SEC and criminal enforcement proceedings. All of the foregoing has had a macro decline in the price of securities of digital asset companies, including ours.

Other than Compute North, we have not been directly impacted by any of the recent bankruptcies in the digital asset space, as we have no contractual privity or relationship to the relevant parties. The Company relocated its miners out of Compute North’s facilities to those hosted by Blockfusion and Coinmint in New York State. However, termination of the Master Agreement with Compute North had an adverse effect on the Company’s business and financial condition. Such recent events have contributed, at least in part, to our and our peers stock price as well as the price of bitcoin. If the liquidity of the digital assets markets continues to be negatively impacted, digital asset prices (including the price of bitcoin) may continue to experience significant volatility and confidence in the digital asset markets may be further undermined. A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce confidence in digital asset networks and result in greater volatility in digital asset values. Any of these events may adversely affect our operations and results of operations and, consequently, an investment in us.

We may be unable to raise additional capital needed to grow our business.

We need to raise additional capital to expand our operations, pursue our growth strategies and to respond to competitive pressures or working capital requirements. While we have an effective $500,000,000 at the market shelf registration statement, we may not be able to obtain additional debt or equity financing on favorable terms, which could impair our growth and adversely affect our existing operations. The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including diminished credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. Such macroeconomic conditions could also make it more difficult for us to incur additional debt or obtain equity financing.

If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests, and the per share value of our Ordinary Shares could decline. Furthermore, if we engage in debt financing, the holders of debt likely would have priority over the holders of our Ordinary Shares on order of payment preference. We may be required to accept terms that restrict or limit our ability to, among other things:

● Pay cash dividends to our stockholders, subject to certain limited exceptions; ● Redeem or repurchase our ordinary shares or other equity; ● Incur additional indebtedness; ● Permit liens on assets; ● Make certain investments (including through the acquisition of stock, shares, partnership or limited liability company interests, any loan, advance or capital contribution); ● Sell, lease, license, lend or otherwise convey an interest in a material portion of our assets; and ● Sell or otherwise issue ordinary shares or other capital stock subject to certain limited exceptions.

These restrictions may limit our ability to obtain additional financing, withstand downturns in our business or take advantage of business opportunities.

Our mining operating costs outpace our mining revenues, which could seriously harm our business or increase our losses.

Our mining operations are costly, and our expenses may increase in the future. We intend to use funds on hand and from shares sold under an effective registration statement to continue to purchase bitcoin mining machines if our operating costs are lower than the value of bitcoin. This expense increase may not be offset by a corresponding increase in revenue. Our expenses may be greater than we anticipate, and our investments to make our business more efficient may not succeed and may outpace monetization efforts. Increases in our costs without a corresponding increase in our revenue would increase our losses and could seriously harm our business and financial performance.

The properties included in our mining network may experience damage, including damage that is not covered by insurance.

As of December 31, 2024, our mining operations in the states of Texas, Kentucky and New York in the United States and Iceland are, and any future mining sites we may establish will be, subject to a variety of risks relating to physical condition and operation, including, but not limited to:

● the presence of construction or repair defects or other structural or building damage;

● any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements;

● any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms; and

● claims by employees and others for injuries sustained at our properties.

For example, our mines could be rendered inoperable, temporarily or permanently, as a result of a fire or other natural disaster, the coronavirus or another pandemic, or by a terrorist or other attack. The security and other measures we take to protect against these risks may not be sufficient. Additionally, our mines could be materially adversely affected by a power outage or loss of access to the electrical grid or loss by the grid of cost-effective sources of electrical power generating capacity. Given the power requirements of our mines, it would not be feasible to run miners on back- up power generators in the event of a power outage. We do not have any insurance to cover the replacement cost of any lost or damaged miners, or any interruption of our mining activities. In the event of an uninsured loss, such mines may not be adequately repaired in a timely manner or at all, and we may lose some or all of the future revenues anticipated to be derived from such mines.

From time to time, our service providers have been unable to supply sufficient electric power for us to operate our miners, which has adversely affected our operations, causing us to relocate some or all of our miners to an alternative facility, which may have a less advantageous cost structure and our business and results of operations may suffer as a result.

We made a significant capital investment in purchasing second-hand miners in order to implement them rapidly to mine bitcoin at prices advantageous to us. Management believes, based on its knowledge of the industry, that the hosting agreements provided many advantages as opposed to other alternative arrangements. However, we have since been required to deploy or move our miners from their current hosting service providers to other mining facilities, and we may be forced to accept less advantageous terms. Further, during relocation to a new mining facility, we will not be able to operate our miners and therefore we will not be able to generate revenue.

From May until September 2022, power was offline at the Niagara Falls, New York facility hosted by Blockfusion, due to an explosion and subsequent fire. We have estimated the loss of revenue at the Blockfusion site through September 13, 2022 to be approximately $3,200,000. Our methodology is based on the historical rate for those impacted miners and the average bitcoin and ETH earned during the above period. Shortly after power was restored, the Company and Blockfusion received a notice from the City of Niagara Falls, New York directing Blockfusion to cease and desist its cryptocurrency mining activities at Blockfusion’s Niagara Falls facility. The loss of power at Blockfusion facilities has had a material adverse effect on our operations. We relocated our miners from Blockfusion facilities to Digihost, Soluna and Bitdeer after our service agreement with Blockfusion ended in September 2023.

During the same time, a portion of our miners were offline and power has only been partially used at our hosting partner Digihost’s facility at North Tonawanda, New York. Based on the historical miner model hosted by Digihost, we calculated our loss at Digihost (based on a hash rate of 60 TH/s and power consumption of 3000W) to be non-material in 2022. In 2023, we did not operate any miners at the Digihost’s North Tonawanda facility.

As a result of the bankruptcy filing by Compute North on September 22, 2022, as described above, we have experienced service disruptions.

If we are unable to secure sufficient power supply from the current hosting service providers, or if the current hosting service providers are unable to supply sufficient electric power, we may be forced to seek out alternative mining facilities. Should this occur, our operations may be disrupted, which may have a material adverse effect on our operations.

If our Hosting Agreements with the current hosting service providers in the U.S. and Canada are terminated, we may be forced to seek a replacement facility to operate our miners on acceptable terms; should this occur, our operations may be disrupted, which may have a material adverse effect on our operations.

Relocating our miners, as we did to migrate from China and from Compute North and Core Scientific facilities and Blockfusion and Blockbreakers facilities, required us to incur costs to transition to new facilities including, but not limited to, transportation expenses and insurance, downtime while we are unable to mine, legal fees to negotiate the new lease, de-installation at our current facility and, ultimately, installation at any new facility we identify. These costs may be substantial, and we cannot guarantee that we will be successful in transitioning our miners to a new facility. Since we are required to move our miners, our business may suffer, and our results of operations would be expected to be materially adversely affected.

The development and acceptance of cryptographic and algorithmic protocols governing the issuance of and transactions in digital assets is subject to a variety of factors that are difficult to evaluate.

The use of digital assets to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs bitcoin assets based upon a computer-generated mathematical and/or cryptographic protocol. Large-scale acceptance of digital assets as a means of payment has not, and may never, occur. The growth of this industry in general, and the use of bitcoin, in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of developing protocols may occur unpredictably. The factors include, but are not limited to:

● continued worldwide growth in the adoption and use of digital assets as a medium to exchange;

● governmental and quasi-governmental regulation of digital assets and their use, or restrictions on or regulation of access to and operation of the network or similar bitcoin systems;

● changes in consumer demographics and public tastes and preferences;

● the maintenance and development of the open-source software protocol of the network;

● the increased consolidation of contributors to the bitcoin blockchain through mining pools;

● the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

● the use of the networks supporting digital assets for developing smart contracts and distributed applications;

● general economic conditions and the regulatory environment relating to digital assets; and

● negative consumer sentiment and perception of bitcoin specifically and digital assets generally.

The outcome of these factors could have negative effects on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations as well as potentially negative effect on the value of any bitcoin or other digital assets we mine or otherwise acquire or hold for our own account, which would harm investors in our securities.

Banks and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities or that accept digital assets as payment, including financial institutions of investors in our securities.

A number of companies that engage in bitcoin and/or other bitcoin-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. This is particularly true as a result of recent bank failures, which were connected to cryptocurrency activities. Similarly, a number of companies and individuals or businesses associated with digital assets may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions in response to government action, particularly in China, where regulatory response to digital assets has been to exclude their use for ordinary consumer transactions within its jurisdiction.

Subject to such restrictions, we also may be unable to obtain or maintain these services for our business. The difficulty that many businesses in our industry and in related industries have and may continue to have in finding banks and financial institutions willing to provide them services may now, and in the future, decrease the usefulness of digital assets as a payment system, harm public perception of digital assets and decrease their usefulness.

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

Although we have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. We have experienced from time to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems and facilities, as well as those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees, service providers, and our customers) into disclosing usernames, passwords, payment card information, or other sensitive information, which may, in turn, be used to access our information technology systems and our digital assets. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.

We may suffer significant and adverse effects due to hacking or one or more adverse software events.

In order to minimize risk, we have established processes to manage wallets that are associated with our digital assets holdings. There can be no assurances that any processes we have adopted or will adopt in the future are or will be secure or effective, and we would suffer significant and immediate adverse effects if we suffered a loss of our digital assets due to an adverse software or cybersecurity event. We utilize several layers of threat reduction techniques, including: (i) the use of hardware wallets to store sensitive private key information; (ii) performance of transactions offline; and (iii) offline generation storage and use of private keys.

~~The~~In ~~Company~~addition, isdevelopment ~~evaluating several third-party custodian wallet alternatives~~activities, ~~but~~regardless of ~~there~~whether ~~can~~they beare noultimately ~~assurance~~successful, ~~that~~also ~~such~~typically ~~services~~require ~~will~~a besubstantial ~~more~~portion ~~secure~~of ~~than~~management’s ~~those~~time ~~the Company~~and ~~presently employs~~attention. ~~Human error and the constantly evolving state of cybercrime and hacking techniques~~ This may ~~render~~distract ~~present~~WhiteFiber’s ~~security protocols~~management ~~and~~from ~~procedures~~focusing ~~ineffective~~on inother ~~ways~~operational ~~which~~activities weof ~~cannot~~our ~~predict~~business. If ~~our~~WhiteFiber ~~security~~is ~~procedures~~unable ~~and~~to complete ~~protocols~~development ~~are~~projects ~~ineffectual~~successfully and ~~our digital~~on ~~assets~~a ~~are~~timely ~~compromised by cybercriminals~~basis, weits ~~may~~business ~~not have adequate recourse to recover our losses stemming from such compromise and we~~ may ~~lose~~be ~~much~~adversely ~~of the accumulated value of our bitcoin mining activities~~affected. ~~This would have a material adverse impact on our business and operations.~~

~~The~~WhiteFiber’s ~~impact~~ongoing ofinvestment ~~geopolitical~~in retrofitting data centers involves infrastructure and ~~economic~~technologies ~~events~~which onis ~~the~~inherently ~~supply~~risky, and ~~demand~~could ~~for~~divert ~~digital~~management ~~assets~~attention isand harm ~~uncertain~~its business, financial condition, and operating results.

~~Geopolitical~~WhiteFiber’s ~~crises~~ongoing ~~may~~investments that it ~~motivate~~is ~~large-scale~~making ~~purchases~~in ofinfrastructure, ~~bitcoin~~research and ~~other~~development ~~digital~~augment ~~assets,~~its ~~which~~data ~~could~~center ~~increase~~capabilities, ~~the~~reflect ~~price~~WhiteFiber’s ofongoing ~~bitcoin~~efforts to innovate and ~~other~~provide ~~digital~~products ~~assets rapidly.~~and ~~This~~services ~~may~~that ~~increase~~are ~~the~~helpful ~~likelihood~~to ofits acustomers. ~~subsequent~~However, ~~price~~these ~~decrease~~investments asmay ~~crisis-driven~~not ~~purchasing~~be ~~behavior~~commercially ~~dissipates, adversely affecting~~viable ~~the~~or ~~value~~may ofnot ~~our~~result ~~inventory~~in ~~following~~an ~~such~~adequate ~~downward~~return ~~adjustment~~of capital. ~~Such~~These ~~risks~~endeavors ~~are~~involve ~~similar~~significant ~~to the~~ risks ofand ~~purchasing~~uncertainties, ~~commodities~~including ~~in general~~diversion ~~uncertain~~of ~~times,~~resources ~~such~~and asmanagement ~~the~~attention ~~risk~~from ofcurrent ~~purchasing~~operations, ~~holding~~different ormonetization ~~selling gold. Alternatively~~models, asand anthe ~~emerging~~use ~~asset~~of ~~class~~alternative ~~with limited acceptance~~investment, asgovernance, ~~a payment system~~ or ~~commodity,~~compensation ~~global~~structures ~~crises~~that ~~and general economic downturn~~ may ~~discourage~~fail ~~investment~~to inadequately ~~digital~~align ~~assets~~incentives asacross ~~investors focus~~WhiteFiber ~~their~~or ~~investment~~otherwise onaccomplish ~~less volatile asset classes as a means of hedging~~ their ~~investment risk~~objectives.

AsEven anif ~~alternative~~this ~~to fiat~~additional ~~currencies~~space ~~that are backed by central governments, digital assets, which are relatively new, are subject to supply and demand forces.~~available ~~How~~for ~~such~~lease ~~supply~~at ~~and~~any ~~demand~~one ~~will~~of beits ~~impacted~~data ~~by geopolitical events is largely uncertain~~centers, ~~but~~its ~~could~~ability ~~be harmful~~ to uslease ~~and~~this ~~investors~~space in our Ordinary Shares. Political or economic crises, including recent bank failures, may motivate large-scale acquisitions or sales of digital assets either globally or locally. Such events could have a material adverse effect on our ability to ~~continue~~existing ~~as a going concern~~ or ~~to pursue our~~ new ~~strategy~~customers ~~at all, which~~ could ~~have~~be aconstrained ~~material~~by ~~adverse~~its ~~effect on our business, prospects or operations and potentially the~~ability ~~value~~to ofprovide ~~any~~sufficient ~~bitcoin~~electrical ~~or any other digital assets we mine or otherwise acquire or hold for our own account~~power.

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

Currently, there is a relatively limited use of any bitcoin in the retail and commercial marketplace, thus contributing to price volatility that could adversely affect an investment in our securities. Banks and other established financial institutions may refuse to process funds for bitcoin transactions, process wire transfers to or from bitcoin exchanges, bitcoin-related companies or service providers, or maintain accounts for persons or entities transacting in bitcoin. Conversely, a significant portion of bitcoin demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Price volatility undermines any bitcoin’s role as a medium of exchange, as retailers are much less likely to accept it as a form of payment. Market capitalization for a bitcoin as a medium of exchange and payment method may always be low.

The relative lack of acceptance of bitcoins in the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use them to pay for goods and services. Such lack of acceptance or decline in acceptances could have a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of bitcoins we mine or otherwise acquire or hold for our own account.

Transactional fees may decrease demand for bitcoin and prevent expansion.

Currently, miners receive both rewards of new bitcoin and transaction fees paid in bitcoin by persons engaging in bitcoin transactions on the bitcoin blockchain for being the first to solve bitcoin blocks. As the number of bitcoins currency rewards awarded for solving a block in a blockchain decreases, the incentive for miners to continue to contribute to the bitcoin network may transition from a set reward and transaction fees to solely transaction fees. This transition could be accomplished by miners independently electing to record in the blocks they solve only those transactions that include payment of the highest transaction fees. If transaction fees paid for bitcoin transactions become too high, the marketplace may be reluctant to accept bitcoin as a means of payment and existing users may be motivated to switch from bitcoin to another digital asset or to fiat currency. Either the requirement from miners of higher transaction fees in exchange for recording transactions in a blockchain or a software upgrade that automatically charges fees for all transactions may decrease demand for bitcoin and prevent the expansion of the bitcoin network to retail merchants and commercial businesses, resulting in a reduction in the price of bitcoin that could adversely impact an investment in our securities. Decreased use of and demand for bitcoin may adversely affect its value and result in a reduction in the price of bitcoin and, consequently, the value of our Ordinary Shares.

~~The~~If ~~decentralized~~WhiteFiber ~~nature of~~fails ~~the governance of bitcoin systems may lead~~ to ~~ineffective~~effectively ~~decision making that slows development or prevents a network from overcoming~~manage ~~emergent~~its ~~obstacles.~~growth, ~~Governance~~its ofbusiness, ~~many~~financial ~~bitcoin~~condition ~~systems is by voluntary consensus~~ and ~~open~~results ~~competition with no clear leadership structure or authority. To the extent lack~~ of ~~clarity~~operations incould ~~corporate governance of bitcoin systems leads to ineffective decision making that slows development and growth of such digital assets, the value of our Ordinary Shares may~~ be ~~adversely affected~~harmed.

~~There~~WhiteFiber is a ~~lack~~development stage company with ofa ~~liquid~~small ~~markets~~management ~~for~~team ~~digital~~and ~~assets~~is subject to the strains of ongoing development and growth, which will place significant demands on its management and ~~blockchain/bitcoin-based~~its ~~assets~~operational ~~are~~and ~~susceptible~~financial infrastructure. Although WhiteFiber may not grow as it expects, if it fails to ~~potential~~manage ~~manipulation~~its growth effectively or to develop and expand its managerial, operational and financial resources and systems, its business and financial results would be materially harmed.

~~Digital~~Impact ~~assets~~of ~~that~~advancements ~~are represented~~in ~~and~~AI ~~trade~~ on ~~a ledger-based platform may not necessarily benefit from viable trading markets. Stock exchanges have listing~~demand ~~requirements and vet issuers; requiring them to be subjected to rigorous listing standards and rules and monitor investors transacting on such platform~~ for ~~fraud~~AI and ~~other~~WhiteFiber ~~improprieties.~~data ~~These~~centers ~~conditions~~ may ~~not~~reduce ~~necessarily be replicated on a distributed ledger platform, depending on~~ the ~~platform’s~~need controls and other policies. As described above under “Unfavorable Digital Asset Market Conditions,” recent bankruptcies in the digital assets industry involved platforms which were not publicly listed without regulatory supervision. The laxer a distributed ledger platform is about vetting issuers of bitcoin assets or users that transact on the platform, the higher the potential risk for ~~fraud~~HPCs orand ~~the manipulation of the ledger due to a control event. These factors may decrease liquidity or volume or may otherwise increase volatility of investment securities or other assets trading on a ledger~~AI-~~based~~specific ~~system,~~data ~~which~~center ~~may adversely affect us. Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all~~infrastructure, which could have aan ~~material~~ adverse effect on ~~our~~WhiteFiber’s business, ~~prospects~~results orof operations, and ~~potentially~~financial ~~the value of any bitcoin or other digital assets we mine or otherwise acquire or hold for our own account and harm investors~~condition.

~~Our~~The ~~operations~~AI industry is rapidly evolving, with continuous ~~investment~~improvements ~~strategies~~in algorithms, software efficiencies, and ~~profitability~~hardware capabilities. Emerging AI technologies, such as demonstrated by DeepSeek, may allow for complex AI operations to be ~~adversely~~executed ~~affected~~with bysignificantly ~~competition~~less ~~from~~computing ~~other~~power ~~methods~~than is currently required. This reduction in computational intensity could decrease the demand for specialized computing and HPC data center services. If AI developers are able to achieve the same or better performance outcomes with more energy-efficient, cost-effective, or less resource-intensive technologies, they may adjust their need for large-scale, high capacity data center solutions. This shift could have an adverse effect on WhiteFiber’s business, results of ~~investing~~operations, and financial condition. We continuously monitor industry trends and invest in ~~digital~~innovation ~~assets~~to mitigate these risks. However, there is no assurance that we will be able to anticipate or respond effectively to such changes, which could have an adverse effect on our business, results of operations, and financial condition.

WeWhiteFiber’s ~~compete~~customers ~~with other~~frequently users and/or companies that are mining digital assets and other potential financial vehicles, including securities backed by or linked to digital assets through entities similar to us. Market and financial conditions, and other conditions beyond our control, may make ~~it more~~advance ~~attractive~~payments tobased invest in other financial vehicles, or to invest in digital assets directly, which could limit the market for our shares and reduce their liquidity. The emergence of other financial vehicles and exchange-traded funds have been scrutinized by regulators and such scrutiny and the negative impressions or conclusions resulting from such scrutiny could be applicable to us and impact our ability to successfully pursue our business strategy or operate at all, or to maintain a public market for our securities. Such circumstances could have a material adverse effect on ~~our~~anticipated ~~ability~~future to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other digital assets we mine or otherwise acquire or hold for our own account, and harm investorsusage.

~~The~~In ~~development~~its cloud service business, customers often make advance payments ~~and~~as ~~acceptance~~deposits offor ~~competing~~future ~~blockchain~~usage ~~platforms~~of orour ~~technologies~~services. ~~may~~If ~~cause~~we ~~consumers~~are unable to ~~use~~meet ~~alternative~~the ~~distributed~~contract ~~ledgers~~requirements or ~~other~~deliver ~~alternatives~~GPU clusters to their satisfaction for any reason, we may be obligated to refund these deposits.

~~The~~In ~~development~~its ~~and~~colocation ~~acceptance of~~Data ~~competing~~Center ~~blockchain~~Hosting ~~platforms~~Business, customers ortypically ~~technologies~~pay ~~may~~a ~~cause~~month ~~consumers~~in toadvance ~~use~~based ~~alternative~~on ~~distributed~~their ~~ledgers~~projected ~~or an alternative to distributed ledgers altogether~~demand. ~~Our~~If ~~business~~WhiteFiber ~~utilizes~~is ~~presently~~unable ~~existent~~to ~~digital~~provide ~~ledgers~~the ~~and~~services ~~blockchains~~as ~~and we could face difficulty adapting to~~expected ~~emergent~~for ~~digital~~any ~~ledgers~~reason, ~~blockchains,~~it orwould ~~alternatives~~be ~~thereto.~~required ~~This~~to ~~may~~issue ~~adversely~~a ~~affect~~credit usor ~~and~~refund ~~our~~the ~~exposure~~difference to ~~various blockchain technologies and prevent us from realizing~~ the ~~anticipated profits from our investments~~customer. ~~Such~~Any ~~circumstances~~such ~~could~~refunds ~~have a material adverse effect on our ability to continue as a going concern~~ or toissuances ~~pursue~~of ~~our business strategy at all, which~~ credit could have aan ~~material~~ adverse effect on ~~our~~ its business, ~~prospects~~results ~~or operations and potentially the value~~ of ~~any bitcoin or other digital assets we mine or otherwise acquire or hold for our own account~~operations, and ~~harm~~financial ~~investors~~condition.

Dependence on joint ventures and other local partners could adversely affect WhiteFiber’s profits.

WhiteFiber intends to conduct some operations through joint ventures in which unaffiliated third parties may control or have significant influence on the operations of the joint venture. As with any joint venture arrangement, differences in views among the joint venture participants may result in the joint venture operating in a manner that is contrary to WhiteFiber’s preference, delayed decisions or in failures to agree on major issues. These factors could have a material adverse effect on the business and results of operations of its joint ventures and, in turn, its business and combined results of operations. In addition to joint ventures, WhiteFiber may rely on local third-party partners in foreign jurisdiction, as it does in Iceland, to provide various services in support of its cloud services and HPC data center businesses, including installation, service and technical support, as well as the provision of equipment and personnel. If a local partner is unwilling or unable to deliver its services for any reason including, but not limited to, a dispute with WhiteFiber, the deterioration of its financial condition or a loss of personnel, WhiteFiber may be unable to engage an alternative partner or subcontractors to perform the same services, or on terms substantially similar to those with its existing partners. The failure to do so may cause us to breach the terms of existing contracts, impede WhiteFiber’s ability to complete orders, and/or result in damage to our customer relationships in that jurisdiction, any of which may damage WhiteFiber’s reputation and have a material adverse effect on its business in the impacted jurisdiction.

~~Our~~WhiteFiber’s ~~digital~~operations ~~assets~~ may be ~~subject~~negatively affected if it is unable to ~~loss~~obtain, ~~theft~~develop orand ~~restriction~~retain onkey ~~access~~personnel and skilled labor forces.

