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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO 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 OF 1934

For the transition period from _____________ to ______________

Commission file number 001-40792

BTCS Inc.

(Exact name of registrant as specified in its charter)

Nevada		90-1096644
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification No.)

9466 Georgia Avenue #124, Silver Spring, MD		20910
303 W. Lancaster Ave #336, Wayne, PA		19087
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (202) ~~430~~987-~~6576~~8368

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	BTCS	The Nasdaq Stock Market
		(The Nasdaq Capital Market)

Securities registered under Section 12(g) of the Exchange Act: 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 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 of 1934 during the preceding 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, 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 check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 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 its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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 Act). Yes ☐ No ☒

The aggregate market value of the Common Stock of the registrant held by non-affiliates was approximately $1433,~~739~~925,000 based on the closing sale price on The Nasdaq Capital Market on June 2830, ~~2024~~2025 (the last business day of the registrant’s most recently completed second fiscal quarter).

As of March 1722, ~~2025~~2026, there were 2049,~~087~~754,~~981~~240 shares of common stock, par value $0.001, issued and outstanding.

Documents Incorporated By Reference

Portions of the registrant’s Proxy Statement for the ~~2025~~2026 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission (the “SEC”) within 120 days of the registrant’s fiscal year ended December 31, ~~2024~~2025.

BTCS INC.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	149
Item 2.	Properties	1511
Item 3.	Legal Proceedings	1511
Item 4.	Mine Safety Disclosures	1511
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1612
Item 6.	Reserved	1613
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1713
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	4839
Item 8.	~~Consolidated~~ Financial Statements and Supplementary Data	4839
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	4839
Item 9A.	Controls and Procedures	4839
Item 9B.	Other Information	4840
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	4840
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	4940
Item 11.	Executive Compensation	4940
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4940
Item 13.	Certain Relationships and Related Transactions, and Director Independence	4941
Item 14.	Principal Accounting Fees and Services	4941
PART IV
Item 15.	Exhibits and ~~Consolidated~~ Financial Statement Schedules	5041
Item 16.	Form 10-K Summary	5142

PART I

ITEM 1. BUSINESS

BTCS Inc. (“BTCS” or the “Company”) is a U.S.-based, Nasdaq-listed blockchain technology company focused on ~~advancing blockchain~~revenue ~~infrastructure.~~generation ~~Since~~through ~~2014,~~blockchain ~~BTCS~~infrastructure ~~has established itself as one of the only publicly traded U.S. companies with a primary emphasis on proof-of-stake (“PoS”)~~ and ~~delegated~~decentralized ~~proof-of-stake~~finance (“~~dPoS~~DeFi”) ~~blockchain~~activities, ~~networks.~~primarily ~~The~~on ~~Company’s~~the ~~goal~~Ethereum isnetwork. toBTCS ~~drive~~operates ~~scalable~~as ~~revenue~~an byactive ~~leveraging~~participant ~~its~~in ~~robust~~the ~~blockchain~~Ethereum ~~infrastructure~~ecosystem, togenerating ~~develop~~digital ~~innovative~~asset ~~business~~denominated ~~lines~~on-chain ~~that~~revenues ~~complement~~through ~~and enhance~~ its ~~core~~ operations.

~~BTCS~~The Company’s ~~primary~~ ~~activities~~business ~~include~~model ~~Ethereum~~is ~~block-building~~centered ~~(“Builder+”)~~on ~~and~~providing ~~validator~~core ~~node~~blockchain ~~operations~~infrastructure ~~(“NodeOps”)~~services, ~~across PoS~~participating ~~and~~in ~~dPoS~~transaction ~~networks.~~validation and ~~The~~block ~~Company~~construction, ~~generates~~and ~~native~~engaging ~~token~~in ~~rewards~~decentralized byfinance ~~staking~~activities ~~the~~to ~~Company’s~~generate ~~crypto~~revenue. ~~assets~~While ~~(also~~BTCS ~~referred~~maintains tosignificant ~~“cryptocurrencies”,~~Ethereum (“~~crypto~~ETH”,) ~~“digital assets”~~holdings, orthe ~~“tokens”)~~Company todoes ~~validator~~not ~~nodes~~operate ~~(“nodes”)~~as ~~operated~~a bypassive ~~BTCS and~~digital ~~other~~asset ~~third-parties~~holder. ByInstead, ~~leveraging~~ETH ~~our~~serves ~~blockchain~~as ~~infrastructure,~~an weoperating ~~aim~~asset that tosupports ~~drive scalable~~ revenue ~~growth~~generation ~~and~~across ~~strengthen our leadership in~~ the ~~blockchain~~Company’s ~~ecosystem~~business lines.