~~There~~WhiteFiber ismust aattract, ~~risk~~develop ~~that some~~and orretain ~~all~~executive officers ofand ~~our~~other ~~digital assets~~professional, ~~including~~technical ~~bitcoin,~~and ~~ETH,~~labor ~~liquid~~forces ~~staking~~with ~~tokens~~the skills and~~/or~~ ~~USD~~experience ~~Coin~~necessary ~~could~~to besuccessfully ~~lost~~manage, ~~stolen~~operate and ~~or destroyed~~grow. ~~Digital assets~~WhiteFiber ~~are~~has ~~stored~~recently inhired ~~platforms~~certain ~~commonly~~key ~~referred~~personnel, toas well as ~~“wallets”~~the bymanagement ~~holders~~team of ~~bitcoins~~Enovum. ~~which~~However, ~~may~~competition befor ~~accessed to exchange~~these aemployees ~~holder’s~~is ~~bitcoin~~high, ~~assets.~~due, ~~Access~~in part, to ~~our~~the ~~digital~~nascent ~~assets~~HPC ~~could~~Business ~~also~~workforce. beIn ~~restricted~~some bycases, ~~cybercrime~~competition ~~(such~~for asthese aemployees ~~denial-of-service~~is ~~attack) against~~on a ~~service~~regional, national, ator ~~which~~global ~~we maintain a hosted hot wallet~~basis. WeAt ~~believe~~times ~~that~~of ~~our~~low ~~digital~~unemployment, ~~assets~~it ~~will~~may be andifficult ~~appealing~~for ~~target~~WhiteFiber to ~~hackers or~~attract ~~malware~~and ~~distributors~~retain ~~seeking~~qualified toand ~~destroy, damage or steal our digital assets~~affordable personnel. ~~See~~A ~~Risk~~shortage ~~Factor~~in ~~“Cyberattacks~~the ~~and~~supply ~~security breaches~~ of ~~our~~skilled ~~system,~~personnel orcreates ~~those~~competitive ~~impacting~~hiring ~~our third parties~~markets, ~~could~~increased ~~adversely~~labor ~~impact our brand and reputation and our business~~expenses, ~~operating~~decreased ~~results,~~productivity and ~~financial~~potentially ~~condition.”~~lost Abusiness ~~hot~~opportunities ~~wallet refers~~ to ~~any~~support ~~bitcoin~~WhiteFiber’s ~~wallet~~operating ~~that~~and isgrowth ~~connected to the Internet~~strategies. ~~Generally~~Additionally, ~~hot~~if ~~wallets~~WhiteFiber ~~are~~is ~~easier~~unable to ~~set~~hire upemployees ~~and~~with ~~access~~the ~~than~~requisite ~~wallets in cold storage~~skills, ~~but~~it ~~they~~may ~~are~~be ~~also~~forced ~~more susceptible~~ to ~~hackers~~incur ~~and~~significant ~~other~~training ~~technical vulnerabilities~~expenses. ~~Cold~~ ~~storage~~As ~~refers~~a toresult, ~~any~~WhiteFiber’s ability ~~bitcoin wallet that is not connected~~ to ~~the~~maintain ~~Internet.~~productivity, ~~Cold~~relationships ~~storage~~with iscustomers, ~~generally~~competitive ~~more~~costs, ~~secure~~and ~~from~~quality ~~external~~services ~~attack than hot storage but~~ is ~~not~~limited ~~ideal~~by ~~for~~the ~~quick or regular transactions and we may experience lag time in our~~ ability to ~~respond to market~~ ~~fluctuations in the price of our bitcoin assets. Moreover~~employ, ~~cold~~retain ~~storage~~and ~~may~~train ~~increase~~ the ~~risk~~necessary ofskilled ~~internal~~personnel ~~theft or malfeasance. We hold our digital assets in hot~~ and ~~cold~~could ~~wallets~~negatively ~~through~~affect ~~third~~its ~~party~~results ~~custodians to reduce the risk~~ of ~~external malfeasance~~operations, ~~but~~financial ~~the~~position ~~risk of~~and ~~loss~~cash ~~of our bitcoin assets cannot be wholly eliminated~~flows. ~~If any of our bitcoin were lost or stolen, it is unlikely that we would ever be able to recover such bitcoin.~~

InWhiteFiber ~~addition,~~faces ~~the~~intense ~~Company~~competition ~~participates~~ in its ~~the~~data ~~Foundry USA~~centers ~~Mining~~operations ~~Pool~~and ~~(“Foundry”).~~may ~~Foundry~~not isbe aable ~~mining~~to ~~pool~~compete ~~operator~~with ~~which~~other ~~provides~~companies. ~~the~~If ~~Company~~WhiteFiber ~~with~~does anot ~~digital~~continue ~~currency~~to ~~mining~~innovate ~~pool. While~~in ~~Foundry~~the ~~does~~design and ~~not~~management ~~provide~~of ~~wallet~~data orcenters ~~custodial~~in ~~services,~~order itto ~~deposits~~offer ~~bitcoin~~innovative ~~rewards~~solutions to ~~our~~store, ~~custodian~~process ~~wallet~~and ~~addresses.~~manage ~~Accordingly~~digital information, ~~the~~ ~~risk~~including ofartificial intelligence ~~loss~~(“AI”) orand ~~theft~~machine oflearning ~~digital~~(“ML”) ~~assets~~applications, ~~when~~to ~~Foundry~~its ~~transfers~~customers ~~bitcoin~~and ~~rewards~~partners, init amay ~~custodian~~not ~~account~~remain competitive, iswhich nocould ~~different~~harm ~~than~~its ~~any~~business, ~~other transfer~~financial ~~from~~condition, ~~one~~data ~~wallet~~centers toand ~~another~~operating results.

~~Hackers~~WhiteFiber ~~or malicious actors~~ may ~~launch~~not ~~attacks~~be able to ~~steal,~~compete ~~compromise~~successfully against present or ~~secure~~future ~~digital~~competitors. ~~assets,~~WhiteFiber ~~such~~does asnot byhave ~~attacking~~ the ~~digital~~capital ~~asset~~resources ~~network~~to ~~source~~compete ~~code,~~with ~~exchange miners,~~larger ~~third-party~~providers ~~platforms,~~of ~~cold~~similar ~~and~~data centers ~~hot~~at ~~storage~~this ~~locations~~time. orWhiteFiber’s ~~software,~~data ~~our~~centers ~~general~~business ~~computer~~environment ~~systems~~is orrapidly ~~networks,~~evolving orand byintensely ~~other~~competitive, ~~means.~~and it faces Wefrequent ~~cannot~~introductions ~~guarantee~~of ~~that~~rival wesolutions ~~will~~and ~~prevent~~new ~~loss,~~technologies. ~~damage~~To orcompete ~~theft~~successfully, ~~whether~~WhiteFiber ~~caused~~must, ~~intentionally~~among other things, ~~accidentally~~accurately anticipate ordata bycenter ~~act~~technology ofdevelopments ~~God.~~and ~~Access~~innovate ~~to our~~data ~~digital~~centers’ ~~assets~~design, ~~could~~management ~~also~~and betechnologies ~~restricted~~in bya ~~natural~~timely ~~events~~manner. As ~~(such~~its asdata ancenters ~~earthquake~~business orevolves, ~~flood)~~the orcompetitive ~~human~~pressure ~~actions~~to ~~(such~~innovate aswill encompass a ~~terrorist~~wider ~~attack)~~range of technologies and solutions. WeWhiteFiber ~~may~~must becontinue to invest significant resources in ~~control~~personnel, ~~and~~technical ~~possession~~infrastructure ofand ~~one~~R&D, ofincluding ~~the~~through ~~more~~acquisitions, in ~~substantial~~order ~~holdings~~to ofadvance/innovate ~~digital~~its ~~assets~~data centers. AsWith wethe ~~increase~~limited inresources ~~size~~WhiteFiber has available, weit may ~~become~~experience adifficulties in ~~more~~expanding ~~appealing~~and ~~target~~improving ofits ~~hackers,~~data ~~malware,~~centers. ~~cyber-attacks~~Competition orfrom ~~other~~existing ~~security~~and ~~threats.~~future ~~Any~~competitors, ofparticularly ~~these~~those ~~events~~better ~~may~~capitalized, ~~adversely~~could result ~~affect~~in ~~our~~its ~~operations and,~~inability ~~consequently,~~to ~~our~~secure ~~investments~~acquisitions and ~~profitability.~~partnerships ~~The~~that ~~loss~~it ormay ~~destruction~~need ofto aexpand ~~private~~its ~~key~~data ~~required~~centers tobusiness ~~access~~in ~~our~~the ~~digital~~future. ~~wallets~~This ~~may~~competition befrom ~~irreversible~~other entities with greater resources, experience and wereputation may beresult ~~denied~~in ~~access~~WhiteFiber’s ~~for~~failure ~~all~~to ~~time~~maintain or toexpand ~~our~~its ~~digital~~data ~~asset~~center ~~holdings~~business, ~~held~~as init ~~those~~may ~~compromised~~never ~~wallets~~be able to successfully execute its business plan. ~~Our~~If ~~loss of~~WhiteFiber ~~access~~is unable to ~~our~~expand and ~~private~~remain ~~keys~~competitive, orits ~~our~~business ~~experience~~could ofbe anegatively ~~data~~affected, ~~loss~~which ~~relating~~would tohave ~~our~~an ~~digital~~adverse ~~wallets~~effect ~~could~~on ~~adversely~~the ~~affect~~trading ~~our~~price ~~investments~~of WhiteFiber ~~and~~Ordinary ~~assets~~Shares, which would harm its investors.

~~Digital~~Supply ~~assets~~chain ~~are~~disruptions ~~controllable only~~may ~~by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held,~~adversely ~~which~~affect ~~wallet~~WhiteFiber’s ~~public~~new ~~key~~project ~~or address is reflected in the network’s public blockchain~~development. We will publish the public key relating to digital wallets in use when we verify the receipt of transfers and disseminate such information into the network, but we will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or otherwise compromised, we will be unable to access our bitcoin rewards and such private keys may not be capable of being restored by any network. Any loss of private keys relating to digital wallets used to store our digital assets could have a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other digital assets we mine or otherwise acquire or hold for our own account.

ItWhiteFiber is ~~possible~~a ~~that,~~provider of GPUs compute and purchases NVIDA H100, H200, B200, GB200 servers, as well as other servers, through ~~computer~~OEMS, for example, Super Micro Computer Inc®, Dell, and Hewlett Packard Enterprise. Disruptions, shortages or ~~human~~delays ~~error~~in WhiteFiber’s ability to source GPUs and price increases from suppliers may occur, ~~theft~~and adversely affect WhiteFiber’s planned expansions and new project timelines. Any material disruption at WhiteFiber’s facilities or ~~criminal~~those ~~action~~of its customers or suppliers or otherwise within its supply chain, ~~our~~whether ~~digital~~as ~~assets~~a result of downtime, work stoppages or facility damage could beprevent ~~transferred~~WhiteFiber infrom ~~incorrect~~meeting ~~amounts~~future customer demands or toexpected ~~unauthorized~~timelines, require ~~third~~it ~~parties~~to orincur ~~accounts.~~unplanned Incapital ~~general~~expenditures, ~~digital~~or ~~asset~~cause ~~transactions~~other ~~are~~material ~~irrevocable~~disruptions to its operations, ~~and~~any ~~stolen~~of orwhich ~~incorrectly~~could ~~transferred~~have ~~digital~~a ~~assets~~material ~~may~~adverse beeffect ~~irretrievable~~on WhiteFiber’s future operations, financial position and wecash ~~may~~flows. ~~have~~Further, ~~extremely~~supply ~~limited~~chain ordisruptions nocan ~~effective~~occur from ~~means~~events out of ~~recovering~~WhiteFiber’s control, such ~~digital~~as ~~assets~~environmental incidents or other catastrophes.

We safeguard and keep private our digital assets, including the bitcoin that we mine, by utilizing storage solutions provided by Cactus Custody and Fireblocks (see “Summary of Information – Custodian Accounts”), which requires multi-factor authentication. While we are confident in the security of our digital assets held by Cactus Custody and Fireblocks, given the broader market conditions, there can be no assurance that other digital asset market participants, including Cactus Custody and Fireblocks as our custodian, will not ultimately be impacted. We continue to monitor the digital assets industry as a whole, although it is not possible at this time to predict all of the risks stemming from these events that may result to us, our service providers, our counterparties, and the broader industry as a whole.

~~Incorrect~~WhiteFiber’s orbusiness ~~fraudulent~~has and is ~~bitcoin~~expected ~~transactions~~to ~~may~~continue beto ~~irreversible~~have significant customer concentration.

~~Bitcoin~~WhiteFiber ~~transactions~~generates a large portion of its revenue from a small number of customers. There are ~~irrevocable~~inherent ~~and~~risks ~~stolen~~whenever ora ~~incorrectly~~large ~~transferred~~percentage ~~digital~~of ~~assets~~total ~~may~~revenue beis ~~irretrievable.~~concentrated Aswith a ~~result,~~limited number ~~any~~of ~~incorrectly~~customers. ~~executed~~If WhiteFiber were to lose one or ~~fraudulent bitcoin~~more ~~transactions~~of ~~could~~its ~~adversely~~customers, ~~affect~~its ~~our~~operating ~~investments~~results ~~and~~could ~~assets~~be materially adversely affected.

~~Bitcoin~~As ~~transactions are~~of ~~not~~December 31, ~~from~~2025, anWhiteFiber’s ~~administrative~~data center ~~perspective,~~served ~~reversible~~fifteen ~~without~~customers. ~~the~~No ~~consent~~one ~~and~~customer ~~active~~accounted ~~participation~~for ofin ~~the~~excess ~~recipient~~ of ~~the~~50% ~~digital~~of ~~assets from~~data ~~the~~center ~~transaction.~~revenue Inin ~~theory, bitcoin transactions may be reversible with~~ the ~~control~~12 ormonths ~~consent~~ended ~~of a majority of processing power~~December on31, ~~the~~2025 ~~network,~~or ~~however,~~2024. weDuring dofiscal ~~not~~year ~~now~~2023, ~~nor~~12 iscustomers itaccounted ~~feasible~~for ~~that~~all weof ~~could~~WhiteFiber’s inrevenue. ~~the~~During ~~future~~2025, ~~possess sufficient processing power to affect~~WhiteFiber’s ~~this~~HPC ~~reversal.~~data ~~Once~~center ain ~~transaction~~Iceland ~~has~~had ~~been~~contracts ~~verified~~with ~~and~~twenty ~~recorded~~one incustomers. aDNA ~~block~~Fund ~~that~~accounted isfor ~~added~~approximately to11.5% ~~a blockchain, an incorrect transfer~~ of ~~a bitcoin~~cloud orservices arevenue ~~theft~~during ~~thereof~~the ~~generally~~12 months ~~will~~ended ~~not be reversible~~December 31, 2025. ~~and~~WhiteFiber wedid ~~may~~ not ~~have~~generate ~~sufficient~~any ~~recourse~~revenue ~~to recover our losses~~ from ~~any~~DNA ~~such transfer~~Fund orin ~~theft~~2024. ItWhiteFiber’s isInitial ~~possible~~Customer ~~that,~~accounted ~~through~~for ~~computer~~approximately or70.7% of ~~human~~cloud ~~error,~~services orrevenue ~~through~~during ~~theft~~the or12 months ~~criminal~~ended ~~action~~December 31, ~~our~~2025 ~~bitcoin~~and ~~rewards~~96.6% ~~could be~~of ~~transferred~~cloud inservices ~~incorrect~~revenues ~~amounts~~through ~~or to unauthorized third parties~~December 31, ~~or to uncontrolled accounts~~ 2024. ~~Further,~~As ~~according~~of to the ~~SEC,~~report ~~at this time~~date, ~~there~~WhiteFiber isand nothe ~~specifically~~Initial ~~enumerated~~Customer ~~U.S.~~are orengaged ~~foreign~~in ~~governmental,~~ongoing ~~regulatory,~~discussions ~~investigative~~regarding ora ~~prosecutorial~~potential ~~authority~~resolution ~~or mechanism~~of ~~through~~the ~~which~~existing toservice ~~bring~~agreements anfollowing ~~action~~the oragreed ~~complaint~~pause ~~regarding~~of ~~missing or stolen bitcoin~~services. WeNo ~~are,~~definitive ~~therefore,~~agreement ~~presently~~has ~~reliant~~been ~~on existing private investigative entities, such as Chainalysis and Kroll, to investigate any potential loss of our bitcoin assets~~reached. ~~These~~Following ~~third-party~~the service ~~providers~~pause, ~~rely~~WhiteFiber onhas ~~data~~redeployed ~~analysis~~the ~~and~~GPUs ~~compliance~~previously ofallocated ~~ISPs with traditional court orders~~ to ~~reveal information such as~~ the IPInitial ~~addresses~~Customer ~~of any~~to ~~attackers~~three ~~who~~other ~~may have targeted us~~customers. ToBased ~~the~~on ~~extent~~WhiteFiber’s current ~~that~~customer wemix ~~are~~and ~~unable~~contracted tocapacity ~~recover~~for ~~our losses from such action~~2026, ~~error or theft, such events could have~~ a ~~material~~limited ~~adverse~~number ~~effect~~of oncustomers ~~our~~are ~~ability~~expected to ~~continue~~represent as a ~~going~~significant ~~concern~~portion ~~or to pursue our business strategy at all, which~~of ~~could~~cloud ~~have~~services arevenue. ~~material~~While ~~adverse~~WhiteFiber ~~effect~~is onactively ~~our~~expanding ~~business, prospects or operations of~~ and ~~potentially~~diversifying ~~the~~its ~~value~~customer ofbase, ~~any~~WhiteFiber’s ~~bitcoin~~results ormay ~~other digital~~continue ~~assets~~to webe ~~mine~~influenced orby ~~otherwise~~the ~~acquire~~performance orand ~~hold~~contractual ~~for~~arrangements ~~our~~of ~~own~~these ~~account~~customers.

~~Our~~WhiteFiber ~~reliance~~expects ~~primarily~~that the limited number of oncustomers will continue to account for a ~~few~~high ~~models~~percentage of ~~miners~~its revenue for the foreseeable future. In addition, demand for WhiteFiber’s services generated by these customers may ~~subject~~fluctuate ~~our~~significantly ~~operations~~from quarter to ~~increased~~quarter. ~~risk~~The concentration of ~~mining~~its customer base increases risks related to the financial condition of its customers, and the deterioration in financial condition of a single customer or the failure of a single customer to perform its obligations could have a material adverse effect on its results of operations and cash flow. In the event that any of WhiteFiber’s customers experience a decline in their equipment usage for any reason, or decide to discontinue the use of WhiteFiber’s facilities, we may be compelled to lower its prices or risk losing a significant customer. Such developments could adversely affect WhiteFiber’s profit margins and financial position, leading to a negative impact on its revenue and operational results.

~~The~~Cloud ~~performance~~Service ~~and~~Development ~~reliability of~~Related our miners and our technology is critical to our reputation and our operations. Because we currently use MicroBT and Bitmain miners, if there are issues with those machines, our entire system could be affected. Any system error or failure may significantly delay response times or even cause our system to fail. Any disruption in our ability to continue mining could result in lower yields and harm our reputation and business. Any exploitable weakness, flaw, or error common to MicroBT and Bitmain miners affects all our miners, and if a defect other flaw is exploited, our entire mining operations could go offline simultaneously. Any interruption, delay or system failure could result in financial losses, a decrease in the trading price of our Ordinary Shares and/or damage to our reputation.Risks

~~The Company~~WhiteFiber’s cloud service technology ~~reliance~~and oninfrastructure amay ~~third-party~~not ~~mining~~operate ~~pool~~properly ~~service~~or ~~provider~~as ~~for~~it ~~our~~expects ~~mining~~them ~~revenue~~to, ~~payouts~~which ~~may~~could ~~have~~cause aWhiteFiber ~~negative~~to ~~impact~~incur onfines ~~the~~and ~~Company’s~~monetary penalties, adversely affecting its business, results of operations, and financial condition.

WeThe ~~use~~continuous ~~third–party mining~~development, ~~pools to receive our mining rewards from the network. Mining pools allow miners to combine their processing power~~maintenance, ~~increasing their~~and ~~chances~~operation of ~~solving~~WhiteFiber’s acloud ~~block~~service technology and ~~getting~~infrastructure ~~paid~~is byexpensive ~~the~~and ~~network.~~complex ~~The~~and ~~rewards~~may ~~are~~involve ~~distributed~~unforeseen ~~by the pool operator~~difficulties, ~~proportionally to our contribution~~ toincluding ~~the~~material ~~pool’s~~performance ~~overall mining power~~problems, ~~used~~undetected ~~to generate each block. Should the pool operator’s system suffer downtime due to a cyberattack~~defects, ~~software malfunction~~ or ~~other similar issues~~errors, itparticularly ~~will~~with ~~negatively~~new ~~impact~~capabilities ~~our ability to mine~~ and ~~receive~~system ~~revenue~~integrations. ~~Furthermore,~~WhiteFiber wemay ~~are~~encounter ~~dependent~~technical onobstacles, ~~the~~and ~~accuracy~~it ofis ~~the~~possible ~~mining~~that ~~pool~~WhiteFiber ~~operator’s~~may ~~record~~discover ~~keeping~~additional toproblems ~~accurately record the total processing power provided to the pool for a given bitcoin mining application in order to assess the proportion of~~ that ~~total~~prevent ~~processing power we provided. While we have internal methods of tracking both our power provided and the total used by the pool, the mining pool operator uses~~ its ~~own~~technology ~~record-keeping~~and tosystems ~~determine~~from ~~our~~operating ~~proportion of a given reward~~properly. WeIf ~~have~~WhiteFiber’s ~~little~~cloud ~~means~~services ofdo ~~recourse~~not ~~against~~function ~~the mining pool operator if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect~~reliably, ~~other~~it ~~than~~may ~~leaving~~incur ~~the~~fines ~~pool.~~and Ifmonetary ~~we are unable to consistently obtain~~penalties, ~~accurate~~as ~~proportionate~~well ~~rewards~~as ~~from~~regulatory ~~our~~orders ~~mining~~requiring ~~pool operators~~remedial, ~~we may experience reduced reward for our efforts~~injunctive, ~~which~~or ~~would~~other ~~have~~corrective ~~an adverse effect on our business and operations~~actions.

Regulators may limit WhiteFiber’s ability to develop or implement its cloud services technology and infrastructure and/or may eliminate or restrict the confidentiality of its technology, which could have a material adverse effect on its financial condition and results of operations.

WhiteFiber’s future success depends on its ability to continue to develop and implement our cloud services technology, and to maintain the confidentiality of this technology. Changes to existing regulations, their interpretation or implementation, or new regulations could impede its use of this technology, or require that WhiteFiber disclose WhiteFiber’s technology to its competitors, which could impair its competitive position and result in a material adverse effect on its business, results of operations, and financial condition.

~~The~~WhiteFiber ~~limited~~faces ~~rights of~~intense ~~legal~~competition ~~recourse~~in the ~~available~~cloud toservices usindustry and ~~our~~may ~~lack~~not ofbe ~~insurance~~able ~~protection~~to ~~for~~compete ~~risk~~with ofother ~~loss~~companies. ofIf ~~our~~WhiteFiber ~~digital~~does ~~assets~~not ~~exposes~~continue usto innovate and ~~our shareholders~~provide cloud services to ~~the~~its ~~risk~~customers ofand ~~loss~~partners ofit ~~our~~may ~~digital~~not ~~assets~~remain ~~for~~competitive, which nocould ~~person~~harm ~~may~~our ~~ultimately~~business, befinancial ~~held~~condition, ~~liable~~cloud service and weoperating ~~may not be able to recover our losses~~results.

~~The~~WhiteFiber’s ~~digital~~current ~~assets~~and ~~held~~potential domestic byand usinternational ~~are~~competitors ~~not~~range ~~insured.~~from ~~Further,~~large ~~banking~~and ~~institutions~~established ~~will~~companies ~~not~~to ~~accept~~emerging ~~our~~start-ups. ~~digital~~Some ~~assets~~competitors have longer operating histories and ~~they~~well-established ~~are~~relationships ~~therefore~~in ~~not~~various ~~insured~~sectors. byThey ~~the~~can ~~Federal Deposit~~use ~~Insurance~~their ~~Corporation~~experience ~~(“FDIC”)~~and orresources ~~the~~in ~~Securities~~ways ~~Investor~~that ~~Protection~~could ~~Corporation~~affect WhiteFiber’s ~~(“SIPC”).~~competitive ~~Therefore~~position, a ~~loss~~including ~~may~~by bemaking ~~suffered~~acquisitions ~~with~~and ~~respect~~entering tointo ~~our~~other ~~digital~~strategic ~~assets~~arrangements; ~~which~~continuing to isinvest ~~not~~heavily ~~covered~~in bycloud ~~insurance~~services ~~and~~technical weinfrastructure, ~~may~~R&D, ~~not~~and bein ~~able~~talent; toinitiating ~~recover~~intellectual ~~any~~property ofand ~~our~~competition ~~carried~~claims ~~value~~(whether inor ~~these~~not ~~digital~~meritorious). ~~assets~~Further, ifdiscrepancies ~~they~~in ~~are~~enforcement ~~lost~~of orexisting ~~stolen~~laws ormay ~~suffer~~enable ~~significant~~WhiteFiber’s ~~and~~lesser ~~sustained~~known competitors ~~reduction~~to inaggressively ~~conversion~~interpret ~~spot~~those ~~price. If~~laws wewithout ~~are~~commensurate ~~not~~scrutiny, ~~otherwise~~thereby ~~able~~affording tothem ~~recover~~competitive ~~damages~~advantages. ~~from~~WhiteFiber’s competitors amay ~~malicious~~also ~~actor~~be inable ~~connection~~to ~~with~~innovate ~~these~~and ~~losses,~~provide ~~our~~cloud ~~business~~services ~~and~~faster ~~results~~than ofit ~~operations may~~can ~~suffer,~~or ~~which~~ may ~~have~~foresee athe ~~material~~need ~~negative~~for ~~impact~~products onand ~~our~~services before ~~share~~it ~~price~~does.

~~Currently,~~WhiteFiber weis doexpanding ~~not have~~its ~~any~~investment ~~insurance~~in toresearch and ~~cover~~development ~~our~~companywide. ~~digital~~This ~~assets~~includes orgenerative ~~mining~~AI ~~equipment.~~and ~~The~~continuing ~~market~~to ~~for~~integrate ~~such~~AI ~~insurance~~capabilities isinto inits ~~the~~products ~~early~~and ~~stages~~services. Cloud service technology and weservices ~~intend to~~are ~~purchase~~highly ~~such~~competitive, ~~insurance~~rapidly inevolving, ~~the~~and ~~future.~~require ~~One~~significant ofinvestment, ~~our~~including ~~digital~~development and ~~asset~~operational ~~custodians~~costs, ~~Cactus~~to ~~Custody,~~meet isthe ~~self-insured~~changing ~~for~~needs $4and ~~million~~expectations ~~plus~~of ~~annual additions.~~WhiteFiber’s ~~Any~~existing ~~uninsured~~users ~~losses~~and ~~may~~attract ~~have~~new anusers. ~~adverse~~WhiteFiber’s ability ~~effect~~to ondeploy ~~our~~certain ~~results~~cloud ofservice ~~operations~~technologies critical for its products and~~/or~~ ~~financial~~services ~~condition.~~and ~~Fireblocks~~for ~~offers Fireblocks~~its ~~Institutional~~business ~~Digital~~strategy ~~Asset~~may ~~Program~~depend on ~~which~~the isavailability ~~insured~~and bypricing ~~leading~~of ~~insurance~~third-party ~~companies~~equipment ~~which~~and ~~are~~technical Ainfrastructure.M. ~~Bests~~Additionally, ~~rated~~other ~~“A” (excellent).~~companies ~~There~~may isdevelop ancloud service ~~aggregate~~products ofand ~~$30,000,000~~technologies ~~digital~~that ~~asset~~are ~~crime~~similar ~~insurance~~or ~~for~~superior ~~theft~~to ofWhiteFiber’s ~~digital~~technologies ~~assets,~~or ~~external~~more ~~breach~~cost-effective ofto ~~Fireblocks’~~deploy. Other ~~software~~companies have, or ~~any~~in ~~malicious~~the orfuture ~~intentional~~may ~~misbehavior~~obtain, patents or ~~fraud~~other byproprietary ~~employees.~~rights ~~Fireblocks~~that ~~has~~would ~~$12~~prevent,~~500~~ limit,~~000~~ ofor ~~aggregate~~interfere ~~insurance~~with ~~for errors~~WhiteFiber’s ~~and~~ability ~~omissions;~~to ~~professional~~make, ~~liability~~use, ~~insurance~~or ~~and~~sell ~~cyber/privacy~~its ~~liability~~own ~~insurance~~cloud services.

~~Digital~~WhiteFiber’s ~~assets~~financial condition and operating ~~face~~results ~~significant~~may ~~scaling~~also ~~obstacles~~suffer if its cloud services are not responsive to the evolving needs and desires of its customers and partners. As new and existing cloud service technologies continue to develop, competitors and new entrants may be able to offer experiences that ~~can~~are, or ~~lead~~that are seen to ~~high~~be, ~~fees~~substantially similar to or ~~slow~~better ~~transaction~~than ~~settlement~~WhiteFiber’s. ~~times~~These technologies could reduce usage of WhiteFiber’s products and services, and force it to compete in different ways and expend significant resources to develop and operate equal or better products and services. Competitors’ success in providing compelling products and services or in attracting and retaining customers and partners could harm WhiteFiber’s financial condition and operating results.

~~Digital~~WhiteFiber’s ~~assets~~sales ~~face~~cycles ~~significant scaling obstacles that~~ can ~~lead to high fees or slow transaction settlement times and attempts to increase the volume of transactions may not~~ be ~~effective. Scaling digital assets is essential to the widespread acceptance of digital assets as a means of payment, which~~ ~~widespread~~long ~~acceptance is necessary to the continued growth~~ and ~~development of our business. Many bitcoin networks face significant scaling challenges. For example~~unpredictable, digital assets are limited with respect to how many transactions can occur per second. Participants in the bitcoin ecosystem debate potential approaches to increasing the average number of transactions per second that the network can handle and ~~have implemented~~its ~~mechanisms~~sales orefforts ~~are~~require ~~researching~~considerable ~~ways~~time ~~to increase scale, such as increasing the allowable sizes of blocks,~~ and therefore the number of transactions per block, and sharding (a horizontal partition of data in a database or search engine), which would not require every single transaction to be included in every single miner’s or validator’s blockexpense. However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of bitcoin transactions will be effective, or how long they will take to become effective, which could adversely affect an investment in our securities.

~~The~~WhiteFiber’s ~~price~~go-to-market ofapproach ~~digital~~currently ~~assets~~focuses ~~may~~on bea ~~affected~~top-down bysales model to drive demand and pipeline from the ~~sale~~large ofAI labs and AI enterprises. Sales to such ~~digital~~customers ~~assets~~involves longer byand ~~other~~more ~~vehicles~~unpredictable ~~investing~~sales incycles. ~~digital~~Customers ~~assets~~often view the purchase of WhiteFiber’s platform as a significant strategic decision and, as a result, frequently require considerable time to evaluate, test, and qualify WhiteFiber’s platform prior to entering into or ~~tracking~~expanding ~~bitcoin~~a ~~markets~~relationship with WhiteFiber. Large enterprises in particular, often undertake a significant evaluation process that further lengthens our sales cycle.

~~The~~WhiteFiber’s ~~global~~direct ~~market~~sales ~~for~~team develops ~~digital~~relationships ~~assets~~with isits ~~characterized~~customers, ~~by supply constraints that differ from those present in the markets for commodities or other assets such as gold~~ and ~~silver.~~works ~~The~~on ~~mathematical~~account ~~protocols~~penetration, ~~under~~account ~~which certain digital assets are mined permit the creation of a limited~~coordination, ~~predetermined amount of currency~~sales, ~~while~~and ~~others~~overall ~~have~~market ~~no limit established on total supply~~development. ~~To the extent that other vehicles investing in digital assets~~WhiteFiber orspends ~~tracking~~substantial ~~digital~~time ~~assets markets form~~ and ~~come~~resources toon ~~represent~~its asales ~~significant~~efforts ~~proportion~~without ofany ~~the~~assurance ~~demand~~that ~~for~~its ~~digital~~efforts ~~assets,~~will ~~large~~produce ~~redemptions of~~a ~~the securities of those vehicles and the subsequent~~ sale. ofCloud ~~digital~~infrastructure capacity ~~assets~~purchases byare ~~such~~frequently ~~vehicles~~subject ~~could~~to ~~negatively~~budget ~~affect~~constraints, ~~digital~~multiple ~~asset~~approvals, ~~prices~~ and ~~therefore~~unanticipated ~~affect~~administrative, ~~the value of the digital asset inventory (i.e.~~processing, ~~bitcoin~~ and other ~~ETH) we hold~~delays. ~~The~~As ~~recent~~a ~~introduction~~result, ofit ais ~~spot~~difficult ~~bitcoin exchange~~to ~~traded~~predict ~~fund~~whether ~~(“ETF”)~~ and ~~the~~when ~~pending~~a ~~approval~~sale ofwill anbe ~~ETH ETF may attract speculative traders who seek short-term gains based on price movements~~completed. ~~This~~The ~~increased~~failure ~~speculative~~of ~~activity~~WhiteFiber’s ~~could lead~~ efforts to ~~short-term~~secure ~~price~~sales ~~volatility.~~after ~~Such~~investing ~~events~~resources ~~could~~in ~~have~~ a ~~material adverse~~lengthy ~~effect~~sales onprocess ~~our~~would ~~ability~~adversely toaffect ~~continue~~its ~~as a going concern or to pursue our~~ business, ~~strategy~~operating ~~at all~~results, ~~which could have a material adverse~~financial ~~effect on our business~~condition, ~~prospects or operations~~ and ~~potentially~~future ~~the value of any digital assets we mine or otherwise acquire or hold for our own account~~prospects.

~~There~~WhiteFiber’s ~~are~~ability ~~risks related~~ to ~~technological~~maintain ~~obsolescence,~~customer ~~the~~satisfaction ~~vulnerability~~depends ofin ~~the~~part ~~global~~on ~~supply~~the ~~chain~~quality ~~for~~of ~~bitcoin~~its ~~hardware~~customer ~~disruption,~~support and ~~difficulty~~cloud inoperations ~~obtaining~~services. ~~new~~Its ~~hardware~~failure ~~which~~to maintain high-quality ~~may~~customer support and cloud operations services could have aan ~~negative~~adverse effect on ~~our~~its business, operating results, financial condition, and future prospects.

~~Our~~WhiteFiber ~~mining~~believes ~~operations can~~that ~~only~~the be successful ~~and~~use ~~ultimately profitable if the costs, including hardware and electricity costs, associated with mining digital~~of ~~assets~~its ~~are~~platform ~~lower~~requires ~~than~~a ~~the~~high ~~price~~level of asupport ~~bitcoin. As our mining facility operates, our miners experience ordinary wear~~ and ~~tear,~~engagement ~~and~~for ~~may~~many ~~also face more significant malfunctions caused by a number~~ of ~~extraneous~~its ~~factors beyond our control~~customers. WeIn ~~have~~order ~~purchased second-hand miners from third parties. The degradation of our miners requires us~~ to, ~~over~~deliver ~~time,~~appropriate ~~replace~~customer ~~those miners which are no longer functional. Additionally,~~support asand ~~the technology evolves~~engagement, weWhiteFiber ~~are~~must ~~required~~successfully toassist ~~acquire~~its ~~newer~~customers ~~models~~in ofdeploying ~~miners~~and continuing to ~~remain~~use ~~competitive~~its inplatform, ~~the~~resolve ~~market. Reports have been released~~performance ~~which~~issues, ~~indicate~~address ~~that~~interoperability ~~miner~~challenges ~~manufacturers~~with ~~or sellers adjust~~ the ~~prices~~customers’ ofexisting ~~their~~IT ~~miners according to bitcoin prices~~infrastructure, soand ~~the~~respond ~~cost~~to ofsecurity ~~new~~threats ~~machines~~and iscyber-attacks ~~unpredictable~~and ~~but~~performance ~~could~~and bereliability ~~extremely~~problems ~~high.~~that ~~As a result, at times, we~~ may ~~obtain~~arise ~~miners and other hardware~~ from ~~third~~time ~~parties at premium prices,~~ to ~~the extent they are available~~time. ~~This~~Increased ~~upgrading~~demand ~~process~~for ~~requires~~customer ~~substantial~~support ~~capital investment,~~ and ~~we may face challenges.~~cloud ~~Further,~~operations ~~the global supply chain for bitcoin miners is presently heavily dependent on China-based manufacturers. In addition~~services, ~~there~~without ~~have been~~corresponding ~~shortages~~increases ~~of the semiconductors which are key components~~ in ~~miner production. The global reliance on China as a main supplier of bitcoin miners has been called into question~~revenue, particularly in the wake of the COVID-19 pandemic. Should similar outbreaks or other disruptions to the China-based global supply chain for bitcoin hardware on the spot market or otherwise occur, we may not be able to obtain adequate replacement parts for our existing miners or to obtain additional miners from the manufacturer or third parties on a timely basis. Such events could ~~have~~increase aits ~~material~~costs ~~adverse~~and ~~effect~~adversely onaffect ~~our~~its ~~ability to pursue our~~ business ~~strategy~~, ~~which could have a material adverse effect~~operating onresults, ~~our~~financial ~~business~~condition, and ~~the~~future ~~value of our Ordinary Shares~~prospects.

~~The~~Furthermore, ~~bitcoin~~there wecan be no assurance that WhiteFiber ~~mine~~will isbe ~~subject~~able to ~~halving;~~hire ~~the~~sufficient ~~bitcoin~~support ~~reward~~personnel ~~for~~as ~~successfully~~and ~~uncovering~~when aneeded, ~~block~~particularly ~~will~~if ~~halve~~its ~~several~~sales ~~times~~exceed inour internal forecasts. WhiteFiber expects to increase the ~~future~~number of its customers, and ~~bitcoin~~that growth may put additional pressure on its customer support and cloud operations services teams. WhiteFiber’s customer support and cloud operations services teams may need additional personnel to respond to customer ~~value~~demand. WhiteFiber may ~~not~~be ~~adjust~~unable to ~~compensate~~respond usquickly enough to accommodate short-term increases in customer demand for services. To the extent ~~reduction~~that WhiteFiber is unsuccessful in ~~the~~hiring, ~~rewards~~training, weand ~~receive~~retaining ~~from~~adequate support resources, its ability to provide high-quality and timely support to its customers will be negatively impacted, and its customers’ satisfaction and their purchase of our ~~mining~~infrastructure could ~~efforts~~be adversely affected.

~~Halving~~In isaddition, aas ~~process designed~~WhiteFiber continues to ~~control~~grow its ~~the~~operations ~~overall supply~~ and ~~reduce~~expand ~~the~~outside ~~risk~~ of ~~inflation in digital assets using a proof-of-work consensus algorithm. At a predetermined block,~~ the ~~mining~~United ~~reward is cut in half~~States, ~~hence~~need ~~the~~to ~~term~~be ~~“halving.”~~able ~~For bitcoin, the reward was initially set at 50 bitcoin currency rewards per block and this was cut in half~~ to 25provide onefficient ~~November~~services ~~28,~~that ~~2012~~meet atits ~~block 210,000 and again to 12.5 on July~~customers’ 9,needs ~~2016~~globally at ~~block 420~~scale,~~000.~~ ~~The next halving for bitcoin occurred in May 2020 at block 630,000 when the reward was reduced to 6.25. This reward rate was halved during April 2024 to 3.125 bitcoin per new block~~ and ~~will~~its ~~continue~~customer tosupport ~~halve at approximately four-year intervals until all potential 21 million bitcoin have been mined. If the award of bitcoin rewards for solving blocks~~ and ~~transaction~~cloud ~~fees~~operations ~~are~~services ~~not sufficiently~~teams ~~high, we~~ may ~~not~~face ~~have~~additional an adequate incentive to continue mining and may cease our mining operations. Halving may result in a reduction in the aggregate hash rate of the bitcoin network as the incentive for miners decreases. Miners ceasing operations would reduce the collective processing power on the networkchallenges, ~~which~~including ~~would adversely affect the confirmation process for transactions (i.e., temporarily~~those ~~decreasing~~associated ~~the~~with ~~speed~~operating ~~at which blocks are added to a blockchain until~~ the ~~next~~platforms ~~scheduled adjustment in difficulty for block solutions)~~ and ~~make~~delivering ~~bitcoin~~support, ~~networks more vulnerable to a malicious actor or botnet obtaining control in excess of 50% of the processing power active on a blockchain~~training, ~~potentially permitting such actor or botnet to manipulate a blockchain in a manner that adversely affects the network~~ and ~~our~~documentation ~~activities. A reduction~~ in ~~confidence~~languages inother ~~the~~than ~~confirmation~~English ~~process or processing power of the network could result~~ and ~~be irreversible.~~providing ~~Such~~services ~~events~~across ~~could~~expanded ~~have~~time-zones. aIf ~~material~~WhiteFiber ~~adverse~~is ~~effect~~unable ~~on our ability~~ to ~~continue~~provide toefficient ~~pursue~~customer ~~our~~support ~~business~~services ~~strategy~~globally at ~~all~~scale, ~~which~~its ~~could have a~~ability ~~material~~to ~~adverse~~grow ~~effect~~its ~~on our business, prospects or~~ operations ~~and~~may ~~potentially~~be ~~the value of any bitcoin or other digital assets we mine~~harmed, ~~whether~~ ~~now~~and orWhiteFiber inmay ~~the~~need ~~future,~~to orhire ~~otherwise~~additional ~~acquire~~services orpersonnel ~~hold~~which ~~for~~could ~~our~~increase ~~own account. While bitcoin prices have had a history of price fluctuations around the halving of~~ its ~~bitcoin rewards~~expenses, ~~there is no guarantee that the price change will be favorable or would compensate for the reduction~~ ~~in mining reward. If a corresponding~~ and ~~proportionate~~negatively ~~increase~~impact inits ~~the~~business, ~~trading~~financial ~~price of bitcoin does not follow these anticipated halving events~~condition, ~~the~~operating ~~revenue we earn from our mining operations would see a corresponding decrease~~results, ~~which would have a material adverse effect on our business~~ and ~~operations~~future prospects.

The ~~impact~~broader adoption, use, and commercialization of ~~social~~AI ~~media~~technology, and ~~influencers~~the continued rapid pace of developments in the AI field, are inherently uncertain. Failure by WhiteFiber’s customers to use its cloud services to support AI use cases in their systems, or its ability to keep up with evolving AI technology requirements and regulatory frameworks, could have a material adverse effect on ~~the~~WhiteFiber’s ~~price~~business, ~~for~~operating ~~digital~~results, ~~assets~~financial iscondition, and ~~uncertain~~future prospects.

~~Renowned~~As ~~persons,~~part ~~including social media influencers, may publicly discuss their holdings (or the holdings~~ of ~~companies~~WhiteFiber’s ~~with~~growth ~~which they are affiliated) of bitcoin~~strategy, orit ~~their~~seeks ~~intent~~ to ~~buy~~attract ~~or sell large quantities of bitcoin. This may have a dramatic impact on the price of bitcoin, both up~~ and ~~down. At~~acquire acustomers ~~minimum,~~requiring ~~these~~high-performance ~~public statements delivered through social media~~computing, such as XAI, ~~(formerly~~machine ~~Twitter)~~learning, ~~may~~and ~~cause~~automated ~~the price of bitcoin to~~decision-making ~~experience~~technologies, ~~significant~~including ~~volatility.~~proprietary ~~These~~AI ~~episodes~~algorithms ~~could~~and ~~have~~models a(collectively, ~~material~~“AI ~~adverse impact on the value of our bitcoin holdings as well as the prices of bitcoin that we may sell~~Technologies”).

AI has been developing at a rapid pace, and continues to evolve and change. As demand continues for AI services, AI providers, including our customers, have sought increased compute capacity to enable advancements in their AI models and service the demands of end users. We cannot predict whether additional computing power will continue to be required to develop larger, more powerful AI models, or if the practical limits of AI technology will plateau in the future regardless of available compute capacity. Further, there have been recent advancements in AI technology, including open-source AI models, that may lead to compute and other efficiencies that may impact the demand for AI services, including our platform, solutions, and services, which may adversely impact our revenue and profitability. In the event that existing scaling laws do not continue to apply as they have in the past, demand by our customers for compute resources, including our solutions and services, may not continue to increase over time, or may decrease if overall demand for AI is impacted by a lack of further technological development. If we are unable to keep up with the changing AI landscape or in developing services to meet our customers’ evolving AI needs, or if the AI landscape does not develop to the extent we or our customers expect, our business, operating results, financial condition, and future prospects may be adversely impacted.

WeAdditionally, we may incur significant costs and experience significant delays in developing new solutions and services or enhancing our current platform to adapt to the changing AI landscape, and may not beachieve ~~able~~a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to ~~realize~~continue and may accelerate, the ~~benefits~~long-term trajectory of ~~forks~~this technological trend is uncertain. Further, market acceptance, understanding, and valuation of solutions and services that incorporate AI Technologies are uncertain and the perceived value of AI Technologies used and/or provided by our customers could be inaccurate. If AI is not broadly adopted by enterprises to the extent we expect, or if new use cases do not arise, then our opportunity may be smaller than we expect. Further, if the consumer perception and perceived value of AI Technologies is inaccurate this could have a material adverse effect on our customers, which in turn could have a material adverse effect on our business, operating results, financial condition, and future prospects.

ToConcerns ~~the~~relating ~~extent~~to ~~that a significant majority of users and miners on a bitcoin network install software that changes~~ the ~~bitcoin~~responsible ~~network~~use orby ~~properties of a bitcoin,~~our ~~including~~customers ~~the irreversibility~~ of ~~transactions and limitations on the mining of~~ new ~~bitcoin, the bitcoin network would be subject to new protocols~~ and ~~software.~~evolving ~~However~~technologies, ifsuch ~~less~~as ~~than a significant majority of users and miners on the bitcoin network consent to the proposed modification~~AI, ~~and~~which ~~the~~are ~~modification~~supported isby ~~not~~our ~~compatible with the software prior to its modification~~platform, ~~the~~may ~~consequence~~result would be what is known as a “fork” of the network, with one prong running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the bitcoin running in ~~parallel~~collateral ~~yet~~reputational ~~lacking interchangeability and~~harm ~~necessitating exchange-type transaction~~ to ~~convert currencies between the two forks~~us. ~~Additionally,~~AI it may bepose ~~unclear~~emerging ~~following~~ethical aissues ~~fork which fork represents the original asset~~ and ~~which~~if isour ~~the~~platform ~~new~~enables ~~asset.~~customer ~~Different~~solutions ~~metrics~~that ~~adopted~~draw bycontroversy ~~industry~~due ~~participants~~ to ~~determine~~their ~~which~~perceived isor ~~the~~actual ~~original~~impact ~~asset~~on ~~include: referring to the wishes of the core developers of bitcoin~~society, ~~blockchains~~we ~~with~~may ~~the~~experience ~~greatest~~brand ~~amount of hashing power contributed by miners~~ or ~~validators;~~reputational orharm, ~~blockchains~~competitive ~~with~~harm, ~~the longest chain. A fork in the network of a particular bitcoin could adversely affect an investment in our Company~~ or ~~our~~legal ~~ability to operate~~liability.

WeFurthermore, ~~may not be able to realize~~ the ~~economic~~rapid ~~benefit~~pace of ainnovation ~~fork, either immediately or ever, which could adversely affect an investment~~ in ~~our securities. If we~~ ~~hold a bitcoin at~~ the ~~time~~field of aAI ~~hard~~has ~~fork~~led ~~into~~to ~~two~~developing ~~digital~~and ~~assets,~~evolving ~~industry~~regulatory ~~standards~~frameworks ~~would~~globally, ~~dictate~~which ~~that~~are ~~we would be~~ expected to ~~hold~~become increasingly complex anas ~~equivalent~~AI ~~amount~~continues ofto ~~the~~evolve. ~~old~~Regulators and ~~new~~lawmakers ~~assets~~around ~~following~~ the ~~fork.~~world ~~However,~~have westarted ~~may~~proposing ~~not~~and ~~be able~~adopting, or itare ~~may~~currently ~~not be practical~~considering, ~~to secure~~ orregulations ~~realize~~and ~~the~~guidance ~~economic~~specifically ~~benefit~~on of the ~~new~~use ~~asset~~of ~~for various reasons~~AI. ~~For~~Regulations ~~instance,~~related weto ~~may~~AI ~~determine~~Technologies ~~that~~have ~~there~~been isintroduced noin ~~safe~~the orUnited ~~practical~~States ~~way~~at ~~to custody~~ the ~~new~~federal ~~asset,~~level ~~that~~and ~~trying~~are toalso doenacted soand ~~may~~advancing ~~pose~~at anthe ~~unacceptable~~state ~~risk~~level. toAdditional ~~our~~regulations ~~holdings~~may inimpact ~~the~~our ~~old~~customers’ ~~asset, or that the costs of~~ability ~~taking~~to ~~possession~~develop, use and~~/or~~ ~~maintaining~~commercialize ~~ownership~~AI ofTechnologies, ~~the~~which ~~new~~would ~~bitcoin~~impact ~~exceed~~demand ~~the~~for ~~benefits~~our ~~of owning the new bitcoin. Additionally~~platform, ~~laws~~solutions, ~~regulation or~~and ~~other~~services ~~factors~~and may ~~prevent~~affect our usbusiness, ~~from~~operating ~~benefitting~~results, ~~from~~financial ~~the~~condition, ~~new asset even if there is a safe~~ and ~~practical~~future ~~way to custody and secure the new asset~~prospects.