~~OUR~~Business ~~BUSINESS~~Lines

~~Blockchain~~BTCS ~~Infrastructure~~operates through three primary, complementary business lines:

BTCS’s blockchain infrastructure operations underpin its participation in blockchain network consensus mechanisms and security. The Company operates a network of cloud-based validator nodes that perform essential roles in PoS and dPoS blockchain ecosystems. Validator ~~nodes~~ ~~validate~~Node ~~transactions~~Operations (“~~attestation~~NodeOps”) and propose new blocks for inclusion in the blockchain (“block proposal”). In return, BTCS earns native token rewards through these activities. These rewards are generated by staking (or “delegating”) BTCS’s own crypto assets and from supporting third-party delegations to BTCS nodes.

BTCS’s ~~infrastructure~~operates ~~currently~~validator ~~supports~~nodes on the Ethereum network as a ~~diverse~~validator ~~range~~(“Validator”). ofValidator ~~PoS~~nodes perform validation and ~~dPoS~~consensus-related activities ~~blockchains,~~(“attestation”) ~~including~~as ~~Ethereum,~~well ~~Cosmos,~~as ~~Kava,~~block ~~Akash,~~proposal ~~Avalanche,~~functions that contribute to network security and block finalization. ~~others~~In asexchange, ofBTCS ~~December~~earns 31ETH-denominated staking revenue, ~~2024.~~which ~~The~~include ~~flexibility~~protocol-defined ofrewards ~~BTCS’s~~and ~~validator~~execution ~~operations~~layer ~~positions~~transaction ~~the~~fees. Validator ~~Company~~operations torepresent ~~adapt~~a tofoundational ~~emerging~~component ~~opportunities within~~of the Company’s blockchain ~~sector~~infrastructure activities.

WeBlock ~~primarily~~Building earn crypto assets through the operation of our non-custodial validator nodes, with the intention of enhancing our production of crypto assets in various blockchain networks. While we have no formal policy, our primary objective is to hold and re-stake these earned crypto assets for network security and additional production opportunities, we may, on occasion, sell a portion for cash to meet operational needs. Our primary cryptocurrency exchange is Kraken; however, we also have basic accounts with multiple alternative cryptocurrency exchanges and OTC desks. As of the filing date, we have no exclusive agreements with any cryptocurrency exchanges, nor do we maintain margin or other type accounts that could create additional liability for the Company. Our approach to our crypto asset holdings remains adaptable to evolving market conditions and operational requirements.(“Builder+”)

~~Details~~Through ofits Builder+ operations, BTCS participates in the ~~Company’s~~blockspace ~~crypto~~value ~~asset~~chain ~~held~~by ~~can~~operating beproprietary ~~found~~block ~~under~~builders (“~~Item~~Builders”) that 7construct optimized transaction blocks for submission to Validators. ~~Management’s~~Builder+ ~~Discussion~~revenues ~~and~~are ~~Analysis~~derived from the fees earned when BTCS-constructed blocks are successfully proposed on-chain. In connection with these activities, the Company makes payments to the block proposing validator (“Validator Payments”) to external validators as part of ~~Financial~~the ~~Condition~~block-proposal process in order to secure block inclusion on the network. Validator Payments are made in digital assets and ~~Results~~represent ofa ~~Operations~~direct cost associated with the Company’s block-building operations.”

Builder+ has become an increasingly significant contributor to the Company’s revenues as BTCS has expanded private order flow integrations, enhanced infrastructure efficiency, and increased participation across Ethereum blockspace markets.

Decentralized Finance Operations (“Imperium”)

In 2025, BTCS launched Imperium, a business line focused on deploying digital assets into decentralized finance protocols as a liquidity provider and market participant. Through Imperium, the Company deploys ETH and stablecoins into smart contract-based protocols that facilitate decentralized lending, borrowing, liquidity provision, and other on-chain financial activities. Revenues earned through Imperium are variable and depend on protocol utilization, market conditions, and the performance of deployed assets.