~~There~~AI isand arelated ~~possibility~~industries, including cloud services, ofare ~~bitcoin~~under ~~mining~~increasing ~~algorithms~~scrutiny ~~transitioning~~from regulators due to ~~proof~~their concerns about market concentration, anti-competitive practices, and the pace of ~~stake~~partnerships ~~validation~~and acquisitions involving generative AI startups. As the industry continues to grow, transactions and ~~other~~business ~~mining~~conduct will ~~related~~likely ~~risks~~continue to draw scrutiny from regulators. Our customers may become subject to further AI regulations, including any restrictions on the total consumption of compute technology, which could ~~make~~cause usa ~~less~~delay ~~competitive~~or impediment to the commercialization of AI technology and could lead to a decrease in demand for our customers’ AI infrastructure, and ~~ultimately~~may adversely affect our business, ~~and~~operating ~~the~~results, financial ~~value~~condition, ofand ~~our~~future ~~shares~~prospects.

~~The~~A ~~protocol~~curtailment ~~pursuant to which transactions are confirmed automatically on the bitcoin blockchain through mining is known as proof-of-work (~~or ~~PoW).~~disruption ~~Proof-of-stake (or PoS) is an alternative method~~ in ~~validating digital asset transactions, such as Ethereum. The shift from a proof-of-work validation method to a PoS method, mining requires less~~ energy ~~and may render any company that maintains advantages~~ supply in ~~the current climate (for example~~Iceland, ~~from~~ ~~lower~~Canada ~~priced electricity, processing, real estate,~~ or ~~hosting)~~the ~~less competitive~~U.S. due ~~We, as a result of our efforts~~ to ~~optimize~~regulations and ~~improve the~~policies ~~efficiency~~implemented ofby ~~our~~their ~~bitcoin~~respective ~~mining operations~~governments, ~~may~~which beprioritize ~~exposed to the risk in the future of losing the benefit of our capital investments~~energy ~~and the competitive advantage we hope to gain from this as a result~~supply, ~~and~~ may because ~~negatively impacted by~~ a ~~switch~~substantial todisruption ~~proof-of-stake~~or ~~validation. This~~discontinuance ~~may additionally have an impact on other various investments~~ of ~~ours.~~WhiteFiber’s ~~Such~~data ~~events~~center ~~could~~operations ~~have~~based ain ~~material~~Iceland, ~~adverse~~Canada ~~effect on our ability~~or toprospectively ~~continue~~in asthe ~~a going concern or to pursue our business strategy at all~~U.S., ~~which~~and ~~could~~therefore ~~have~~impair aWhiteFiber’s ~~material~~financial ~~adverse~~condition ~~effect on our business, prospects~~ or ~~operations~~results ~~and potentially the value~~ of ~~any bitcoin or other digital assets we mine or otherwise acquire or hold for our own account~~operations.

ToThrough ~~the~~WhiteFiber ~~extent~~Iceland ~~that the~~ehf, ~~profit~~WhiteFiber ~~margins~~established ofand ~~bitcoin~~has ~~mining~~been providing ~~operations~~cloud ~~are~~services ~~not~~since ~~high~~November 2023. As of December 31,2025, ~~operators~~WhiteFiber had a fleet of ~~bitcoin~~462 ~~mining~~servers ~~operations~~at ~~are~~a ~~more~~third-party data center ~~likely~~located toin ~~immediately~~Northern ~~sell~~Iceland. Through WhiteFiber’s subsidiary, Enovum, which was acquired in October 2024, WhiteFiber ~~bitcoin~~has ~~rewards~~been ~~earned~~operating byits ~~mining~~data center located in ~~the~~Montreal ~~market~~Canada (MTL-1), ~~thereby~~and ~~constraining~~commenced ~~growth~~operations ofin the ~~price~~in ofthe ~~bitcoin~~fourth ~~that~~quarter ~~could~~of ~~adversely~~2025 ~~impact~~at MTL-3. usIn May 2025, WhiteFiber purchased a former industrial manufacturing building and land outside of Greensboro, North Carolina ~~similar~~which ~~actions~~it ~~could~~expects ~~affect~~to ~~other~~be ~~digital~~operational ~~assets~~in the second quarter of 2026.

~~Over~~In ~~the~~order ~~past several~~to ~~years,~~maintain ~~bitcoin~~its ~~mining~~data ~~operations~~center ~~have evolved from individual users mining with computer processors~~operations, ~~graphics~~WhiteFiber ~~processing units~~ and ~~first-generation~~its landlords ~~ASIC~~in ~~servers.~~Iceland ~~Currently, new processing power is predominantly added by incorporated~~ and ~~unincorporated “professionalized”~~in ~~mining~~Montreal ~~operations.~~will ~~Professionalized~~need ~~mining~~to ~~operations~~acquire ~~may~~sufficient ~~use~~supplies ~~proprietary hardware or sophisticated ASIC machines acquired from ASIC manufacturers. They require the investment~~ of ~~significant~~electricity ~~capital~~generated ~~for~~by ~~the acquisition of this hardware~~hydroelectric, ~~the leasing of operating space (often in data centers or warehousing facilities), incurring of electricity costs~~ and ~~the~~geothermal ~~employment of technicians to operate the mining farms~~energy. AsIn ~~a result~~addition, ~~professionalized~~WhiteFiber’s ~~mining~~data ~~operations~~centers ~~are~~need ofto aalso ~~greater~~maintain ~~scale~~reliable ~~than prior miners~~ and ~~have~~adequate ~~more~~infrastructure ~~defined~~ and ~~regular~~cooling ~~expenses~~systems ~~and liabilities. These regular expenses and liabilities require professionalized mining operations~~ to ~~maintain profit margins on the sale of bitcoin. To the extent the price of bitcoin declines~~ ~~and~~ensure ~~such~~optimal profit margin is constrained, professionalized miners are incentivized to more immediately sell bitcoin earned from mining operations, whereas it is believed that individual miners in past years were more likely to hold newly mined bitcoin for more extended periodsperformance. ~~The immediate selling of newly mined bitcoin greatly increases the trading volume of bitcoin, creating downward pressure on the market price of bitcoin rewards.~~

Currently, Icelandic and Canadian-based data centers and similar facilities, including the ones contracted with WhiteFiber, may face significant risks of energy disruption, curtailment or discontinuance due to low water levels. Water reservoirs are utilized by hydropower plants, which provide hydro-generated energy in the country. In the event of a water shortage, and therefore a shortage of hydro-generated energy, the prioritization framework for Icelandic energy favors residential and certain business uses over data centers and similar facilities. In addition, volcanic eruptions might interrupt the generation of electricity from geothermal energy, as occurred several times in 2023.

~~The~~In ~~extent~~addition, toWhiteFiber ~~which~~may ~~the value~~be ofsubject ~~bitcoin~~to ~~mined~~risks and byunanticipated acosts ~~professionalized~~associated ~~mining~~with ~~operation~~obtaining ~~exceeds~~power ~~the~~from ~~allocable~~various ~~capital~~utility ~~and~~companies. ~~operating~~Utilities ~~costs~~that ~~determines~~serve ~~the~~our ~~profit margin~~data ofcenters ~~such operation. A professionalized mining operation~~ may be dependent ~~more~~on, ~~likely~~and sensitive to ~~sell~~price increases for, a ~~higher~~particular ~~percentage~~type of ~~its~~fuel, ~~newly~~including ~~mined~~hydroelectric. ~~bitcoin rapidly~~In ifaddition, itthe istotal ~~operating~~cost atof delivered aelectricity ~~low~~could ~~profit~~increase ~~margin~~as ~~and~~a itresult ~~may~~of: ~~partially~~regulations orintended ~~completely~~to ~~cease~~regulate ~~operations~~carbon ifemissions ~~its~~and ~~profit~~other ~~margin~~pollutants, ~~is negative.~~ratepayer Insurcharges arelated ~~low~~to ~~profit~~recovering ~~margin~~the ~~environment,~~cost aof ~~higher~~extreme ~~percentage~~weather ~~could~~events beand ~~sold~~natural ~~more~~disasters ~~rapidly,~~(including ~~thereby~~volcanoes ~~potentially~~in ~~depressing~~Iceland ~~bitcoin~~and ~~prices. Lower~~floods ~~bitcoin~~in ~~prices~~North ~~could~~Carolina), ~~result~~geopolitical inconflicts, ~~further~~military ~~tightening~~conflicts, ofgrid ~~profit~~modernization ~~margins~~charges, ~~for~~as ~~professionalized~~well ~~mining~~as ~~operations~~other ~~creating~~charges aborne ~~network~~by ~~effect that~~ratepayers. ~~may~~Increases ~~further~~in ~~reduce~~ the ~~price~~cost of ~~bitcoin~~power ~~until~~at ~~mining~~any ~~operations~~of ~~with~~WhiteFiber’s ~~higher~~data ~~operating~~centers ~~costs~~could ~~become~~put ~~unprofitable~~those ~~forcing~~locations ~~them~~at toa ~~reduce~~competitive disadvantage relative ~~mining~~to ~~power~~data orcenters ~~cease~~that ~~mining~~are ~~operations~~supplied ~~temporarily~~power at a lower price.

IfAccordingly, athe ~~malicious actor~~energy orsupply ~~botnet~~for ~~obtains~~WhiteFiber’s data ~~control~~centers ofmay ~~more~~be ~~than~~subject ~~50%~~to ofdisruption ~~the~~and ~~processing~~could ~~power~~become oninsufficient ato ~~bitcoin~~support ~~network,~~their oroperations. ~~33%~~WhiteFiber’s financial condition or ~~more~~results ~~share~~ of ~~the~~operations ~~Ethereum~~may ~~Validators, such~~be ~~actor~~adversely oraffected ~~botnet~~if ~~could~~its ~~manipulate~~WhiteFiber ~~blockchains~~data tocenters ~~adversely~~are ~~affect~~disrupted ~~us,~~or ~~which~~discontinued ~~would~~due ~~adversely~~to ~~affect~~a ancurtailment or ~~investment~~interruption inof usthe orenergy ~~our ability to operate~~supply.

IfEstablishing adata ~~malicious~~centers ~~actor or~~in ~~botnet~~remote ~~(a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains~~areas amay ~~majority~~adversely ofaffect ~~the~~WhiteFiber’s ~~processing power dedicated to mining a bitcoin, or the~~ ability to ~~valuate~~retain ~~Ethereum~~staff ~~transactions, it may be able to alter blockchains on which transactions of bitcoin or 33% or more of ETH reside~~ and ~~rely~~increase by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it is believed that it could not generate new units or transactions using such control. The malicious actor could “double-spend” its ~~own~~compensation ~~digital asset (i~~costs.e., spend the same digital asset in more than one transaction) and prevent the confirmation of other users’ transactions for as long as it maintained control. To the extent that such malicious actor or botnet yields its control of the processing power on the network or the bitcoin and/or Ethereum communities do not reject the fraudulent blocks as malicious, reversing any changes made to blockchains may not be possible. The foregoing description is not the only means by which the entirety of blockchains or digital assets may be compromised but is only an example.

~~Although~~If ~~there~~WhiteFiber ~~are~~establishes ~~no known~~data ~~reports~~centers ofin ~~malicious~~areas ~~activity~~with orlower ~~control~~populations such ofas ~~blockchains~~Iceland ~~achieved~~or ~~through~~remote ~~controlling~~parts ~~over 50%~~ of ~~the~~North ~~processing power on the bitcoin network~~America, itrecruiting isand ~~believed~~retaining ~~that certain mining pools may have exceeded~~ the ~~50%~~necessary ~~threshold~~staff into ~~bitcoin.~~operate ~~The~~its ~~possible~~locations ~~crossing~~may ofpose ~~the~~a ~~50% threshold~~challenge. ~~for~~When ~~bitcoin~~WhiteFiber orencounters ~~33% for Ethereum indicates~~ a ~~greater~~relatively ~~risk~~low ~~that a single mining pool could exert authority over the validation of digital asset transactions. To the extent that the digital asset ecosystem~~population, ~~and~~ the ~~administrators~~pool of ~~mining~~available ~~pools,~~employees dois ~~not~~limited. ~~act~~In ~~to ensure greater decentralization of digital asset mining processing power~~addition, ~~the~~some ~~feasibility~~employers ofhave ~~a malicious actor obtaining control of the processing power~~offered ~~will~~significantly ~~increase~~higher ~~because~~wages ~~the~~in ~~botnet~~order or malicious actor could compromise more than the threshold and thereby gain control of the blockchain, whereas if the blockchain remains decentralized it is inherently more difficult for the botnet of malicious actor to ~~aggregate~~fill ~~enough processing~~vacant ~~power~~positions. toThis ~~gain control of the blockchain, which~~ may adversely affect anWhiteFiber’s ~~investment in our Ordinary Shares. Such lack of controls and responses to such circumstances could have a material adverse effect on our~~ ability to ~~continue~~attract asand ~~a going concern or to pursue our~~retain ~~new~~qualified ~~strategy~~personnel atand ~~all,~~may ~~which~~increase ~~could~~its ~~have~~employee acosts ~~material~~if ~~adverse~~it ~~effect~~has onto ~~our~~increase ~~business, prospects or operations and potentially~~ the ~~value~~compensation ~~of any bitcoin or other digital assets~~ we ~~mine~~pay orin ~~otherwise~~response ~~acquire~~to orthe ~~hold for our own account, and harm investors~~market.

WeWhiteFiber’s ~~are~~data ~~subject to~~centers ~~risks~~could ~~associated with our need for significant electrical power. Government regulators may potentially restrict the ability of electricity~~be ~~suppliers~~adversely toimpacted ~~provide~~by ~~electricity~~climate ~~to mining operations, such as ours~~change.

~~The~~Severe ~~operation~~weather ofevents, asuch ~~bitcoin or~~as ~~other~~tornadoes, ~~digital~~hurricanes, rain, ~~asset~~drought, ~~mine~~fire, ~~can~~ice ~~require~~and ~~massive~~snowstorms, ~~amounts~~and ofhigh-and ~~electrical~~low-temperature ~~power. Further~~extremes, ~~our~~occur ~~mining~~in ~~operations~~regions ~~can~~in ~~only~~which beWhiteFiber ~~successful~~operates and maintains ~~ultimately~~infrastructure. ~~profitable~~WhiteFiber’s ifprincipal ~~the~~data ~~costs,~~centers ~~including~~in ~~electrical~~Iceland ~~power~~and ~~costs,~~Canada ~~associated~~are ~~with~~designed ~~mining~~to aprovide ~~bitcoin~~year-round ~~are~~cool ~~lower~~weather ~~than~~conditions. Nevertheless ~~the~~climate ~~price~~change ofcould achange ~~bitcoin. As~~the afrequency ~~result,~~and ~~any~~severity ~~mine~~of weweather ~~establish~~events, ~~can~~which ~~only~~may becreate ~~successful~~physical ifand wefinancial ~~can~~risks to ~~obtain~~WhiteFiber. ~~sufficient~~Such ~~electrical~~risks ~~power~~could ~~for~~have ~~that~~an ~~mine~~adverse effect on aWhiteFiber’s ~~cost-effective basis~~financial condition, ~~and~~results ~~our~~of ~~establishment~~operations ofand ~~new~~cash ~~mines~~flows. Increases ~~requires~~in ussevere toweather ~~find~~conditions ~~locations~~or ~~where~~extreme ~~that~~temperatures ismay ~~the~~cause ~~case.~~infrastructure ~~There~~construction ~~may~~projects to be ~~significant~~delayed ~~competition~~or ~~for~~canceled ~~suitable~~and ~~mine~~limit ~~locations,~~resources ~~and~~available ~~government~~for ~~regulators~~such ~~may~~projects ~~potentially~~resulting in decreased revenue or increased project costs. In addition, drought conditions could restrict the ~~ability~~availability of ~~electricity~~water ~~suppliers~~supplies toor ~~provide~~limit ~~electricity~~ the ability to ~~mining~~obtain water use permits, inhibiting the ability to conduct operations. inTo ~~times~~date, none of ~~electricity~~WhiteFiber’s ~~shortage~~WhiteFiber ordata ~~may~~centers ~~otherwise~~in ~~potentially~~Iceland ~~restrict~~ or ~~prohibit~~Canada ~~the~~have ~~provision~~experienced orany ~~electricity~~material impacts to ~~mining~~its financial condition, results of operations or cash flows due to the physical effects of climate change.

The broader adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain. Failure by our customers to use its cloud services to support AI use cases in their systems, or WhiteFiber’s ability to keep up with evolving AI technology requirements and regulatory frameworks, could have a material adverse effect on our business, operating results, financial condition, and future prospects.

As part of WhiteFiber’s growth strategy, it seeks to attract and acquire customers requiring high-performance computing, such as AI, machine learning, and automated decision-making technologies, including proprietary AI algorithms and models (collectively, “AI Technologies”).

AI has been developing at a rapid pace, and continues to evolve and change. As demand continues for AI services, AI providers, including WhiteFiber’s customers, have sought increased compute capacity to enable advancements in their AI models and service the demands of end users. We cannot predict whether additional computing power will continue to be required to develop larger, more powerful AI models, or if the practical limits of AI technology will plateau in the future regardless of available compute capacity. Further, there have been recent advancements in AI technology, including open-source AI models, that may lead to compute and other efficiencies that may impact the demand for AI services, including WhiteFiber’s platform, solutions, and services, which may adversely impact its revenue and profitability. In the event that existing scaling laws do not continue to apply as they have in the past, demand by our customers for compute resources, including our solutions and services, may not continue to increase over time, or may decrease if overall demand for AI is impacted by a lack of further technological development. If WhiteFiber is unable to keep up with the changing AI landscape or in developing services to meet its customers’ evolving AI needs, or if the AI landscape does not develop to the extent we or our customers expect, our business, operating results, financial condition, and future prospects may be adversely impacted.

~~Any~~Additionally, ~~shortage~~we ofmay ~~electricity~~incur significant costs ~~supply~~and orexperience ~~increase~~significant delays in ~~electricity~~developing ~~cost~~new insolutions aand ~~jurisdiction~~services ~~may~~or ~~negatively~~enhancing ~~impact~~our current platform to adapt to the ~~viability~~changing AI landscape, and ~~the~~may ~~expected~~not ~~economic~~achieve a return on investment or capitalize on the opportunities presented by demand for ~~bitcoin~~AI solutions. Moreover, ~~mining~~while ~~activities~~AI inadoption ~~that~~is ~~jurisdiction.~~likely Into ~~addition~~continue and may accelerate, the ~~significant~~long-term trajectory ~~consumption~~ of ~~electricity~~this ~~may~~technological ~~have~~trend ais ~~negative~~uncertain. ~~environmental impact~~Further, ~~including~~market ~~contribution~~acceptance, tounderstanding, ~~climate~~and ~~change,~~valuation ~~which~~of ~~may~~solutions ~~give~~and ~~rise~~services tothat ~~public~~incorporate ~~opinion~~AI ~~against~~technologies ~~allowing~~are uncertain and the ~~use~~perceived value of ~~electricity~~AI ~~for~~Technologies ~~bitcoin~~used ~~mining~~and/or provided by WhiteFiber’s customers could be inaccurate. If AI is not broadly adopted by enterprises ~~activities~~to orthe ~~government~~extent ~~measures~~WhiteFiber ~~restricting~~expects, or ~~prohibiting~~if ~~the~~new use cases do not arise, then our opportunity may be smaller than it expects. Further, if the consumer perception and perceived value of ~~electricity~~AI ~~for~~Technologies ~~bitcoin~~is ~~mining~~inaccurate ~~activities~~this could have a material adverse effect on WhiteFiber’s customers, which, in turn, could have a material adverse effect on its business, operating results, financial condition, and future prospects.

WeConcerns ~~may~~relating ~~not~~to ~~adequately~~the responsible use by WhiteFiber’s ~~respond~~customers of new and evolving technologies, such as AI, which are supported by its platform, may result in collateral reputational harm to ~~price~~WhiteFiber. ~~fluctuations~~AI may pose emerging ethical issues and ~~rapidly~~if ~~changing~~its ~~technology~~platform enables customer solutions that draw controversy due to their perceived or actual impact on society, ~~which~~WhiteFiber may ~~negatively~~experience ~~affect~~brand ~~our~~or ~~business~~reputational harm, competitive harm, or legal liability.

~~Competitive~~Furthermore, ~~conditions within~~ the ~~digital~~rapid ~~asset~~pace ~~industry~~of ~~require~~innovation ~~that we use sophisticated technology~~ in the ~~operation~~field of ~~our~~AI ~~business.~~has ~~The~~led ~~industry~~to ~~for~~developing ~~blockchain technology~~and isevolving ~~characterized~~regulatory byframeworks ~~rapid technological changes~~globally, ~~new~~which ~~product~~are ~~introductions,~~expected ~~enhancements~~to ~~and~~become ~~evolving~~increasingly ~~industry standards. New~~complex ~~technologies,~~as ~~techniques~~AI orcontinues ~~products~~to ~~could~~evolve. ~~emerge~~Regulators ~~that~~and ~~might~~lawmakers ~~offer~~around ~~better~~the ~~performance~~world ~~than~~have ~~the~~started ~~software~~proposing and ~~other~~adopting, ~~technologies~~or weare currently ~~utilize~~ considering, regulations and weguidance ~~may~~specifically ~~have~~on tothe ~~manage~~use ~~transitions~~of toAI. Regulations ~~these~~related ~~new technologies~~ to ~~remain~~AI ~~competitive.~~Technologies Wehave ~~may~~been ~~not~~introduced bein ~~successful,~~the ~~generally or~~United States ~~relative~~at ~~to our competitors in~~ the ~~digital~~federal ~~asset~~level ~~industry,~~and inare ~~timely~~also ~~implementing~~enacted ~~new~~and ~~technology~~advancing ~~into~~at ~~our~~the ~~systems,~~state ~~or doing so in a cost-effective manner~~level. ~~During~~Additional ~~the~~regulations ~~course~~may ofimpact ~~implementing~~our ~~any~~customers’ ~~such~~ability to ~~new technology into our operations~~develop, weuse ~~may experience system interruptions~~ and ~~failures during~~commercialize ~~such~~AI ~~implementation. Furthermore~~Technologies, ~~there~~which ~~can~~would beimpact nodemand ~~assurances~~for ~~that~~WhiteFiber’s ~~we will recognize~~platform, ~~in a timely manner or at all~~solutions, ~~the~~and ~~benefits~~services ~~that~~and we may ~~expect~~affect ~~as a result of~~ our ~~implementing~~business, ~~new~~operating ~~technology~~results, ~~into~~financial ~~our operations. As a result~~condition, ~~our business~~ and ~~operations~~future ~~may suffer, and there may be adverse effects on the price of our Ordinary Shares~~prospects.

~~The~~AI ~~value~~and related industries, including cloud services, are under increasing scrutiny from regulators due to their concerns about market concentration, anti-competitive practices, and the pace of ~~stable~~partnerships and acquisitions involving generative AI startups. As the industry continues to grow, transactions and business ~~coins~~conduct ~~that~~will welikely ~~hold~~continue to draw scrutiny from regulators. WhiteFiber’s customers may bebecome subject to ~~volatility~~further ~~and~~AI ~~risk~~regulations, including any restrictions on the total consumption of ~~loss~~compute technology, which could cause a delay or impediment to the commercialization of AI technology and could lead to a decrease in demand for WhiteFiber’s customers’ AI infrastructure, and may adversely affect our business, operating results, financial condition, and future prospects.

AsWhiteFiber ofoperates ~~December 31, 2024, we held approximately $0.4 million~~ in ~~USD Coin,~~ a stablecoin issued by Circle Internet Financial Public Limited Company (“Circle”) that is backed by dollar denominated assets held by the issuer in segregated accounts with U.S. regulated financial institutions. Stablecoins such as USD Coin are usually backed by the U.S. Dollar and other short capital-~~dated U.S. government obligations, and are usually pegged to the~~intensive industry U.S. dollar. On March 9, 2023, as a result of the closure of Silicon Valley Bank (“SVB”), Circle announced that $3.3 billion of its roughly $40 billion USD Coin reserves were held at SVB. As a result, Circle depegged the USD Coin from its $1.00 peg, trading as low as $0.87. In January 2024, Coindesk reported that Circle’s USDC dollar-pegged stablecoin fell to as low at $0.74 on three separate occasions following a marketwide sell-off spurred by a report casting doubt over whether a spot bitcoin ETF will be approved. Such a risk may result in the sell-off of USD Coin and ~~volatility~~is assubject to ~~the~~capital ~~value~~market ~~of stablecoins, which would expose us to risk of potential loss~~ and ~~could~~interest ~~have~~rate ~~a material adverse effect on our ability to raise new funding and on our business, financial condition, and results of operations and prospects~~risks.

~~Ethereum~~WhiteFiber’s ~~Risk~~operations ~~Factors~~require significant capital investment to purchase and maintain the property and equipment required to provide specialized infrastructures to support generative AI work streams. In addition, WhiteFiber’s operations include a significant level of fixed and semi-fixed costs. Consequently, WhiteFiber will rely on capital markets, as sources of liquidity for capital requirements for growth. If WhiteFiber is unable to access capital at competitive rates, the ability to implement business plans, make capital expenditures or pursue acquisitions it would otherwise rely on for future, growth may be adversely affected. For example, without obtaining additional debt financing, WhiteFiber will not have sufficient funds to retrofit NC-1 into a HPC data center or achieve its estimated 99 MW (gross) of total HPC data center capacity by May 2029 and other growth strategies. Market disruptions may increase the cost of borrowing or adversely affect WhiteFiber’s ability to access one or more financial markets. Such market disruptions could include:

~~Risks~~● ~~Associated with~~a ~~Staking~~significant oneconomic ~~Ethereum~~downturn; 2● the financial distress of unrelated industry leaders in the same line of business; ● deterioration in capital market conditions; ● turmoil in the financial services industry; ● volatility in GPU prices; ● terrorist attacks; ● war; or ● cyberattacks.0

In connection with the transition of the Ethereum network from PoW to PoS, which occurred on September 15, 2022, when the Ethereum Mainnet merged with the PoS Beacon Chain (the “Merge”), the Company is deploying Ethereum (ETH) to the beacon chain with a view to earning an ETH-denominated return thereon. On April 12, 2023, Ethereum’s Shanghai hard fork, also referred to as “Shapella,” has been finalized, enabling withdrawals for users who have “staked” their ETH to secure and validate transactions on the blockchain.

In addition, by running a validator node, the Company will be exposed to the risk of loss of its staked digital assets if it equivocates or fails to operate the node in accordance with applicable protocol rules, as the Company’s digital assets may be “slashed” or inactivity penalties may be applied if the validator node “double signs” or is offline for a prescribed period of time. Disputes on a liquid staking provider may lead to the value of staking assets diverging from ETH or failure to exit the liquid staking position. The Company intends to mitigate this risk by utilizing experienced service providers such as Figment for native staking and by carefully monitoring the staking activities performed by the Company in reliance on such services.

~~Risks~~If ~~under~~one ~~the~~of its customers were to obtain ~~Federal~~exclusive ~~securities~~rights ~~laws~~to ~~associated~~open ~~with~~source ~~Staking~~technologies that WhiteFiber employs across our businesses, its ability to realize significant operating efficiencies could be jeopardized.

~~The~~WhiteFiber’s ~~Merge~~business ~~and~~model ~~the~~leverages ~~switch~~its ~~from~~ability ~~PoW~~ to ~~PoS~~share ~~did~~significant ~~not~~open ~~change~~source ~~our~~technological ~~characterization~~innovations ofacross ~~ETH~~cloud asservices, aits ~~digital~~data ~~asset.~~centers Weand ~~intend~~customers. toIf ~~hold~~one ~~our~~of ~~staked ETH for our own account. In~~its ~~the~~customers ~~event~~were weto ~~exchange~~obtain ~~ETH~~exclusive ~~for~~rights ~~other~~to ~~digital~~what ~~assets~~are ~~(such~~now asopen ~~liquid~~source ~~staking~~technologies ~~tokens)~~WhiteFiber ~~which~~employs ~~may~~across beits ~~deemed to be securities~~businesses, ~~it would be for~~WhiteFiber ~~our~~could ~~own account. In all instances, we will perform a risk-based analysis to evaluate whether the digital asset may~~ be ~~deemed~~limited toin beobtaining aessential ~~“security” under~~supplies ~~the~~at ~~Federal~~competitive ~~securities~~costs ~~laws~~and ~~prior~~sharing toresearch ~~mining~~and ~~the~~development ~~digital~~costs ~~asset.~~across Weits ~~do not believe if we hold for our own account a particular digital~~businesses. ~~asset~~As ~~which may be deemed to be~~ a ~~security~~result, itWhiteFiber’s ~~will~~ability ~~be a risk~~ to ~~our~~realize ~~business~~significant ~~operations.~~operating ~~Nevertheless,~~efficiencies weby ~~will~~modifying ~~continue~~its toexisting ~~implement a~~or ~~compliance~~new ~~infrastructure~~data tocenters ~~ensure~~utilizing these ~~full~~technologies ~~compliance~~and ~~with~~its ~~the~~ability ~~federal~~to ~~securities~~serve ~~laws.~~all Inits ~~the~~customers ~~event~~could ~~our staking program is found to not~~ be ~~in compliance with the federal securities laws~~jeopardized, wewhich could ~~face~~materially ~~legal~~adversely oraffects ~~regulatory consequences. We would also need to undertake a regulatory~~WhiteFiber’s ~~review~~business, toresults ~~ensure~~of ~~compliance~~operations ~~with the Federal securities laws if~~ and ~~when~~future ~~we decide to offer staking-as-a-service for value to individuals~~prospects. ~~The Company would need to install a fully compliant organic infrastructure or hire third-party contractors.~~

~~Speculative~~WhiteFiber ~~and~~may be vulnerable to physical ~~Volatile~~security ~~Nature~~breaches, which could disrupt its operations and have a material adverse effect on its business, financial condition and results of ~~ETH~~ operations.

ToA ~~date,~~party who is able to compromise the ~~Company~~physical ~~has~~security ~~deployed~~measures aprotecting ~~portion~~its offacilities ~~the~~could ~~capital~~cause itinterruptions ~~has~~or ~~raised~~malfunctions ~~into~~in ~~ETH.~~its ~~The~~operations ~~price~~and ofmisappropriate ~~ETH~~our isproperty or ~~subject~~the toproperty ~~significant~~of ~~volatility~~its customers. InAs ~~addition,~~WhiteFiber ~~there is~~provides noassurances ~~guarantee~~to our customers that its provided the ~~Company~~highest ~~will~~level beof ~~able~~security, such toa ~~sell~~compromise ~~its~~could ~~ETH~~be atparticularly ~~prices~~harmful ~~quoted~~to onits ~~various~~brand ~~cryptocurrency~~and ~~trading~~reputation. ~~platforms~~WhiteFiber ormay atbe ~~all~~required ifto expend significant capital itand ~~determines~~resources to doprotect ~~so.~~against ~~The~~such ~~supply~~threats ofor ~~ETH~~to isalleviate ~~currently~~problems ~~controlled~~caused by ~~the~~breaches ~~source~~in ~~code~~security. ofAs ~~the~~techniques ~~Ethereum~~used ~~platform,~~to ~~and~~breach ~~there~~security change isfrequently aand ~~risk~~are ~~that the~~often ~~developers~~not ofrecognized ~~the~~until ~~code~~launched ~~and~~against ~~the~~a ~~participants~~target, inWhiteFiber ~~the~~may ~~Ethereum~~not ~~network~~be ~~could~~able ~~develop~~to ~~and/or~~implement ~~adopt~~ new ~~versions~~security measures ofin ~~the~~a ~~Ethereum~~timely ~~software that~~manner ~~significantly~~or, ~~increase~~if ~~the~~and ~~supply~~when ofimplemented, ~~ETH~~WhiteFiber inmay ~~circulation,~~not ~~negatively~~be ~~impacting~~certain ~~the~~whether ~~trading~~these ~~price~~measures ofcould ~~ETH.~~be circumvented. Any ~~significant~~breaches ~~decrease in~~that ~~the~~may ~~price~~occur ofcould ~~ETH~~expose ~~may~~us ~~materially~~to ~~and~~increased ~~adversely~~risk ~~affect~~of ~~the~~lawsuits, ~~value~~regulatory penalties, loss of ~~the~~existing ~~Company~~or potential customers, harm to WhiteFiber’s ~~securities~~reputation and, increases in ~~turn~~its security costs, ~~the~~which ~~Company~~could have a material adverse effect on WhiteFiber’s business, ~~and~~ financial condition and results of operations.

~~The~~WhiteFiber ~~ETH~~has ~~markets~~an ~~are~~evolving ~~sensitive to~~business ~~new developments, and since volumes are still maturing, any significant changes in market sentiment (by way of sensationalism in the~~model ~~media~~which oris ~~otherwise)~~subject ~~can~~to ~~induce~~various ~~large swings in volume and subsequent price changes~~uncertainties. ~~Such volatility can adversely affect the business and financial condition of the Company.~~

~~Momentum~~As ~~pricing~~cloud ~~typically~~services and WhiteFiber data centers isbecome more widely available, it expects the services and products associated with ~~growth~~them ~~stocks~~to ~~and~~evolve. ~~other~~In ~~assets~~order ~~whose~~to ~~valuation~~stay current with the industry, WhiteFiber’s business model requires it to evolve as ~~determined~~well. byFrom ~~the~~time ~~public~~to time, ~~accounts~~WhiteFiber ~~for~~has ~~anticipated~~modified ~~future~~and ~~appreciation~~will continue into ~~value~~modify aspects of its business model relating to its strategy. ~~The~~WhiteFiber ~~Company~~cannot ~~believes~~offer any assurance that ~~momentum~~these ~~pricing~~or ofany ~~ETH~~other ~~has~~modifications will ~~resulted,~~be ~~and~~successful ~~may~~or ~~continue~~will tonot result, in ~~speculation~~harm ~~regarding~~to ~~future appreciation~~its inbusiness. ~~the~~WhiteFiber ~~value~~may ofnot ~~ETH~~be able to manage growth effectively, ~~inflating~~which could damage its reputation, limit our growth and ~~making~~negatively ~~more~~affect ~~volatile~~our operating results. Further, as the ~~value~~markets ofin ~~ETH.~~which AsWhiteFiber aoperates ~~result~~continue to evolve, ~~ETH~~new market participants have emerged and may becontinue ~~more~~to ~~likely~~emerge and this may require WhiteFiber to ~~fluctuate~~further evaluate its business inmodel ~~value~~and ~~due~~products toand ~~changing~~services. ~~investor~~WhiteFiber ~~confidence~~cannot inprovide ~~future~~any ~~appreciation,~~assurance ~~which~~that ~~could~~we ~~adversely~~will ~~affect~~successfully ~~the~~identify all emerging trends and growth opportunities in this business sector, and ~~financial~~it ~~condition~~may lose out on those opportunities. Such circumstances could have a material adverse effect ofon ~~the~~its ~~Company~~business, prospects or operations.

~~Underlying~~WhiteFiber ~~Value~~does not have any business interruption ~~Risk~~or disruption insurance coverage.

~~ETH~~Currently, ~~represents~~WhiteFiber adoes ~~relatively new~~not ~~form~~have ofany ~~digital~~business liability ~~value~~or ~~that~~disruption isinsurance ~~still~~to ~~being~~cover ~~digested~~our ~~by society. Its underlying value is driven by its utility as a store of value~~operations, ~~means~~ ofother ~~exchange,~~than ~~and~~director’s ~~unit of account,~~ and ~~notably,~~officer’s ~~the~~liability ~~demand for ETH within various use cases of the Ethereum network~~insurance. ~~Just as oil~~WhiteFiber ishas ~~priced~~determined bythat the ~~supply~~costs ~~and demand~~ of ~~global~~insuring ~~markets, as a function of its utility to,~~ for ~~instance,~~these ~~power~~risks ~~machines~~ and ~~create plastics, so too is ETH priced by~~ the ~~supply~~difficulties ~~and~~associated ~~demand~~with ofacquiring ~~global~~such ~~markets~~insurance ~~for~~on ~~its own utility within Ethereum’s use cases. There is a risk~~commercially ifreasonable weterms ~~are~~make ~~working~~it ~~through~~impractical afor ~~staking~~WhiteFiber ~~pool~~ to ~~valuate~~have ~~ETH~~such ~~investors~~insurance. WeAny ~~rely~~uninsured ~~upon~~business adisruptions ~~pool~~may ~~operator~~result toin ~~run the validator. There is a counterparty~~WhiteFiber ~~risk~~incurring ~~that~~substantial ~~the~~costs ~~party with which we trust our assets may not uphold their side of the deal~~ and ~~fees or penalties may be assessed to~~ the ~~pool.~~ ~~These~~diversion ~~fees~~of ~~are typically assessed if the pool operator has downtime or dishonest actions. Finally~~resources, ~~blockchains~~which ~~are~~could ~~new~~have ~~technologies and there is always~~ an ~~outside~~adverse ~~risk~~effect ofon aour ~~catastrophic~~results ~~chain failure that could put locked or staked funds at risk. The speculative and volatile nature~~ of ~~ETH~~operations and ~~blockchain may materially and adversely affect the value of the Company’s securities~~financial condition.

~~The~~WhiteFiber ~~staked~~or ~~ETH~~Bit isDigital ~~subject to~~may ~~the~~fail ~~volatility risks set forth under “Speculative and Volatile Nature of ETH” and the risks related~~ to ~~hacking set~~perform ~~forth above~~ under ~~“Cyberattacks~~the ~~and~~Transition ~~security~~Services ~~breaches~~Agreement ~~of our system,~~ or ~~those~~WhiteFiber ~~impacting~~may ~~our~~fail ~~third~~to ~~parties,~~have ~~could~~necessary ~~adversely~~systems ~~impact our brand~~ and ~~reputation~~services ~~and our business, operating results, and financial condition” that could result~~ in aplace ~~loss~~when ofthe ~~staked~~transition ~~ETH~~services agreement expires.

On July 30, 2025, prior to the consummation of its initial public offering, WhiteFiber and Bit Digital entered into the Transition Services Agreement pursuant to which Bit Digital will provide certain services to WhiteFiber, on a transitional basis. The Transition Services Agreement provides for the performance of certain services by Bit Digital for the benefit of WhiteFiber, or in some cases certain services provided by WhiteFiber for the benefit of Bit Digital, for a limited period of time after its initial public offering. WhiteFiber will rely on Bit Digital to satisfy its obligations under this agreement. If Bit Digital is unable to satisfy its obligations under this agreement, WhiteFiber could incur operational difficulties or losses. If WhiteFiber does not have agreements with other providers of these services once certain transaction agreements expire or terminate, WhiteFiber may not be able to operate its business effectively, which may have a material adverse effect on its financial position, results of operations and cash flows.

~~The~~Cybersecurity ~~risks~~incidents ~~involved~~and ~~with~~threats including ~~liquid~~cyberattacks, ~~staking~~ransomware ~~differ~~attacks ~~from~~and ~~direct~~security ~~staking.~~breaches ~~Liquid~~of ~~staking~~cloud ~~allows~~services ~~participants,~~and ~~including~~our ~~the~~information ~~Company~~systems, toor ~~maintain~~those ~~the~~impacting ~~liquidity~~our ofthird ~~their~~parties, ~~digital~~could ~~assets~~adversely ~~while~~impact ~~still~~our ~~earning~~brand ~~staking~~and ~~rewards.~~reputation ~~However,~~and itour isbusiness, ~~subject~~operating toresults, ~~the~~and ~~following~~financial ~~consequence risks apart from direct staking:~~condition.

●WhiteFiber’s ~~Liquid~~cloud ~~staking~~services ~~requires~~involve athe collection, ~~certain~~storage, ~~level~~processing, and transmission of ~~technical~~confidential ~~expertise~~information, toemployee, ~~manage~~service ~~the~~provider, ~~staking~~and ~~process~~other ~~effectively~~personal data. ~~This~~WhiteFiber has ~~can~~built beits cloud services on the premise that it maintains a ~~barrier~~secure ~~for~~way ~~some~~to ~~investors~~secure, ~~particularly~~store, ~~those~~and ~~who~~transact ~~are~~in ~~new~~cloud toservices. ~~the~~As ~~world~~a result, any actual or perceived security breach of ~~digital~~WhiteFiber ~~asset~~or ~~investing.~~its third-party partners may:

● ~~The~~harm ~~price~~our ofreputation ~~the~~and ~~staked derivative may decrease from its original price. This may happen because the new token has a lower market price.~~brand;

● ~~In we lose our liquid token, we will also lose our staked token. This can~~ result ~~from~~in ~~bad~~WhiteFiber’s ~~trades,~~cloud ~~rebalancing~~services ~~losses~~being ~~when~~unavailable ~~farming in liquidity pools,~~ and ~~liquidations~~interrupt atour ~~lending protocols.~~operations;

● ~~Token holders will likely choose to stake their tokens on liquid staking protocols. As a~~ result, ~~the balance of validator shares taking part~~ in ~~the~~improper ~~network~~disclosure ~~may~~of bedata ~~disrupted,~~and ~~giving~~violations ~~room~~of ~~for~~applicable ~~undue~~privacy ~~control~~and ~~from~~other ~~more powerful validators.~~laws;

~~Development~~● ~~of the~~result ~~Ethereum~~in ~~Platform~~significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;

~~The~~● ~~Ethereum~~result ~~platform is~~in anexposure open-source project being developed by a network of software developers, including Vitalik Buterin, a founder of Ethereum. Mr. Buterin or another key participant within the core development group could cease to beclaims ~~involved~~for ~~with~~damages ~~the~~and ~~Ethereum~~other ~~platform.~~remedies ~~Factions~~by ~~could~~WhiteFiber’s ~~form within~~customers ~~the Ethereum community, resulting in different~~ and ~~competing~~individuals ~~versions~~whose ofpersonal ~~Ethereum~~data ~~being~~is ~~adopted by network participants. Furthermore, network participants running~~ the ~~Ethereum~~subject ~~software may choose not~~ to ~~update their versions of the software, resulting in different versions of the Ethereum software running on the network. Any of the foregoing developments could have~~ a ~~significant~~cybersecurity ~~negative impact on the viability and overall health of the Ethereum platform, the value of ETH and the Company’s business model and assets.~~incident;

~~The~~● ~~beacon~~cause ~~chain~~WhiteFiber ~~(the PoS successor~~ to ~~the~~incur ~~Ethereum~~significant ~~PoW~~remediation ~~chain) launched in December 2020~~ and ~~the~~notification “merging” of the Ethereum PoW chain into Ethereum 2.0 occurred on September 15, 2022. In addition, Ethereum’s Shanghai hard fork, also referred to as “Shapella,” has been finalized on April 12, 2023, enabling withdrawals for users who have “staked” their ETH to secure and validate transactions on the blockchain. Although management believes that these changes to the Ethereum platform will positively impact its potential for mainstream adoption, no assurance can be given that such impact will materialize. If the Company cannot successfully anticipate and react to the impacts of this shift, its business and results of operations may be adversely affected. costs;

~~Uncertainty~~● ~~Regarding~~ divert the ~~Growth~~attention of ~~Blockchain~~management ~~and~~from ~~Web~~the 3operation ~~Technologies~~of WhiteFiber’s business; and

~~The~~● ~~further~~adversely ~~development and~~affect ~~use of blockchain, Web 3 technologies and digital assets are subject to a variety of factors that are difficult to evaluate and predict, many of which are beyond the Company~~WhiteFiber’s ~~control.~~business ~~The slowing or stopping of the development or acceptance of blockchain networks, specifically Ethereum,~~ and ~~blockchain~~operating ~~assets would be expected to have a material adverse effect on the Company~~results. Furthermore, blockchain and Web 3 technologies, including Ethereum, may never be implemented to a scale that provides identifiable economic benefit to blockchain-based businesses, including the Company.

~~The~~Further, ~~Ethereum~~any ~~network and~~actual ~~ETH~~or asperceived ~~digital~~breach ~~asset~~or ~~have~~cybersecurity incident aor ~~limited history. Due to this short history~~attack, itwhether isor not ~~clear~~WhiteFiber ~~how~~is ~~all~~directly ~~elements of ETH will unfold over time~~impacted, ~~specifically~~ ~~with~~could ~~regard~~lead to ~~governance~~a ~~between~~general ~~miners,~~loss ~~developers~~of ~~and~~customer ~~users,~~confidence asin ~~well as~~ the ~~long-term~~digital asset ~~security~~industry ~~model~~or asin the ~~rate~~use of ~~inflation of~~technology ~~ETH~~to ~~decreases.~~conduct ~~Since~~financial ~~the~~transactions, ~~ETH~~which ~~community~~could ~~has~~negatively ~~successfully~~impact ~~navigated~~WhiteFiber, aincluding ~~considerable~~the market ~~number~~perception of ~~technical and political challenges since its inception,~~ the ~~Company~~effectiveness ~~believes~~of ~~that it will continue to engineer~~ its ~~way~~security ~~around~~measures ~~future~~and ~~challenges~~technology infrastructure. ~~The~~Certain ~~history~~kinds of ~~open-source~~cybersecurity ~~software~~incidents ~~development~~and ~~would~~attacks, ~~indicate~~such ~~that~~as ~~vibrant~~ransomware ~~communities~~attacks, ~~are~~could ~~able~~result toin ~~change~~ the ~~software~~interruption ~~under development at a pace sufficient to stay relevant. The continuation~~ of ~~such~~WhiteFiber’s ~~vibrant~~cloud ~~communities~~services isand ~~not~~information ~~guaranteed~~systems, and ~~insufficient~~result ~~software~~in ~~development or any other unforeseen challenges that~~ the ~~community~~inability ~~is not able~~ to ~~navigate~~access ~~could~~and ~~have~~loss ~~an adverse impact on the business~~ of ~~the Company~~data.

Cybersecurity incidents and attacks upon systems across a variety of industries, including cloud services, are increasing in their frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper, or illegal access to systems and information (including customers and partners’ personal data, AI algorithms, disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on WhiteFiber’s cloud services or those of its third-party service providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed. For example, attacks may be designed to deceive employees and service providers into releasing control of our systems to a hacker, while others may aim to introduce computer viruses or malware into WhiteFiber’s cloud services with a view to stealing confidential or proprietary data. Additionally, certain threats are designed to remain dormant or undetectable until launched against a target and we may not be able to implement adequate preventative measures.

Although WhiteFiber has developed systems and processes designed to protect our information systems and the data it manages, prevents cybersecurity incidents, data loss and other security breaches, effectively responds to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. WhiteFiber has experienced from time to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and WhiteFiber expects that they will continue to attempt, to gain access to its systems and facilities, as well as those of its customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees, service providers, and its customers) into disclosing usernames, passwords, payment card information, or other sensitive information, which may, in turn, be used to access WhiteFiber’s operations. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect.

~~Potential~~WhiteFiber ~~Decrease~~may be vulnerable to physical insecurity ~~Global~~breaches, ~~Demand~~which ~~for~~could ~~ETH~~disrupt its operations and have a material adverse effect on our business, financial condition and results of operations.