Imperium is designed to complement BTCS’s blockchain infrastructure activities by enabling more flexible and capital-efficient deployment of digital assets. In contrast to traditional staking, which is subject to constraints by protocol-defined reward structures and lock-up requirements, DeFi participation allows the Company to dynamically allocate assets across protocols and strategies based on prevailing market conditions, risk considerations, and liquidity needs.

NodeOps and Builder+ collectively comprise the Company’s blockchain infrastructure activities, while Imperium represents a distinct DeFi operating segment. Revenues from blockchain infrastructure activities and DeFi activities are presented separately in the Company’s financial statements.

~~Ethereum~~Business ~~Block~~Evolution ~~Building~~and –Strategic ~~Builder+~~Focus

~~BTCS’s~~During ~~Ethereum block-building operations~~2025, ~~launched~~BTCS ~~under~~completed ~~the~~a ~~Builder+~~strategic ~~brand~~repositioning into ~~2024,~~concentrate ~~represent~~its aoperations ~~core~~and ~~pillar~~capital ofallocation ~~the~~on ~~Company’s~~Ethereum ~~blockchain infrastructure~~focused ~~strategy~~activities. ~~Block-building~~As part ~~is a critical function within Ethereum’s proof-~~of~~-stake~~ ~~ecosystem~~this transition, ~~where~~the ~~Builders~~Company ~~create and~~discontinued ~~submit~~validator ~~blocks~~node tooperations ~~Validators~~on ~~for~~non-Ethereum ~~proposal,~~blockchains ~~validation,~~ and ~~inclusion~~liquidated in the ~~blockchain.~~majority ~~A Builder selects and organizes transactions~~of ~~from~~its non-Ethereum’s ~~transaction~~digital ~~pool,~~asset ~~known~~holdings. asThe ~~the~~Company ~~mempool,~~also ~~strategically~~discontinued ~~assembling~~the ~~blocks~~development toand ~~maximize~~operation ~~the~~of ~~value~~legacy oftechnology ~~included~~service ~~transactions.~~platforms, ~~Builders~~including ~~compete~~StakeSeeker toin ~~purchase~~2024 ~~block space~~ and ~~have~~ChainQ ~~their~~in ~~blocks selected by Validators~~2025, ~~who~~in ~~propose~~order ~~them~~ to ~~the~~focus ~~network~~resources ~~for~~on ~~consensus~~scalable, ~~resulting~~ inrevenue-generating ~~the~~blockchain ~~block’s verification~~ infrastructure and ~~addition~~DeFi ~~to the blockchain~~activities.

~~Builder+~~These ~~optimizes~~actions ~~this~~reflect ~~process~~BTCS’s byemphasis ~~leveraging~~on ~~advanced~~operational ~~algorithms~~execution, tocapital ~~construct high-value blocks. By analyzing the mempool~~efficiency, ~~Builder+~~and ~~identifies transactions~~alignment with ~~the~~Ethereum-native ~~highest gas fees and assembles them into blocks designed to maximize gross gas fee revenue~~opportunities. ~~Builder+’s logic~~ ~~also~~While ~~aims to minimize~~ the ~~costs~~Company tomay ~~acquire~~continue ~~block space (“Validator Payments”) required~~ to ~~secure~~hold ~~block~~non-Ethereum ~~inclusion,~~digital ~~ensuring an~~assets ~~efficient~~in ~~and~~support ~~scalable~~of ~~approach.~~specific ~~This~~infrastructure ~~has~~or ~~positioned~~operational ~~Builder+ as a significant driver of BTCS’s growth~~activities, ~~enabling~~Ethereum remains the ~~Company to~~core ~~capture~~network ~~value~~underpinning ~~from Ethereum~~BTCS’s ~~transaction~~business ~~fee market~~model.