AsA aparty ~~currency,~~who ~~ETH~~is ~~must~~able to compromise the physical ~~serve~~security asmeasures aprotecting ~~means~~our offacilities ~~exchange,~~could ~~store~~cause ofinterruptions ~~value,~~or malfunctions in WhiteFiber’s operations and ~~unit~~misappropriate its property or the property of ~~account~~its customers. ~~Many~~As ~~people~~WhiteFiber ~~using~~provides ~~ETH~~assurances asto ~~money-over-internet-protocol~~its ~~(MoIP)~~customers dothat soit provides the highest level ~~with~~of itsecurity, assuch ana ~~international~~compromise ~~means~~could ofbe ~~exchange~~particularly harmful to WhiteFiber’s brand and reputation. ~~Speculators~~WhiteFiber may be required to expend significant capital and ~~investors~~resources ~~using~~to ~~ETH~~protect asagainst asuch ~~store~~threats ofor ~~value~~to ~~then~~alleviate ~~layer~~problems oncaused ~~top~~by ofbreaches ~~means~~in ofsecurity. ~~exchange~~As ~~users~~techniques used to breach security change frequently and are often not recognized until launched against a target, ~~creating~~WhiteFiber ~~further~~may ~~demand.~~not be Ifable ~~consumers~~to ~~stop~~implement ~~using~~new ~~ETH~~security asmeasures in a ~~means~~timely manner or, if and when implemented, WhiteFiber may not be certain whether these measures could be circumvented. Any breaches that may occur could expose WhiteFiber to increased risk of ~~exchange~~lawsuits, regulatory penalties, loss of existing or potential customers, harm to its ~~adoption~~reputation ~~therein~~and ~~slows~~increases in its security costs, ~~then~~which ~~ETH’s~~could ~~price~~have a material adverse ~~may~~effect ~~suffer~~on its business, ~~adversely~~financial ~~affecting~~condition ~~the~~and ~~Company~~results of operations.

~~Investors~~WhiteFiber’s ~~should~~inability beto ~~aware~~resolve ~~that~~favorably ~~there~~any isdisputes ~~no assurance~~ that ~~ETH~~arise ~~will~~between ~~maintain~~WhiteFiber ~~its long-term value in terms of purchasing power in the future or that the acceptance of ETH for payments by mainstream retail merchants~~ and ~~commercial~~Bit ~~businesses~~Digital ~~will~~with ~~continue~~respect to ~~grow.~~their Aspast ~~relatively new products~~ and ~~technologies, ETH~~ongoing ~~and~~relationships ~~the~~including ~~Ethereum network have yet to become generally accepted as a means of payment for goods and services by major retail and commercial~~potential ~~outlets,~~conflicts ~~and use~~ of ~~ETH~~interests byamong ~~consumers~~management ~~to pay such retail and commercial outlets remains limited. Banks and other established financial institutions~~ may ~~refuse~~adversely toaffect ~~process~~WhiteFiber’s ~~funds~~operating for Ethereum network-based transactions, process wire transfers to or from digital asset trading platforms, Ethereum-related companies or service providers, or maintain accounts for persons or entities transacting in ETHresults. Conversely, a significant portion of ETH demand is generated by speculators and investors seeking to profit from the short or long-term holding of ETH. The Company believes that, like any commodity, ETH will fluctuate in value, but over time will gain a level of acceptance as a store of value, medium of exchange or token of utility.

~~Smart~~Certain ~~Contract~~key management and directors of both ~~Risk~~Bit Digital and WhiteFiber hold the same or similar positions in both companies. Those positions and their ownership of Bit Digital securities could create, or appear to create, potential conflicts of interest when WhiteFiber’s management and directors and Bit Digital’s management and directors face decisions that could have different implications for Bit Digital and WhiteFiber. Disputes may arise between WhiteFiber and Bit Digital in a number of areas relating to the various transaction agreements, including:

~~The~~● ~~Ethereum network is based upon the development and deployment of smart contracts~~labor, ~~which are self-executing contracts with the terms of the agreement written into software code. There are thousands of smart contracts currently running on Ethereum network. Like any software code~~tax, ~~smart~~employee ~~contracts are exposed to risk that the code contains a bug or other security vulnerability~~benefit, ~~which~~indemnification ~~can lead to loss of assets that are held on or transacted through the contract. The smart contract deployed on Ethereum~~ and, ~~as such, may contain a bug or~~ other ~~vulnerability~~matters ~~that~~arising ~~may lead~~from toWhiteFiber’s ~~the~~separation ~~loss~~from ofBit ~~digital~~Digital; ~~assets~~● ~~held~~employee inretention ~~the~~and ~~wallet.~~recruiting; ~~The~~● ~~Ethereum~~business ~~developer~~combinations ~~community~~involving ~~audits~~WhiteFiber; ~~widely used smart contracts frequently~~ and ~~publishes~~● the ~~results~~nature, ofquality ~~such audits on public forums. The Company currently relies on MarsLand for its native staking~~ and ~~Liquid Collective~~pricing ~~for~~of ~~its~~services ~~liquid~~that ~~staking~~WhiteFiber ~~solution. The smart contract code via MarsLand was audited by CertiK. The smart contract code via Liquid Collective was audited by Halborn~~ and ~~Spearbit.~~Bit ~~Nevertheless,~~Digital ~~there~~have isagreed ~~no guaranty against a bug or other vulnerability leading~~ to aprovide ~~loss of~~each ~~digital assets~~other.

~~Risks~~WhiteFiber ~~Associated~~may ~~with~~not be able to resolve potential conflicts, and even if it does, the ~~Ethereum~~resolution ~~Network~~may be less favorable than if it were dealing with an unaffiliated party.

~~Dependence~~The agreements WhiteFiber enters into with Bit Digital may be amended upon agreement between the parties. While WhiteFiber is controlled by Bit Digital, it may not have the leverage to negotiate amendments to these agreements if required on ~~Ethereum~~terms as favorable to it as those it would negotiate with an unaffiliated ~~Network~~third ~~Developers~~party.

~~While~~WhiteFiber ~~many~~relies ~~contributors to~~upon ~~the~~licenses ~~Ethereum network’s open-source software are employed by companies in the industry, most~~ of ~~them are not directly compensated~~third-party ~~for~~intellectual ~~helping~~property torights ~~maintain~~and ~~the~~may ~~protocol.~~be Asunable ~~a result, there are no contracts or guarantees that they will continue~~ to ~~contribute~~protect toour ~~the Ethereum network’s~~ software ~~(https://github~~code.~~com/ether and https://github.com/orgs/ether/people).~~

~~Issues~~WhiteFiber ~~with~~actively ~~the~~uses specific hardware and ~~Cryptography~~software ~~Underlying~~for our cloud services and colocation data center operations. In certain cases, source code and other software assets may be subject to an open source license, as much technology development underway in this sector is open source. For these works, WhiteFiber intends to adhere to the ~~Ethereum~~terms ~~Network~~of any license agreements that may be in place.

~~Although~~WhiteFiber ~~the~~does ~~Ethereum network~~not iscurrently ~~one of the world’s most established digital asset networks~~own, ~~the Ethereum network~~ and ~~other~~does ~~cryptographic and algorithmic~~not ~~protocols~~have ~~governing~~any ~~the~~current ~~issuance~~plans ~~of digital assets represent a new and rapidly evolving industry that is subject~~ to ~~a variety of factors that are difficult to evaluate. In the past~~seek, ~~flaws~~any patents in ~~the~~connection ~~source~~with ~~code~~its ~~for~~existing ~~digital assets have been exposed~~ and ~~exploited,~~planned ~~including~~operations. ~~flaws that~~WhiteFiber ~~disabled~~relies ~~some~~upon ~~functionality~~trade ~~for users~~secrets, ~~exposed users’ personal information and/or resulted in the theft of users’ digital~~ ~~assets. The cryptography underlying ETH could prove to be flawed or ineffective~~trademarks, orservice ~~developments in mathematics and/or technology~~marks, ~~including advances~~trade ~~in digital computing~~names, ~~algebraic~~copyrights ~~geometry~~ and ~~quantum~~other ~~computing,~~intellectual ~~could~~property ~~result~~rights inand ~~such~~expect ~~cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able~~ to ~~take~~license the ~~ETH~~use ~~held by the Company. Moreover, functionality~~ of ~~the Ethereum network~~intellectual ~~may~~property berights ~~negatively~~owned ~~affected~~and ~~such~~controlled ~~that~~by itothers. isIn ~~no longer attractive to users~~addition, ~~thereby~~WhiteFiber ~~dampening~~has ~~demand~~developed ~~for~~and ~~ETH.~~may ~~Even~~further ifdevelop ~~digital~~certain ~~assets~~software ~~other~~applications ~~than~~for ~~ETH~~purposes ~~were~~of ~~affected~~its byoperations. ~~similar~~Our ~~circumstances,~~open ~~any reduction in confidence in the~~ source ~~code~~licenses ormay ~~cryptography~~not ~~underlying~~afford ~~digital~~WhiteFiber ~~assets generally could negatively affect~~ the ~~demand~~protection ~~for~~we ~~digital~~need ~~assets~~to ~~and~~protect ~~therefore~~our ~~adversely affect the business of the Company~~intellectual property.

~~Disputes~~Risks onRelated ~~the Development of the Ethereum Network may lead~~ to ~~Delays~~Geopolitical ~~in the Development of the Network~~Uncertainty

~~There~~Changes ~~can be disputes between contributors on the best paths forward~~ in ~~building~~tariffs ~~and~~or ~~maintaining~~import ~~the Ethereum network’s software. Furthermore, the stakers~~restrictions ~~supporting~~could ~~the~~have network and other developers and users of the network can disagree with the contributors as well, creating greater debate. Therefore, the Ethereum community often iterates slowly upon contentious protocol issues, which many perceive as prudently conservative, while others worry that it inhibits innovation. It will be important for the community to continue to develop at a ~~pace~~material ~~that~~adverse ~~meets~~effect ~~the demand~~on ~~for~~our ~~transacting in ETH~~business, ~~otherwise~~financial ~~users~~condition ~~may become frustrated~~ and ~~lose~~results ~~faith~~of ~~in the network~~operations. ~~As a decentralized network, strong consensus and unity is particularly important to respond to potential growth and scalability challenges.~~

The ~~Ethereum~~U.S. government ~~Blockchain~~has adopted new approaches to trade policy and in some cases, may ~~Temporarily~~renegotiate, or ~~Permanently~~potentially ~~Fork~~terminate, certain existing bilateral or multi-lateral trade agreements. The U.S. government has also imposed tariffs on certain foreign goods and/ has raised the possibility of imposing significant, additional tariff increases or ~~Split~~expanding the tariffs to capture other countries and types of foreign goods. Because WhiteFiber is developing data centers in Canada and the United States, the imposition of tariffs on imports between these countries or from other countries, such as a 50% tariff on copper imports announced in July 2025 by the U.S. government, could materially impact the cost, timeline, and feasibility of our projects. Tariffs imposed by the U.S. on imports from Mexico and Canada or from other countries, as well as reciprocal tariffs imposed by such countries on U.S. goods, could increase WhiteFiber’s costs for key construction materials, specialized equipment, and labor, potentially delaying deployments and reducing profitability.

~~The~~Data ~~Ethereum~~center ~~network’s software~~construction ~~and~~relies ~~protocol~~heavily ~~are~~on ~~open~~steel, aluminum, ~~source.~~copper, ~~When~~electrical acomponents ~~modification is released by the developers~~ and aHVAC ~~substantial~~systems, ~~majority~~some of ~~participants~~which ~~consent to~~ the ~~modification,~~Company ~~the~~is ~~change~~sourcing isfrom ~~implemented~~Mexico and ~~the~~Canada. ~~Ethereum~~The ~~network~~tariffs ~~continues uninterrupted~~the U.S. has ~~However~~imposed, ifor ahas ~~change~~considered ~~were~~imposing, ~~activated~~on ~~with less~~Canadian ~~than~~steel, aaluminum ~~substantial~~and ~~majority~~copper ~~consenting to the proposed modification~~imports, ~~and~~are ~~the~~expected ~~modification~~to isincrease ~~not compatible with~~ the ~~software prior~~cost toof ~~its~~WhiteFiber’s ~~modification,~~potential ~~the~~projects ~~consequence~~in ~~would~~the ~~be what is known as a “hard fork” (i~~U.eS. Similarly, aif ~~split)~~Canada ofimposes ~~the~~reciprocal ~~Ethereum~~tariffs ~~network~~on ~~(and the blockchain)~~U. ~~One blockchain would be maintained by the pre-modification software and the other by the post-modification software~~S. exports, WhiteFiber’s ~~The~~projects ~~effect~~in isCanada ~~that~~could ~~both~~see ~~blockchain~~cost ~~algorithms~~increases ~~would~~for beimported ~~running~~power ~~parallel~~infrastructure, tonetworking ~~one another~~hardware, ~~but~~and ~~each~~construction ~~would be building an independent blockchain with independent native assets~~equipment.

AAdditionally, ~~hard~~several ~~fork~~transformers, ~~could~~battery ~~present~~storage ~~problems~~systems, ~~such~~and ascooling ~~two~~systems used ~~copies~~in ofour aNorth ~~token~~American ~~for~~data ~~the~~centers ~~same~~are ~~non-fungible~~manufactured ~~tokens~~in ~~(NFTs). It~~or ~~could~~pass ~~also~~through ~~present~~Mexico. aIf ~~problem~~the ~~for a customer having~~U.S. imposes tonew ~~choose~~or toadditional ~~provide~~tariffs ~~services~~on ~~with~~Mexican-manufactured electrical ~~respect to digital assets resulting from a fork. In addition~~equipment, ~~digital~~this ~~asset~~could ~~loan~~create ~~agreements~~supply ~~often~~chain ~~dictate when~~bottlenecks and ~~how~~increase capital ~~each~~expenditures offor ~~the~~both ~~lender~~U.S. and orCanadian ~~the~~facilities. ~~borrower~~Likewise, oftrade arestrictions ~~digital~~on ~~asset~~Canadian-manufactured networking equipment ~~pledging~~or asemiconductors ~~certain~~would ~~digital~~disrupt ~~asset~~supply ~~gets~~availability ~~the~~for ~~benefit~~our ofpotential ~~forked~~projects ~~coins~~ in the ~~event of a hard fork~~U. ~~Similarly, derivative counterparties using ISDA-based contractual documentation may be subject to hard fork-related termination events~~S.

~~Although~~Tariffs ~~forks~~and ~~are~~trade ~~likely to~~tensions bebetween ~~addressed~~the byU.S., Mexico, aand ~~community-led~~Canada ~~effort~~could toalso ~~merge~~indirectly impact the ~~two~~availability ~~groups~~and cost of skilled labor. Many specialized contractors for data center construction, ~~such~~electrical awork, ~~fork~~and mechanical systems operate across borders. Increased trade friction could ~~still~~reduce ~~adversely~~labor ~~affect~~mobility, increase ~~ETH’s~~wages, ~~viability~~or limit access to essential expertise, slowing project execution.

~~Risk~~Such ifhigher acosts ~~Person~~for critical data center components, ~~Gains~~potential adisruptions ~~33%~~to orequipment ~~More~~supply ~~Share~~chains ofand ~~the~~labor ~~Ethereum~~and ~~Validators~~cross-border workforce challenges could have material adverse effects on our business, financial condition and results of operations.

~~According to Ethereum.org~~Additionally, ~~the~~ ~~likelihood~~if oftariffs ~~successful~~increase ~~attacks on~~ the ~~Ethereum~~cost ~~network increases as the proportion~~ of ~~staked ETH controlled by the attacker increases.~~ Ifbuilding anand ~~attacker~~operating ~~controls~~data ~~33%~~centers orin ~~more of~~ the ~~total~~U.S. and ~~stake~~Canada, ~~they~~our ~~can~~customers, ~~prevent~~hyperscalers ~~the~~and ~~chain~~cloud ~~from~~providers, ~~finalizing~~may byshift ~~having~~expansion plans ~~33%~~to or more ofcost-effective regions, ~~the~~such ~~staked ETH~~as ~~maliciously~~Europe ~~attesting~~ or ~~failing to attest~~Asia. IfThis ~~an attacker controls about 50% of the total stake, they~~ could ~~theoretically~~negatively ~~split~~impact ~~the chain into two equally sized forks~~ short-term and ~~then simply use their entire 50.1% stake to vote contrarily to the honest validator set, thereby~~long-term demand ~~maintaining the two forks and preventing finality. If an attacker controls 66% or more of the total stake, they simply vote~~ for ~~their preferred~~WhiteFiber’s ~~fork~~colocation and ~~then~~infrastructure ~~finalize it, simply because they can vote with a dishonest supermajority~~services.

~~Dependence~~Finally, in response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could in turn have a material adverse ~~Internet~~impact on our business, financial condition and results of operations.

ETH stakers relay transactions to one another via the Internet, and when blocks are mined, they are also forwarded via the Internet. Users and developers access Ethereum via the Internet. Thus, the Ethereum network is dependent upon the continued functioning of the Internet.

Attacks on the Ethereum Network

The Ethereum network is periodically subject to distributed denial of service attacks to clog the list of transactions being tabulated by miners, which can slow the confirmation of authentic transactions. Another avenue of attack would be if a large number of miners were taken offline then it could take some time before the difficulty of the mining process algorithmically adjusts, which would stall block creation time and therefore transaction confirmation time. Thus far these scenarios have not plagued the network for long or in a systemic manner. This risk is expected to be substantially mitigated on Ethereum 2.0, as the PoS method of validating transactions was expected to improve the speed and efficiency of the network.

~~Decrease~~Uncertainty in ~~Block~~the global economy and instability ~~Reward~~within orinternational ~~Yield~~relations, including changes in governmental policies relating to technology, and any potential downturn in the semiconductor and electronics industries, may negatively impact our business.

InThere ~~the~~is ~~event~~inherent ofrisk, abased ~~material~~on the complex ~~decrease~~relationships inbetween ~~the~~certain ~~block~~countries ~~reward~~and towithin ~~the~~regions, ~~Ethereum~~that ~~network~~political, ~~stakers~~diplomatic ~~may~~or ~~cease~~military toevents ~~provide~~could ~~their~~result ~~staked~~in ~~ETH~~trade todisruptions and other disruptions in the ~~consensus~~markets ~~mechanism~~and ~~for~~industries ~~the Ethereum~~we ~~network~~serve ~~blockchain.~~and ~~This~~our ~~risk~~supply ~~was~~chain. ~~expected~~For toexample, bethe ~~mitigated~~ongoing ingeopolitical ~~part~~and oneconomic uncertainty ~~Ethereum~~between 2the U.0S. and China, as the ~~rewards~~unknown ~~earned~~impact byof ~~stakers~~current ofand ~~ETH~~future ~~will proportionately~~U.S. and ~~decline~~Chinese astrade ~~more~~regulations, ~~stakers~~and ~~participate~~geopolitical risks inbetween the ~~network~~U.S, ~~Conversely~~Canada, ifwhere ~~some~~WhiteFiber’s ~~stakers~~data ~~decide~~centers toare ~~stop~~located, ~~participating~~between ~~because~~ the ~~yield~~ isU.S. and ~~too low~~Mexico, ~~remaining~~where ~~stakers~~certain ~~will~~components are ~~enjoy~~supplied, aor ~~higher~~between ~~yield.~~China ~~Consequently,~~and ~~Ethereum~~Taiwan ~~2.0~~where ischips ~~expected~~are tomanufactured, ~~attract~~could, adirectly ~~sufficient~~or ~~number~~indirectly, ~~of stakers~~materially ~~and~~harm ~~validators~~our tobusiness, financial ~~keep~~condition ~~the~~and ~~network~~results ~~running~~of ~~efficiently~~operations.

~~Competitors~~While tooverall semiconductor supply conditions ~~ETH~~have improved, WhiteFiber continues to monitor potential availability constraints for high-performance GPUs and related hardware, which may affect the ~~Ethereum~~timing ~~Network~~of future deployments in our cloud services business.

~~Currently~~Furthermore, ~~ETH~~political isor ~~the~~economic conflicts ~~second~~between ~~largest~~various ~~digital~~global ~~asset~~actors, byand ~~market~~responsive ~~capitalization,~~measures ~~with~~that ~~Coingecko~~have ~~citing~~been ~~more~~taken ~~than~~and ~~5,000~~could ~~alternative~~be ~~digital~~taken ~~assets.~~in To the ~~extent a~~future, ~~competitor~~have tocreated ~~ETH gains popularity~~ and ~~greater~~can ~~market~~further create ~~share,~~significant ~~the~~global ~~use~~economic ~~and~~uncertainty ~~price~~that ofcould ~~ETH~~prolong ~~could~~or beexpand ~~negatively~~such ~~impacted~~conflicts, which ~~may adversely affect the investments of the Company. Similarly, the price of ETH~~ could behave ~~negatively~~a ~~impacted~~lasting byimpact ~~competition~~on ~~from incumbents in the~~regional ~~credit card~~ and ~~payments~~global ~~industries~~economies orand ~~from~~harm ~~other~~our ~~developing~~business ~~blockchain~~and ~~protocols~~operating results.

~~Financial~~Failure ~~Institutions~~to maintain exchange listing standards may ~~Refuse~~reduce toliquidity, ~~Support~~increase ~~Transactions~~financing ~~Involving~~costs, ~~ETH~~and negatively affect valuation.

InOur ~~the~~listing ~~uncertain~~on ~~regulatory climate~~NASDAQ ~~for~~subjects ~~digital~~us ~~assets,~~to ~~including~~continued quantitative ~~ETH,~~and ~~regulated~~qualitative ~~financial~~listing ~~institutions~~requirements. ~~may~~Failure ~~refuse~~ to ~~support~~maintain ~~transactions~~minimum ~~involving~~price, ~~digital~~market ~~assets~~capitalization, ~~including~~ ~~the~~public ~~receipt~~float, ofshareholder equity, ~~cash~~governance, ~~proceeds~~or ~~from~~filing ~~sales~~standards ofcould ~~digital~~result ~~asset.~~in ~~Should~~warnings, ~~this~~additional ~~occur~~costs, ~~the~~or ~~Company’s business~~delisting, ~~prospects,~~reducing ~~financial condition,~~liquidity ~~results~~and ofpotentially triggering ~~operations~~defaults or ~~cash~~investor ~~flows could be materially adversely affected~~redemptions.

~~Risks~~Limited ~~Related~~access to ~~United~~banking, payments and insurance ~~States~~services ~~Government~~for ~~Regulations~~digital asset-related businesses may create operational friction and liquidity risks.

Financial institutions may decline to provide deposit, treasury, lending, merchant, custody or other services to digital asset-related companies, leading to operational friction, delays in settlements, and heightened liquidity and operational risk. We may face increased fees, caps, or service interruptions.

Accounting, Financial Reporting and Internal Control Risks

Complex and evolving accounting for digital assets and related items may increase the volatility of our reported results and require significant judgment.

We make critical accounting estimates regarding impairment, fair value measurements, estimated useful lives of miners and infrastructure, revenue recognition (including principal-versus-agent considerations in pools), and the classification and presentation of digital assets. Changes in market inputs, evolving practice, or future GAAP guidance could materially affect our reported results.

Auditor transitions and internal control remediation may result in delays, increased costs, or identification of material weaknesses.

Auditor transitions increase the risk of delays, additional costs, and identification of control deficiencies. If we identify material weaknesses or significant deficiencies in internal control over financial reporting, we may incur substantial remediation costs, and our ability to report timely and accurately could be impacted.

If our breakeven metrics or related assumptions are inaccurate, investors may misinterpret our operating performance and risk profile.

Our breakeven metrics rely on multiple inputs, including energy costs, pool fees, uptime, difficulty, miner efficiency, depreciation and, where disclosed, estimates of financing costs. Assumptions may differ from actual results or from those used by peers, and estimates of financing costs may be imprecise given the nature of past capital raises.

Strategic, Counterparty and Concentration Risks

We operate in a highly competitive industry, and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition could be adversely affected if we are unable to compete effectively.

The digital asset industry is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. In ETH staking we view our main competitors as Sharplink Gaming, Bitmine immersion Technologies and The Ether Machine. In Bitcoin mining our main competitors are MARA Holdings, Riot Platform and CleanSpark. We expect competition to intensify in the future as existing and new competitors introduce new products or enhance existing products. We face significant competition from a variety of companies around the world, ranging from digital asset-native companies, including decentralized exchanges, to large traditional financial services incumbents and financial technology providers.

Given the uneven enforcement by United States and foreign regulators, many of these competitors have been able to operate from offshore while offering large numbers of products and services to consumers, including in the United States, Europe, and other highly regulated jurisdictions, without complying with the relevant licensing and other requirements in these jurisdictions, and historically without penalty. Due to our regulated status in several jurisdictions and our commitment to legal and regulatory compliance, we have not been able to offer many popular products and services, including products and services that our unregulated or less regulated competitors are able to offer.

We also have expended significant managerial, operational, and compliance costs to comply with laws and regulations applicable to us in the jurisdictions in which we operate and expect to continue to incur significant costs to comply with these requirements, which these unregulated or less regulated competitors have not had to incur.

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

Dependence on a limited number of counterparties and strategic partners may concentrate risk and exacerbate disruptions.