~~While~~Capital ~~Builder+~~Strategy currently operates exclusively on Ethereum, it has been designed to expand to other blockchain networks, aligning with BTCS’s long-term strategy of diversification. By combining cutting-edge technology with its blockchain infrastructure expertise, BTCS seeks to capture an increasing share of the Ethereum Builder market. The platform’s 2024 performance demonstrated its potential as a scalable revenue driver, and ~~BTCS believes Builder+ will play a key role in its future growth.~~Operations

~~Staking-~~A core element of BTCS’s business model is its integrated capital strategy, which combines decentralized finance mechanisms with traditional capital markets activities (the “DeFi/TradFi Flywheel”). The Company utilizes tools such as at-athe-~~Service~~market (“ATM”) equity offerings, structured convertible notes, and ETH-backed ~~NodeOps~~DeFi borrowing to fund operations, scale infrastructure, and deploy digital assets while seeking to manage liquidity and shareholder dilution. The use of ATM offerings and convertible notes may result in significant dilution to existing shareholders. Additionally, ETH-backed DeFi borrowing subjects the Company to liquidation risk if the value of ETH declines, and the risk of loss of collateral, which could materially harm the Company’s financial condition.

~~Through~~ BTCS’s actively ~~blockchain~~allocates ~~infrastructure~~capital ~~operations~~and digital assets across staking, weblock-building ~~validate~~support, ~~transactions~~and DeFi deployments based on ~~behalf~~expected ofreturns, risk ~~those~~considerations, ~~who~~and ~~delegate~~prevailing ~~their~~market ~~crypto~~conditions. ~~holdings~~This ~~(or “stake”)~~flexible approach allows the Company to ~~BTCS-operated~~adapt ~~validator~~its ~~nodes~~operating ~~(referred~~footprint toand asset asdeployment ~~“Staking~~strategy as aopportunities ~~Service”~~evolve orwithin ~~“StaaS”)~~the onEthereum ~~dPoS blockchains~~ecosystem.

~~Delegation~~Digital isAsset aSecurity ~~non-custodial process that allows token holders (“Delegators”) to maintain control of their private keys~~ and revoke their delegation at any time (subject to the rules of a particular blockchain). There is no transfer of ownership, often referred to as “private keys”, of any Delegator’s crypto assets as part of the Delegation process. Delegation provides a method for token holders to designate to a validator node operator the ministerial task of running a validator node while still participating in the network consensus mechanism and earning rewards.Custody

~~StaaS~~The ~~providers~~Company ~~are~~prioritizes ~~operators~~the ofsecure ~~computer~~self-custody ~~infrastructure~~of ~~and~~its ~~validation~~digital ~~software that allow them and their Delegators to stake certain native crypto~~ assets ~~utilizing~~as a ~~dPoS~~core ~~consensus~~component ~~protocol.~~of ~~dPoS~~its ~~protocols~~operating ~~provide~~model. ~~for~~BTCS ~~the~~maintains ~~validation~~internal controls ofand ~~transactions~~security onpractices ~~the~~designed ~~related~~to ~~network~~safeguard ~~as well~~digital asassets aand ~~“sybil~~minimize ~~resistance”~~exposure ~~mechanism~~ to ~~help~~third-party ~~secure~~custody ~~the~~and ~~network~~counterparty risks.

~~The~~BTCS ~~nodes~~primarily ~~comprising~~holds aits ~~blockchain~~digital ~~network~~assets ~~use~~in aCompany-controlled ~~protocol~~wallets, ~~(or~~including ~~set of rules) to reach an agreement as to whether~~ a ~~given~~combination ~~transaction proposed by a user~~ of ~~the~~cold ~~network~~storage iswallets ~~valid under the rules of the protocol~~ and ~~should~~hot bewallets. ~~added to the ledger (such agreement being referred to~~Cold asstorage ~~“consensus”).~~wallets, ~~Protocols~~which ~~typically~~are ~~group~~maintained ~~transactions~~offline, ~~into~~are ~~blocks~~used ~~that~~for ~~can~~the ~~only~~long-term besafeguarding ~~added~~of todigital ~~the~~assets, ~~common~~while ~~ledger~~hot ~~when~~wallets ~~validated~~are utilized byon a ~~sufficient~~limited ~~percentage~~basis ofto asupport ~~dispersed~~operational, ~~network~~transactional, ofand ~~unrelated~~liquidity ~~computers~~management oractivities. ~~servers~~The ~~called~~Company ~~“nodes”~~utilizes inthird-party ~~the network. A complete~~wallet ~~record~~infrastructure ~~(or~~providers ~~“blockchain”)~~to issupport ~~maintained~~secure onwallet ~~the~~management, ~~ledger~~access ~~by adding these groups (or “blocks”) of transactions to the chain~~controls, and ~~the~~transaction ~~nodes constantly automatically monitor the blocks to ensure record accuracy~~workflows.