Our agreements with counterparties and strategic partners, including advisors and financial intermediaries, can concentrate risk. Failures, disputes, terminations, or changes in terms could disrupt operations or curtail growth. Certain arrangements may require bespoke governance or include preferential rights that constrain flexibility.

Loss of key personnel or inability to recruit and retain qualified employees may adversely affect our operations and growth.

The competition for experienced blockchain and digital asset professionals has intensified, driven by a widening gap between the high demand for specialized skills and a scarce pool of qualified talent. As the industry matures into 2026, companies are struggling to secure senior talent for critical, high-impact roles, often competing with both AI startups and traditional financial institutions. For example, despite a 395% growth in web3 job demand, qualified professionals remain rare, particularly those with experience in live, production-level, or large-scale, cross-chain, or security-focused projects. If we are unable to secure the necessary personnel, our financial condition may be impacted negatively.

Various actual and potential conflicts of interest may be detrimental to shareholders.

Certain conflicts of interest may exist, or be perceived to exist, between us and our directors or certain executive officers, who are also officers and/or directors of WhiteFiber. Each person must devote time, resources and attention to the affairs of WhiteFiber. This may conflict with such officer’s or director’s interest in WhiteFiber, including conflicting with interests in allocating resources, time and attention to our business and impacting decisions made on our behalf with respect to WhiteFiber. For example, it is expected that, until August 2027, Sam Tabar and Erke Huang will continue to serve as (i) Chief Executive Officer and (ii) Director and Chief Financial Officer, respectively, of WhiteFiber. Messrs. Tabar and Huang are expected to provide certain services, representing not more than approximately 30% of their working time, in respect of Bit Digital operations and have committed to provide the requisite time and effort to fulfill their responsibilities as a full-time officer of WhiteFiber, supervising a full staff. Actual or potential conflicts of interest could arise, for example, over matters such as the desirability of changes in our business and operations, funding and capital matters, regulatory matters, agreements with WhiteFiber relating to the Reorganization or otherwise, employee retention or recruiting or dividend policies.

Bit Digital has put specific procedures in place with respect to potential conflicts of interest, however, in determining with whom our officers or directors may have relationships and considering the risks and risk mitigation factors. As an example, we require that transactions with WhiteFiber involving our executive officers and directors be approved or ratified by our Audit Committee, and recognizing that Ms. Ichi Shih is also the Chair of the WhiteFiber Audit Committee. While we have a majority of independent directors on our Board in order to ensure that there are limitations on the risks of conflicts of interest impacting Board level decisions, since WhiteFiber is not operating a digital asset business, the effects of any such risks of conflicts of interest involving our separate business operations are limited in scope. We expect that as WhiteFiber adds officers and independent directors, the risks of conflicts of interest will become more limited over time. We cannot, however, guarantee that the conflicts of interest described above, or other future conflicts of interest, will not manifest in advice or decisions that negatively impact our financial results and our operations.

Litigation, arbitration or governmental proceedings may be costly, time-consuming, and disruptive, and adverse outcomes could result in significant liabilities.

From time to time, we may be subject to litigation, regulatory investigations, or other legal proceedings. Regardless of the legal merits of a claim, the validity of the allegations, or the eventual outcome of the case, defending against lawsuits involves significant risks, including:

	●	Substantial Legal and Administrative Costs: Defending against lawsuits, including frivolous or meritless claims, requires significant financial resources, including high attorney fees, expert witness costs, and court fees.

	●	Diversion of Management Time and Resources: Litigation is time-consuming and can divert the attention of our management team and employees away from our core business operations.

	●	Reputational Damage: Even if a lawsuit is successfully defended or dismissed, the publicity surrounding the case can harm our reputation, brand image, and relationship with customers, partners, or investors.

	●	Settlement Pressures: The high cost of defense and the distraction of litigation may lead us to settle cases that we believe are without merit to avoid further disruption and expense.

If we are unable to resolve these disputes favorably or if the costs of defending these claims are significant, it could have a material adverse effect on our financial condition, results of operations, and cash flows.

Our stock price may be highly volatile, and future sales or issuances of our securities could depress the trading price.

The market price of digital asset-related equities has experienced extreme volatility, influenced by digital asset prices, regulatory developments, investor sentiment, and macroeconomic conditions. Substantial sales by existing stockholders, issuances under our shelf or equity compensation, or short selling could cause the trading price to decline.

Risks Involving Intellectual Property

We use certain open source technology in our business. We may face claims from third parties claiming ownership of, or demanding the release of, the technology and any other intellectual property that we developed using or derived from such open-source technology.

We utilize a combination of open-source and licensed third-party technologies in the development and operation of our cloud services. While open-source technologies enable rapid development and cost efficiencies, they also pose potential risks, such as security vulnerabilities, lack of long-term support, and legal risks related to licensing terms. Similarly, reliance on licensed third-party technologies may expose us to risks associated with changes in licensing terms, costs, or discontinuation of the licensed products.

We intend to continue to use open-source technology in the future. There is a risk that open-source technology licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to offer our products. By the terms of certain open-source licenses, if we combine our proprietary software with open-source software in a certain manner, we could be required to release the source code of our proprietary software and make our proprietary software available under open-source licenses. Open-source licensors may also decide to change the conditions on which they make their open-source technology available for our use. Additionally, we may face claims from third parties claiming ownership of, or demanding the public release or free license of, the technology and any other intellectual property that it developed using or derived from such open-source technology. The terms of many open-source licenses have not been interpreted by United States courts. There is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our services. These claims could result in litigation and could require that we make our technology freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant technology and product development resources, and we may not be able to complete the process successfully. Failure to adequately manage these risks could result in operational disruptions, legal liabilities, and adverse impacts on our business, results of operations, and financial condition.

Our internal systems rely on software that is highly technical, and, if it contains undetected errors, our business could be adversely affected.

Our internal systems rely on software that is highly technical and complex. In addition, our internal systems depend on the ability of such software to store, retrieve, process and manage immense amounts of data. The software on which we rely has contained, and may now or in the future contain, undetected errors or bugs. Some errors may only be discovered after the code has been released for external or internal use. Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation, or liability for damages, any of which could adversely affect our business, results of operations and financial conditions.

We do not have any patents protecting our intellectual property and may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.

We regard trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our directors, officers and executive employees, to protect our proprietary rights. However, we do not have any non-compete agreements with our non-executive employees, nor do we have any patents protecting our intellectual property. Thus, we cannot assure you that any of our intellectual property rights would not be challenged, invalidated, circumvented or misappropriated, or such intellectual property will be sufficient to provide us with competitive advantages. In addition, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all.

Preventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. To the extent that our employees or consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may be, from time to time in the future, subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or other intellectual property rights that are infringed by our products, services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such intellectual property rights against us in China, the United States or other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, regardless of their merits. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. Moreover, the intellectual property ownership and license rights, including copyright, surrounding AI technologies has not been fully addressed by courts or laws or regulations, and the use or adoption of AI technologies into our offerings may result in exposure to claims of copyright infringement or other intellectual property misappropriation. As a result, our business and results of operations may be materially and adversely affected.

Risks Related to the United States Government Regulations

We are subject to governmental regulation and other legal obligations related to data privacy, data protection and information security. If we are unable to comply with these, we may be subject to governmental enforcement actions, litigation, fines and penalties or adverse publicity.

We collect and process data, including personal, financial and confidential information about individuals, including our employees and business partners; however, not of any customers or other third parties. The collection, use and processing of such data about individuals are governed by data privacy laws and regulations enacted in the U.S. (federal and state), and other jurisdictions around the world. These data privacy laws and regulations are complex, continue to evolve, and on occasion may be inconsistent between jurisdictions leading to uncertainty in interpreting such laws and it is possible that these laws, regulations and requirements may be interpreted and applied in a manner that is inconsistent with our existing information processing practices, and many of these laws are significantly litigated and/or subject to regulatory enforcement. The implication of this includes that various federal, state and foreign legislative or regulatory bodies may enact or adopt new or additional laws and regulations concerning data privacy, data retention, data transfer, and data protection. Such laws may continue to restrict or dictate how we collect, maintain, combine and disseminate information and could have a material adverse effect on our business, results of operations, financial condition and prospects.

In the United States, there are numerous federal and state laws and regulations that could apply to our operations or the operations of our partners, including data breach notification laws, financial information and other data privacy laws, and consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of personal information.

53For example, California has enacted the California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”), which, among other things, allows California consumers to request that certain companies disclose the types of personal information collected by such companies, to correct that information, to delete that information and to opt-out the sale or sharing of personal information for cross-context behavioral advertising. The California Privacy Protection Agency (“CPPA”) has proposed new regulations to require companies to conduct risk assessments, annual cybersecurity audits and set up notice and opt-out and access procedures for the use of automated decision-making technology. These proposed new requirements could increase our costs of compliance and impact our operations and the products and services we offer.

In addition, Iowa, Delaware, Maine, Virginia, Colorado, Utah, Oregon, Montana, Nebraska, New Hampshire, New Jersey, Texas, Utah and Connecticut enacted privacy and data protection laws in recent years that are currently in effect and grant similar rights and impose similar obligations as the CCPA. New privacy laws enacted in Maryland, Minnesota, Rhode Island, and Tennessee will take effect over the next couple years. Other states in the U.S. are also separately proposing laws to regulate privacy and security of personal data. Our failure, and/or the failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal or state laws or changes in applicable laws and regulations, or any compromise of security that results in the unauthorized release of personal information or other user data could damage our reputation and the reputation of our third party vendors and service providers, discourage potential users from trying their products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers, any one or all of which could adversely affect our business, financial condition and results of operations and, as a result, our company. In addition, we, our subsidiaries or our business affiliates may not have adequate insurance coverage to compensate for losses.

Foreign data privacy laws, such as the General Data Protection Regulation (“GDPR”) in the European Union and the United Kingdom Data Protection Act (“UK GDPR”) impose data privacy and security requirements that may impact our ability to collect and process personal information of residents of the EU and the UK. The transfer of personal information from such jurisdictions may be subject to additional restrictions and require the use of transfer mechanisms recognized by GDPR and UK GDPR, such as the use of Standard Contractual Clauses, which impose numerous obligations on data importers and exporters. Violations of the GDPR or UK GDPR could impose us to fines of up to €20 million, or up to 4% of the annual worldwide turnover of the preceding financial year, whichever is greater.

Our business may be adversely affected by future changes in the European Union’s regulations related to AI, which could be reflected in Icelandic and European Union countries’ domestic laws and regulations.

While no current Icelandic legislation directly impacts colocation operations, Iceland, being a member of the European Economic Area, is likely to be influenced by forthcoming European Union acts such as the Artificial Intelligence Act and the AI Liability Directive. These acts may shape the future regulatory landscapes in Iceland and lead the Icelandic government to adopt such regulations domestically.

The potential adoption of said AI regulatory framework could introduce new compliance requirements for WhiteFiber data centers, as well as other legal and regulatory obligations, impacting operational practices and liability considerations for WhiteFiber data centers. This could ultimately adversely affect WhiteFiber’s business and financial results.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare its financial statements according to the rules and regulations required by the SEC. In addition, the Exchange Act requires that we file annual, quarterly and current reports. The Company’s failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject it to penalties under federal securities laws, expose it to lawsuits and restrict its ability to access financing. In addition, the Sarbanes-Oxley Act requires that, among other things, we establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in WhiteFiber’s business, or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of internal control over financial reporting. We have been adhering to these laws and regulations.

Matters affecting our internal controls may cause it to be unable to report its financial information on a timely basis, or may cause it to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in the Company and the reliability of its financial statements. Confidence in the reliability of our financial statements is also likely to suffer if it or its independent registered public accounting firm reports a material weakness in its internal control over financial reporting. This could have a material and adverse effect on us by, for example, leading to a decline in the share price and impairing its ability to raise additional capital.

Existing and increasing legal and regulatory requirements could adversely affect our results of operations.

We are subject to a wide range of laws, regulations, and legal requirements in the U.S. and globally, including those that may apply to our products and online services offerings, and those that impose requirements related to user privacy, telecommunications, data storage and protection, advertising, and online content. Laws in several jurisdictions, including EU Member State laws under the European Electronic ~~Communications~~ Communications Code, increasingly define certain of our services as regulated telecommunications services. This trend may continue and will result in these offerings being subjected to additional data protection, security, law enforcement surveillance, and other obligations. ~~Regulators~~ Regulators and private litigants may assert that our collection, use, and management of customer data and other information is inconsistent ~~with~~ with their laws and regulations, including laws that apply to the tracking of users via technology such as cookies. New environmental, social, and governance laws and regulations are expanding mandatory disclosure, reporting, and diligence requirements. Legislative or ~~regulatory~~ regulatory action relating to cybersecurity requirements may increase the costs to develop, implement, or secure our products and services. ~~Compliance~~ Compliance with evolving digital accessibility laws and standards will require engineering and is important to our efforts to empower all people and organizations to achieve more. Legislative and regulatory action is emerging in the areas of AI and content moderation, which could increase costs or restrict opportunity. For example, in the EU, an AI Act has entered into force, and may entail increased costs or decreased opportunities for the operation of our AI services in the European market. ~~See “Our AI business is subject to complex and evolving U.S. and foreign laws and regulations regarding AI, machine learning, and automated decision making” risk factor above.~~

We are subject to extensive environmental, health and safety laws and regulations that may expose us to significant liabilities for penalties, damages or costs of remediation or compliance.

Our operations and properties are subject to extensive laws and regulations governing occupational health and safety, the discharge of pollutants into the environment or otherwise relating to health, safety and environmental protection requirements in the United States. These laws and regulations may impose numerous obligations that are applicable to our operations, including acquisition of a permit or other approval before conducting construction or regulated activities; restrictions on the types, quantities and concentration of materials that can be released into the environment; limitation or prohibition of construction and operating activities in environmentally sensitive areas, such as wetlands; imposing specific health and safety standards addressing worker protection; and imposition of significant liabilities for pollution resulting from our operations, including investigation, remedial and clean-up costs. Failure to comply with these requirements may expose us to fines, penalties and/or interruptions in our operations that could have a material adverse effect on our financial position, results of operations and cash flows. Certain environmental laws may impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise released into the environment, even under circumstances where the hazardous substances were released by prior owners or operators or the activities conducted and from which a release emanated complied with applicable law. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by noise or the release of hazardous substances into the environment.

The trend in environmental regulation has been to place more restrictions and limitations on activities that may be perceived to impact the environment, and thus there can be no assurance as to the amount or timing of future expenditures for environmental regulation compliance or remediation. New or revised regulations that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our financial position, results of operations and cash flows.

Failure to comply with anti-corruption and anti-money laundering laws, including the Foreign Corrupt Practices Act (the “FCPA”) and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences.

We operate an international business and may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We are subject to the FCPA, and other applicable anti-corruption and anti-money laundering laws in certain countries in which we conduct activities. The FCPA prohibits providing, offering, promising, or authorizing, directly or indirectly, anything of value to government officials, political parties, or political candidates for the purpose of obtaining or retaining business or securing any improper business advantage. In addition, U.S. public companies are required to maintain records that accurately and fairly represent their transactions and have an adequate system of internal accounting controls. Since February 10, 2025, the enforcement of the FCPA has been paused for 180 days. The Company will monitor any upcoming guidance from the DOJ or the SEC in order to remain compliant with the FCPA.

In many foreign countries, including countries in which we may conduct business, it may be a local custom that businesses engage in practices that are prohibited by the FCPA, or other applicable laws and regulations. We face significant risks if we or any of our directors, officers, employees, contractors, agents or other partners or representatives fail to comply with these laws and governmental authorities in the United States and elsewhere could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business, reputation, operating results, prospects and financial condition.

Any violation of applicable anti-corruption laws, anti-money laundering laws or the FCPA (when again enforceable) could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, operating results, prospects and financial condition. In addition, responding to any enforcement action or internal investigation related to alleged misconduct may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, operating results, prospects and financial condition. In addition, responding to any enforcement action or internal investigation related to alleged misconduct may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

~~New York State Moratorium on Cryptocurrency Mining Operations~~60

On November 22, 2022, the New York State enacted a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain operations; provided that such operations shall be subject to a full generic environmental impact statement review. While the Company’s bitcoin mining operations in upstate New York State use proof-of-work authentication, they were approximately 90% (now 99%) carbon free according to NYISO Power Trends 2023 Report. The law provides for a two-year moratorium on new applications or new permits for an electric generating facility that utilizes a carbon-based fuel. Therefore, the Company believes that its New York State hosting facilities, which primarily depended on hydroelectric power, will be able to comply with the law.

Regulatory restrictions that target AI, including, but not limited to, export restrictions may have a material adverse impact on our intended operations.

The increasing focus on the strategic importance of AI technologies has already resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI, and may in the future result in additional restrictions impacting some or all of our service offerings. Such restrictions could include additional unilateral or multilateral export controls on certain products or technology, including, but not limited to, AI technologies. As geopolitical tensions have increased, semiconductors associated with AI, including GPUs and associated products, are increasingly the focus of export control restrictions proposed by stakeholders in the U.S. and its allies, and it is likely that additional unilateral or multilateral controls will be adopted. Such controls may be very broad in scope and application, prohibit us from exporting our services to any or all customers in one or more markets or could impose other conditions that limit our ability to serve demand abroad and could negatively and materially impact our business, revenue, and financial results. Export controls targeting GPUs and semiconductors associated with AI, which are increasingly likely, would restrict our ability to export our technology, services even though competitors may not be subject to similar restrictions, creating a competitive disadvantage for us and negatively impacting our business and financial results. Increasing use of economic sanctions may also impact demand for our services, negatively impacting our business and financial results. Additional unilateral or multilateral controls are also likely to include deemed export control limitations that negatively impact the ability of our research and development teams to execute our roadmap or other objectives in a timely manner. Additional export restrictions may not only impact our ability to serve overseas markets, but also provoke responses from foreign governments, including China, that negatively impact our ability to provide our services to customers in all markets worldwide, which could also substantially reduce our revenue.

During the third quarter of fiscal year 2023, the U.S. government announced new export restrictions and export licensing requirements targeting China’s semiconductor and supercomputing industries. These restrictions impact exports of certain chips, as well as software, hardware, equipment, and technology used to develop, produce, and manufacture certain chips, to China (including Hong Kong and Macau) and Russia. The new license requirements also apply to any future NVIDIA integrated circuit achieving certain peak performance and chip-to-chip I/O performance thresholds, as well as any system or board that includes those circuits. There are also now licensing requirements to export a wide array of products, including networking products, destined for certain end users and for certain end uses in China.

55Management of these new licenses and other requirements is complicated and time consuming. Our results and competitive position may be harmed if we are restricted in offering our services, if customers purchase services from competitors, if customers develop their own internal solution, if we are unable to provide contractual warranty or other extended service obligations, if the U.S. government does not grant licenses in a timely manner or denies licenses to significant customers, or if we incur significant transition costs. Even if the U.S. government grants any requested licenses, the licenses may be temporary or impose burdensome conditions that we cannot or choose not to fulfill. The new requirements may benefit certain of our competitors, as the licensing process will make our pre-sale and post-sale technical support efforts more cumbersome and less certain, and encourage customers to pursue alternatives to our services.

~~Management of these new license and other requirements is complicated and time consuming.~~ Our ~~results~~cloud ~~and competitive position may be harmed if we are restricted in offering our~~ services, ifbusiness ~~customers~~is ~~purchase services from competitors, if customers develop their own internal solution, if we are~~subject ~~unable~~ to ~~provide~~complex ~~contractual~~and ~~warranty~~evolving ~~or other extended service obligations, if the~~ U.S. ~~government~~and ~~does~~foreign ~~not~~laws ~~grant~~and ~~licenses~~regulations inregarding ~~a timely manner or denies licenses to significant customers~~AI, ormachine ~~if we incur significant transition costs. Even if the U.S. government grants any requested licenses~~learning, the licenses may be temporary or impose burdensome conditions that we cannot or choose not to fulfill. The new requirements may benefit certain of our competitors, as the licensing process will make our pre-sale and ~~post-sale~~automated ~~technical~~decision ~~support efforts more cumbersome and less certain, and encourage customers to pursue alternatives to our services~~making.

In recent years the use of machine learning, AI and automated decision making, has come under increased regulatory scrutiny, and governments and regulators in the United States, European Union, and other places have announced the need for greater regulation regarding the use of machine learning and AI generally. New laws, guidance, and decisions in this area may limit WhiteFiber’s cloud services business, or require WhiteFiber to make changes to its clouds service technology and infrastructure and its operations that may decrease its operational efficiency, result in an increase to operating costs and/or hinder its ability to provide or improve its cloud services.

For example, certain global privacy laws regulate the use of automated decision making and may require that the existence of automated decision making be disclosed to the data subject with a meaningful explanation of the logic used in such decision making in certain circumstances, and that safeguards must be implemented to safeguard individual rights, including the right to obtain human intervention and to contest any decision. Other global privacy laws allow individuals the right to opt out of certain automated processing of personal data and create other requirements that impact automated decision-making. At the federal level, the scope and extent of regulation of AI is uncertain, but the National Institute of Standards and Technology issued the NIST-AI-600-1, AI Risk Management Framework: Generative Artificial Intelligence Profile which will likely remain a standard that regulators may consider for determining whether companies have adequate assessed the risk of use of AI.

A number of states have issued or proposed laws that require developers and deployers of high risk AI tools and systems to conduct risk assessments and take steps to avoid algorithmic discrimination. In addition, these laws provide consumers with the right to pre-use notice and certain rights to opt-out of use of such tools for certain kinds of automated decisions and to seek human review for adverse decisions. These laws could impose additional obligations on us to comply with such requirements and limit the Company’s ability to use AI and automated decision making. Violations of such laws could expose the Company to fines and sanctions and consumer class actions.

In the European Union, the EU AI Act establishes a comprehensive, risk-based governance framework for AI in the EU market. The EU AI Act entered in force on August 1, 2024, and the majority of the substantive requirements will apply two years later (beginning 2026). The EU AI Act will apply to companies that develop, use and/or provide AI in the European Union and includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose AI and foundation models, and proposes fines for breach of up to 7% of worldwide annual turnover (revenue). Additionally, in September of 2022, the European Commission proposed two Directives seeking to establish a harmonized civil liability regime for AI in the European Union, in order to facilitate civil claims in respect of harm caused by AI and to include AI-enabled products within the scope of the European Union’s existing strict liability regime. Once fully applicable, the EU AI Act will have a material impact on the way AI is regulated in the European Union, and together with developing guidance and/or decisions in this area, may affect our use of AI and our ability to provide, improve, or commercialize our cloud services, and could require additional compliance measures and changes to our operations and processes.

Moreover, the protectability and ownership of intellectual property, including patent and copyright, resulting from the use of AI technologies has not been fully addressed by courts or laws or regulations. To the extent we use AI technologies to generate or develop other technology, we may have difficulty enforcing intellectual property rights in other such technology. In addition, the use or adoption of AI technologies into our offerings may result in exposure to claims of copyright infringement or other intellectual property misappropriation based on the inputs or outputs of such systems. As the legal and regulatory framework for AI and automated decision making evolves, we may not always be able to anticipate how to respond to these laws or regulations, and compliance may adversely impact our operations and involve significant expenditure and resources. Any failure by us to comply may result in significant liability, potential increases in civil claims against us, negative publicity, an erosion of trust, and/or increased regulation and could materially adversely affect our business, results of operations, and financial condition.

Issues in the development and use of AI may result in reputational or competitive harm or liability.

We ~~are~~provide ~~beginning to build AI into our~~ infrastructure services, and we are also providing computing power for AI available for our customers to use in solutions that they build. We are providing supporting/computing power to clients, including our strategic partners who develop AI systems. We expect this integration of AI into our offerings and our business in general to grow. AI presents risks and challenges that could affect its adoption, and therefore our business. AI algorithms or training methodologies may be flawed. Datasets may be overbroad, insufficient, or contain biased information. Content generated by AI systems may be offensive, illegal, or otherwise harmful. Ineffective or inadequate AI development or deployment practices by our Company or others could result in incidents that impair the acceptance of AI solutions or cause harm to individuals, customers, or society, or result in our products and services not working as intended. Human review of certain outputs may be required. As a result of these and other challenges associated with innovative technologies, our implementation of AI systems could subject us to to competitive harm, regulatory action, legal liability, including under new proposed legislation regulating AI in jurisdictions, new ~~applications~~ applications of existing data protection, privacy, intellectual property, and other laws, and brand or reputational harm. Some AI scenarios ~~present~~ present ethical issues or may have broad impacts on society. If we provide supporting/computing AI services that have unintended consequences, unintended usage or customization by our customers and partners, or are controversial because of their impact on human rights, privacy, employment, or other social, economic, or political issues, we may experience brand or reputational harm, adversely affecting our business and consolidated financial statements.

5662

Existing and increasing legal and regulatory requirements could adversely affect our results of operations.

We are subject to a wide range of laws, regulations, and legal requirements in the U.S. and globally, including those that may apply to our products and online services offerings, and those that impose requirements related to user privacy, telecommunications, data storage and protection, advertising, and online content. Laws in several jurisdictions, including EU Member State laws under the European Electronic Communications Code, increasingly define certain of our services as regulated telecommunications services. This trend may continue and will result in these offerings being subjected to additional data protection, security, law enforcement surveillance, and other obligations. Regulators and private litigants may assert that our collection, use, and management of customer data and other information is inconsistent with their laws and regulations, including laws that apply to the tracking of users via technology such as cookies. New environmental, social, and governance laws and regulations are expanding mandatory disclosure, reporting, and diligence requirements. Legislative or regulatory action relating to cybersecurity requirements may increase the costs to develop, implement, or secure our products and services. Compliance with evolving digital accessibility laws and standards will require engineering and is important to our efforts to empower all people and organizations to achieve more. Legislative and regulatory action is emerging in the areas of AI and content moderation, which could increase costs or restrict opportunity. For example, in the EU, an AI Act is being considered, and may entail increased costs or decreased opportunities for the operation of our AI services in the European market.

~~The~~Regulatory ~~regulatory~~ and legislative developments related to climate change, may materially adversely affect our brand, reputation, business, operating results and financial condition.

A number of governments or governmental bodies have introduced or are contemplating legislative and regulatory changes in response to various climate change interest groups and the potential impact of climate change. Given the very significant amount of electrical power required to operate digital asset mining machines, as well the environmental impact of mining for the rare earth metals used in the production of mining servers, the digital asset mining industry may become a target for future environmental and energy regulation. For example, in June and July of 2021, the Chinese government prohibited the operation of mining machines and supply of energy to mining businesses, citing concerns regarding high levels of energy consumption, which resulted in our suspension of mining operations in China. U.S. legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Specifically, imposition of a carbon tax or other regulatory fee in a jurisdiction where we operate or on electricity that we purchase could result in substantially higher energy costs, and due to the significant amount of electrical power required to operate digital asset mining machines, could in turn put our facilities at a competitive disadvantage. Any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. Any of the foregoing could have a material adverse effect on our financial position, results of operations and cash flows.

57A particular digital asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if a regulator disagrees with our characterization of a digital asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results and financial condition. Furthermore, a determination that Bitcoin or any other digital asset that we own or mine is a “security” may adversely affect the value of such digital asset and our business.

A particular digital asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if a regulator disagrees with our characterization of a digital asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results and financial condition. Furthermore, a determination that bitcoin or any other digital asset that we own or mine is a “security” may adversely affect the value of bitcoin and our business.

The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given digital asset is a security, as described below, is a highly complex, fact-driven analysis that has evolved over time. Our determination that the digital assets we hold are not securities is a risk-based assessment and not a legal standard or one binding on regulators. As of the date of this report, with the exception of certain centrally issued digital assets that have received “no-action” letters from the SEC staff, bitcoin and ETH are the only digital assets which senior officials at the SEC have publicly stated are unlikely to be considered securities. As a digital asset mining company, we do not believe we are an issuer of any “securities” as defined under the federal securities laws. Our internal process for determining whether the digital assets we hold or plan to hold is based upon the public statements of the SEC and existing case law. The digital assets we hold or plan to hold, other than bitcoin and ETH, may have been created by an issuer as an investment contract under the Howey test, SEC v. Howey Co., 328 U.S. 293 (1946), and may be deemed to be securities by the SEC. However, the Company was not the issuer that created these digital assets and is holding them on an interim basis until liquidated. Should the SEC state in the future that U.S. digital currency tokens or other digital assets we hold are securities, we may subject to additional securities laws’ requirements and may no longer be able to hold any of these digital assets. It will then likely become difficult or impossible for such digital assets to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets, which in addition to materially and adversely affecting the trading value of the digital assets is likely to cause substantial volatility and significantly impact their liquidity and market participants’ ability to convert the digital assets into U.S. dollars. Our inability to exchange bitcoin for fiat currency or other digital assets (and vice versa) and to administer our treasury management objectives may decrease our earnings potential and have an adverse impact on our business and financial condition.

Under the Investment Company Act of 1940, as amended, a company may fall within the definition of an investment company under Section 3(c)(1)(A) thereof if it is or holds itself out as being engaged primarily, or proposes to engage primarily in the business of investing, reinvesting or trading in securities, or under Section 3(a)(1)(C) thereof if it is engaged or proposes to engage in business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire “investment securities” (as defined) having a value exceeding 40% of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. There is no authoritative law, rule or binding guidance published by the SEC regarding the status of digital assets as “securities” or “investment securities” under the Investment Company Act. Although we believe that we are not engaged in the business of investing, reinvesting, or trading in investment securities, and we do not hold ourselves out as being primarily engaged, or proposing to engage primarily, in the business of investing, reinvesting or trading in securities, to the extent the digital assets which we mine, own, or otherwise acquire may be deemed “securities” or “investment securities” by the SEC or a court of competent jurisdiction, we may meet the definition of an investment company. If we fall within the definition of an investment company under the Investment Company Act, we would be required to register with the SEC. If an investment company fails to register, it likely would have to stop doing almost all business, and its contracts would become voidable. Generally non-U.S. issuers may not register as an investment company without an SEC order.

The classification of a digital asset as a security under the applicable law has wide-ranging implications for the regulatory obligations that flow from the mining, sale and trading of such assets. For example, a digital asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration. Persons that effect transactions in digital assets that are deemed securities in the United States may be subject to registration with the SEC as a “broker” or “dealer.”

Although the March 17, 2026 SEC interpretive release provided a framework for evaluating which digital assets may constitute securities, updating the Howey analysis, and offering guidance on network-based economic activities, there still exists considerable regulatory uncertainty and potential enforcement exposure associated with digital asset holdings and transactions.

There can be no assurances that we will properly characterize any given digital asset as a security or non-security for purposes of determining which digital assets to mine, hold and trade, or that the SEC, or a court, if the question was presented to it, would agree with our assessment. We could be subject to judicial or administrative sanctions for failing to offer or sell digital assets in compliance with the registration requirements, or for acting as a broker or dealer without appropriate registration. Such an action could result in injunctions, cease and desist orders, as well as civil monetary penalties, fines, and disgorgement, criminal liability, and reputational harm. Further, if bitcoin is deemed to be a security under the laws of any U.S. federal, state, or local jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such digital asset. For instance, all transactions in such supported digital asset would have to be registered with the SEC, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability and transactability. For instance, all transactions in such supported digital asset would have to be registered with the SEC, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability and transactability. Further, it could draw negative publicity and a decline in the general acceptance of the digital asset. Also, it may make it difficult for such digital asset to be traded, cleared, and custodied as compared to other digital assets that are not considered to be securities.

Enactment of the Infrastructure Investment and Jobs Act of 2021 (the “Infrastructure Act”) may have an adverse impact on our business and financial condition.

On November 15, 2021, President Joseph R. Biden signed the Infrastructure Act. Section 80603 of the Infrastructure Act modifies and amends the Internal Revenue Code of 1986 (the “Code”) by requiring brokers of digital asset transactions to report their customers to the IRS. This provision was included to enforce the taxability of digital asset transactions. Section 80603 defines “broker” as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” That could potentially include miners, validators, and developers of decentralized applications. These functions play a critical role in our business and in the functioning of the blockchain ecosystem. Importantly, these functions have no way of identifying their anonymous users. Indeed, bitcoin’s blockchain was designed for anonymity.

This reporting requirement took effect on January 1, 2023, and the implementation of these requirements is ongoing. The Company is closely monitoring the situation and waiting for more issuance of updated guidance from government agencies. The Company deems that it doesn’t qualify as “broker” under section 80603 and therefore it is not required to report its customers to the IRS under such provision. Disclosing the identity of our bitcoin mining operations and associated accounts to ensure they can be taxed by the IRS could cause a significant devaluing of our business, the bitcoin currency, and the entire digital assets market. Additionally, noncompliance with this provision could lead to significant fines and or regulatory actions against our company.

Risks related to material pending crypto legislation or regulations

On the federal level, by certain accounts, more than 100 bills were introduced in Congress to regulate cryptocurrency and digital assets. Except as described in other specific risk factors set forth herein, we do not believe that material pending crypto legislation or regulations would have a material effect on our business, financial condition and results of operations. Certain of the material pending bills are as follows:

●

Digital Commodity Exchange Act of 2022 (DCEA), introduced on April 28, 2022 in the House of Representatives, would create a regulatory overview for digital commodity developers, dealers and exchanges, none of which would currently apply to the Company;

●

Securities Clarity Act, introduced on July 16, 2021 in the House of Representatives, is intended to work with the proposed DCEA. The Securities Clarity Act would codify that an asset, whether tangible or intangible (including an asset in digital form), that is not per se a security, does not become a security as a result of being sold or otherwise transferred pursuant to an investment contract. Thus, certain digital assets which the Company may acquire, if sold pursuant to an investment contract, would not become securities, subject to SEC regulations;

●

Digital Trading Clarity Act of 2022, introduced on September 29, 2022 in the Senate, provides that if a federal court or the SEC determines that a digital asset is a security, the bill requires the SEC Division of Enforcement to request information from an intermediary listing that asset to determine if the intermediary meets the requirements in the bill texts. As stated elsewhere herein, the Company will conduct an extensive compliance review prior to holding any digital asset that may be deemed to be a security, and would need to avoid holding any such digital asset if this bill becomes law.

On March 17, 2026, the Securities and Exchange Commission (SEC) issued an interpretive release clarifying the application of federal securities laws to certain crypto assets and related transactions. This guidance provides the most detailed regulatory framework to date, including the following:

●

The SEC introduced a classification system for crypto assets, delineating assets that are likely considered securities from those less likely to fall under securities laws.

●

Digital assets are evaluated based on characteristics such as investor expectation of profit, decentralization of network controls, and contractual rights to returns or governance.

●

The release reaffirms and updates the Howey Test for digital assets, considering economic realities of token offerings and distribution structures.

●

Features such as profit-sharing, network pre-sale arrangements, and centralized management may indicate security status.

●

Activities such as staking, lending, and liquidity provision may trigger securities law obligations depending on whether they create an investment contract relationship.

●

Peer-to-peer network functionality that does not confer investor expectations of profits may be treated differently.

●

The guidance aligns with prior SEC-CFTC positions, noting potential overlap of regulatory authority, particularly for derivative-like products or commodities-related tokens.

Our interactions with a blockchain and mining pools may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distributive ledger technology.

The Office of Financial Assets Control of the U.S. Department of Treasury (“OFAC”) requires us to comply with its sanction program and not conduct business with persons named on its specially designated nationals (“SDN”) list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list or from countries on OFAC’s sanctioned countries’ list. We also rely on a third-party mining pool service provider for our mining revenue payments and other participants in the mining pool, that, unknown to us, may also be persons from countries on OFAC’s SDN list or from countries on OFAC’s sanctioned countries list. Our Company’s policy prohibits any transactions with such SDN individuals or persons from sanctioned countries, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling bitcoin assets. Moreover, federal law prohibits any U.S. person from knowingly or unknowingly possessing any visual depiction commonly known as child pornography. Recent media reports have suggested that persons have imbedded such depictions on one or more blockchains. Because our business requires us to download and retain one or more blockchains to effectuate our ongoing business, it is possible that such digital ledgers contain prohibited depictions without our knowledge or consent. To the extent government enforcement authorities enforce these and other laws and regulations that are impacted by decentralized distributed ledger technology, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all of which could harm our reputation and affect the value of our Ordinary Shares.

If regulatory changes or interpretations of our activities require our registration as a money services business (“MSB”) under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act (“BSA”), or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive. If we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operations.

To the extent that our activities cause us to be deemed a money service business (MSB) under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records. The Digital Asset Anti-Money Laundering Act of 2022 (DAAMLA) was introduced on December 14, 2022 in the Senate. The bill would authorize FinCEN to designate digital asset wallet providers, miners, validators, and other ~~select~~ network participants as MSBs. This designation would require these parties to register with FinCEN ~~and~~ and would extend to these parties’ anti-money laundering (AML) responsibilities under the BSA.

To the extent that our activities cause us to be deemed an MSB and/or a “money transmitter” (“MT”) or equivalent designation, under ~~state~~ state law in any state in which we operate ~~(currently~~, ~~Texas, Kentucky and New York),~~ we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of AML programs, maintenance of certain records and other operational requirements. Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses, possibly affecting an investment in our securities in a materially adverse manner. Furthermore, the Company and our service providers may not be capable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs. If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to leave a particular state or the United States completely. Any such action would be expected to materially adversely affect our operations.

Current regulation of the exchange of bitcoins under the CEA by the CFTC is unclear; to the extent we become subject to regulation under the CFTC in connection with our exchange of bitcoin, we may incur additional compliance costs, which may be significant.66

Current legislation, including the Commodities Exchange Act of 1936, as amended (the “CEA”) is unclear with respect to the exchange of bitcoins. Changes in the CEA or the regulations promulgated thereunder, as well as interpretations thereof and official promulgations by the Commodity Futures Trading Commission (“CFTC”), which oversees the CEA, may impact the classification of bitcoins and therefore may subject them to additional regulatory oversight by the CFTC.

Presently, bitcoin derivatives are not excluded from the definition of a “commodity future” by the CFTC. We cannot be certain as to how future regulatory developments will impact the treatment of bitcoins under the law. Bitcoins have been deemed to fall within the definition of a commodity and, we may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements. Moreover, we may be required to register as a commodity pool operator or as a commodity pool with the CFTC through the National Futures Association. Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting an investment in us. If we determine not to comply with such additional regulatory and registration requirements, we may seek to curtail our U.S. operations. Any such action would be expected to materially adversely affect our operations. As of the date of this report, no CFTC orders or rulings are applicable to our business.

Because there has been limited precedent set for financial accounting of bitcoin and other digital assets, the determination that we have made for how to account for bitcoin and other digital assets transactions may be subject to change.

While there has been limited precedent set for the financial accounting of digital assets and related revenue recognition, on December 13, 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain crypto assets. Under this new guidance, entities are required to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. Besides ASU 2023-08 issued, there has been little official guidance provided by the FASB, the Public Company Accounting Oversight Board (PCAOB) or the SEC, it is unclear how companies may in the future be required to account for bitcoin and other digital assets transactions and related revenue recognition. A change in regulatory or financial accounting standards could result in the necessity to change our accounting methods and restate our financial statements. Such a restatement could adversely affect the accounting for our newly mined bitcoin rewards and more generally negatively impact our business, prospects, financial condition and results of operation. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which would have a material adverse effect on our business, prospects or operations as well as and potentially the value of any digital assets we hold or expects to acquire for our own account and harm investors.

Risks ~~Related~~ related to ~~Previously Operating~~the inPRC ~~China~~law.

We may be subject to fines and penalties for operating in China without registration.

Prior to the commencement of the Company’s bitcoin mining business, and before the involvement of any of the Company’s current directors, officers or employees, Golden Bull Limited formerly operated a peer-to-peer lending business in the PRC, as discussed below. Additionally, from February 2020 to June 2021, the Company operated its bitcoin mining business in the PRC, but completed the migration of all of its bitcoin mining operations out of China by September 2021.

Although the statute of limitations for non-compliance by our former business in the PRC is generally two years and the Company has not had any operations in PRC since September 2021, the authority may still find its prior bitcoin mining operations involved a threat to financial security. In such event, the two-year period would be extended to five years.

Pursuant to laws and regulations of the PRC, there are two ways for foreign legal persons/entities to be considered to be engaging in operation activities within the territory of China. One way is to establish a foreign-invested enterprise, that is incorporated, according to the Foreign Investment Law of PRC, within the territory of China and that is wholly or partly invested by a foreign investor. The organization form, institutional framework and standard of conduct of a foreign-invested enterprise are subject to the provisions of the Company Law of the PRC and the Partnership Enterprise Law of the PRC and other law related regulations. Another way to be deemed to be operating within China is to complete the approval and registration procedures with the relevant regulatory authorities in accordance with the provisions of Administrative Measures for the Registration of Enterprises of Foreign Countries (Regions) Engaging in Production and Operation Activities within the Territory of China (Revised in 2020), or Order No.31. However, in view of the ban on all new digital asset operations in China, we terminated the process of forming a subsidiary in mainland China. Since our Hong Kong subsidiary had not obtained business licenses in mainland China where Bit Digital Hong Kong used to carry out business, it may lead to a punishment of a warning, fine, confiscation of income and/or suspension of business for rectification.

We may be subject to fines and penalties for our prior mining activities in mainland China.

The Chinese government implements the management systems of pre-establishment national treatment and negative list for foreign investment. Pre-establishment national treatment refers to the treatment given to foreign investors and their investments during the investment access stage, which is not lower than that given to their domestic counterparts; negative list for foreign investment refers to special administrative measures for the restricted or prohibited access of foreign investment in specific fields as stipulated by the Chinese government.

Pursuant to the Special Administrative Measures for Access of Foreign Investment Access (2021 Edition), or the 2021 Edition Negative List for Foreign, issued by The Ministry of Commerce of the PRC (the “MOFCOM”) and the National Development and Reform Commission (the “NDRC”) on December 27, 2021, which came into effect on January 1, 2022, our bitcoin mining business does not fall into the Negative List for Foreign. However, the 2021 Edition Negative List for Foreign indicates that “Fields not mentioned in the Negative List for Foreign Investment Access shall be subject to administration under the principle of consistency for domestic and foreign investments. The relevant provisions of the Negative List for Market Access shall apply to domestic and foreign investors on a unified basis.”

Also, based on the Negative List for Market Access (2022 Edition), “the Catalogue for Guidance on Industrial Restructuring shall be included in the Negative List for Market Access”; plus, according to the Decision of the State Council on Promulgating and Implementing the “Temporary Provisions on Promoting Industrial Structure Adjustment,” valid from December. 2, 2005, “In principle, the ‘Guidance Catalogue for the Industrial Structure Adjustment’ shall apply to various types of enterprises inside China.” “The industries of the eliminated category under the ‘Guidance Catalogue for the Industrial Structure Adjustment’ shall apply to the foreign investment enterprises.” and “Investments are prohibited from being contributed to projects under the eliminated category.” Additionally, the NDRC released on December 30, 2021 its No. 49 Decree, announcing that the Decision of the National Development and Reform Commission on Amending the Guiding Catalog for Industrial Restructuring (2019 Version) (the “Amended Catalog”). The Amended Catalog added “virtual currency mining activities” to the eliminated category of “1. outdated production processing and equipment under the original Catalog.” Therefore, foreign investment enterprises are prohibited from virtual currency activities and our bitcoin mining business are banned in China as well. There can be no assurance that our prior mining activities in China will not be subject to fines and penalties on a retroactive basis.

We may be subject measures from the Cyberspace Administration of China concerning the collection of data and required to obtain clearance from the CAC.

The Cybersecurity Review Measures (2021) (the “Measures”) were officially released to the public on December 28, 2021 and became effective on February 15, 2022. According to the Measures, to go public abroad, an online platform operator that possesses the personal information of more than 1 million users must seek cybersecurity review from the Office of Cybersecurity Review.

Currently, we have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect.

We believe we currently are not required to obtain clearance from the CAC regarding our listing in the United States under the recently-enacted or proposed regulations or rules because we have never set an online platform for any user and we have not acted as an online platform operator. However, since these cybersecurity rules were recently enacted and uncertainties exist as to the interpretation or implementation of the Measures, if the Measures require us to obtain clearance or permissions from the CAC, we would file an application with CAC and seek to obtain the clearance or permissions from the CAC as required, however there can be no assurance we will obtain clearance or permission which could adversely affect our business. Compliance with the Measures, as well as additional laws, regulations and guidelines that the Chinese government promulgates in the future, may entail significant expenses and could materially affect our business.

United States regulators may be limited in their ability to conduct investigations or inspections of our operations in Hong Kong.

The increased regulatory scrutiny of U.S.-listed companies with operations in China could add uncertainties to our business operations, share price and reputation. Although the audit reports of Audit Alliance LLP incorporated by reference into this report are prepared by our auditors in Singapore who are subject to inspection by the Public Company Accounting Overnight Board (the “PCAOB”), there is no guarantee that future audit reports will be prepared by auditors that are completely inspected by the PCAOB and, as such, future investors may be deprived of the benefit of such complete inspections, which could result in limitations or restrictions on our ability to access the U.S. capital markets. Furthermore, trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act (the “HFCA Act”) or the Accelerating Holding Foreign Companies Accountable Act if the SEC subsequently determines our audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as Nasdaq or the over-the-counter market, may determine to delist our securities.

U.S. public companies that have or had a substantial portion of their operations in China have been the subject of heightened scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate government policies or a lack of adherence thereto and, in many cases, allegations of fraud.

As part of increased regulatory focus in the United States on access to audit information, the United States enacted the Holding Foreign Companies Accountable Act, or the HFCA Act, in December 2020. The HFCA Act includes requirements for the SEC to identify issuers whose audit reports are prepared by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The HFCA Act also requires public companies on this SEC list to certify that they are not owned or controlled by a foreign government and make certain additional disclosures in their SEC filings. In addition, under the HFCA Act, if the auditor of a U.S. listed company’s financial statements is not subject to PCAOB inspections for three consecutive “non-inspection” years, the SEC is required to prohibit the securities of such issuer from being traded on a U.S. national securities exchange, such as the NYSE and Nasdaq, or in the U.S. over-the-counter markets. On December 29, 2022, the Consolidated Appropriations Act, 2023 was signed into law, which, among other things, amended the HFCA Act to reduce from three years to two years the number of consecutive years an issuer can be identified as an identified issuer before the SEC can prohibit an issuer’s securities from trading on any U.S. national securities exchange and on the over-the- counter market. Accordingly, our securities may be prohibited from trading on Nasdaq or other U.S. stock exchange if our auditor is not inspected by the PCAOB for two consecutive years, and this ultimately could result in our Ordinary Shares being delisted.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which if enacted into law, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on U.S. stock exchanges if its auditors are not subject to PCAOB inspections for two consecutive “non-inspection” years instead of three. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the Board is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB issued PCAOB Rule 6100 Board Determinations Under the Holding Foreign Companies Accountable Act. The PCAOB notified the SEC that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and in Hong Kong because of the positions taken by authorities in mainland China and Hong Kong. The PCAOB issued a Determination Report on December 15, 2022, determining that the PCAOB secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong, and vacating the 2021 Determinations to the contrary. However, the PCAOB further noted that it will act immediately to consider the need to issue a new determination if the PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access. While the audit report of Audit Alliance LLP included in this report was prepared by auditors based in Singapore who are subject to inspection and investigation by the PCAOB, there can be no assurance that our auditor or we will be able to comply with these and other requirements imposed by U.S. regulators in the future. The market prices of our Ordinary Shares and/or other securities could be adversely affected as a result of possible negative impacts of the HFCA Act and other similar rules and regulations.

Our Hong Kong subsidiaries could become subject to certain PRC laws if such laws are applied to Hong Kong.

The national laws of the PRC, including, but not limited to the Cybersecurity Review Measures that became effective on February 15, 2022, do not currently apply to our Hong Kong subsidiaries, except for those listed in the Basic Law of Hong Kong. However, due to changes in laws, regulations or policies, including how those laws, regulations or policies would be interpreted or implemented, and the national laws applicable in Hong Kong, the Basic Law might be revised in the future and our Hong Kong subsidiaries may be subject to certain PRC laws.

Pursuant to Article 18 of the Basic Law of the Hong Kong Special Administrative Region of the PRC (the “Basic Law”), the laws in force in the Hong Kong Special Administrative Region shall be the Basic Law, the laws previously in force in Hong Kong as provided for in Article 8 of this Law, and the laws enacted by the legislature of the Region. National laws shall not be applied in the Hong Kong Special Administrative Region except for those listed in Annex III to the Basic Law. The laws listed therein shall be applied locally by way of promulgation or legislation by the Region. Also, regarding the Annex III and several Instruments of the Basic Law, National Laws, which have applied

Filing Compare · Bit Digital, Inc