~~dPoS~~BTCS ~~networks~~utilizes ~~rely~~cryptocurrency onexchanges ~~validators who own native crypto assets~~ and ~~operate nodes for~~ over-the-counter ~~network~~trading todesks ~~confirm~~on ~~the~~a ~~validity~~limited ofbasis ~~the transactions comprising each block to be added to the network ledger. The dPoS protocol software run by the relevant network nodes generally determines the validator node~~ for ~~each~~transactional ~~block at random~~purposes, ~~though~~such ~~each~~as ~~blockchain~~asset ~~may have differing selection criteria. To be eligible to validate transactions and to write new blocks to the chain~~conversions, ~~validators are required to “stake” the relevant native crypto assets whereby~~ ~~validators~~liquidity ~~commit value (in the form of the native crypto asset) to the underlying network and lock their native crypto assets~~management, ~~preventing them~~or ~~from~~operational ~~otherwise transacting with those native crypto assets while they are staked~~needs. The ~~dPoS~~Company ~~mechanism~~does isnot aengage ~~sybil-resistance~~in ~~tool (fights~~margin ~~against~~trading, ~~attacks~~leveraged ~~on nodes) that incentivizes validators to confirm~~ transactions, ~~that~~or ~~conform~~similar ~~to the rules of the protocol at the~~arrangements ~~risk~~with ofcryptocurrency ~~losing their staked crypto assets (“slashing”)~~exchanges. ~~Validators utilizing their native crypto assets to participate in dPoS protocols secure the relevant network and receive staking rewards for doing so.~~

AsThe aCompany ~~non-custodial~~currently ~~Validator~~does ~~operator~~not ~~and~~maintain ~~StaaS~~any ~~provider,~~insurance ~~BTCS charges~~policies athat ~~validator~~provide ~~node~~coverage ~~fee~~for ~~(“Validator~~potential ~~Fee”),~~losses ~~which is calculated as a percentage~~ of ~~the~~digital ~~crypto asset rewards earned on crypto~~ assets ~~delegated~~in tocases ~~its~~of ~~node~~theft, ~~creating the opportunity for potential~~ ~~scalable~~lost ~~revenue~~keys, ~~and~~or ~~business~~other ~~growth~~events ~~with~~that ~~limited~~could ~~additional~~result costs. This fee is broadcast by the Validator to the network and publicly available. Both the crypto reward paid to the Delegator and the crypto fee paid to the Validator are distributed by the blockchain network. These Validator Fees in the ~~dPoS~~loss ~~network~~of ~~encourage~~digital ~~validators~~assets toheld ~~participate~~ in ~~the~~its ~~network and thereby help to secure and decentralize the network~~wallets.

AThe ~~StaaS~~Company’s ~~provider~~approach ~~maintains~~to adigital ~~ministerial~~asset ~~role~~custody inand ~~validating~~security ~~transactions~~is onintended ato ~~given~~support ~~dPoS~~operational ~~network~~flexibility onwhile ~~behalf~~mitigating ofrisks associated ~~its~~with ~~Delegators~~centralized ~~by:~~platforms ~~(1)~~and ~~arranging transactions using open~~third-~~source~~party ~~software~~failures. toThese ~~stake~~practices ~~the~~are ~~relevant~~subject ~~crypto~~to ~~assets;~~ongoing ~~(2)~~review ~~monitoring~~and ~~the~~may ~~nodes~~evolve itas ~~is operating to ensure the computers~~market ~~remain~~conditions, ~~online~~regulatory toconsiderations, ~~validate transactions;~~ and ~~(3)~~operational ~~verifying~~requirements ~~transactions on the network when required~~change.

AsGROWTH a StaaS provider, BTCS does not take custody of or pool Delegator crypto assets or Delegator crypto rewards (i.e. BTCS does not take possession of users’ private keys or cryptocurrency assets) at any time during the delegation process. The rewards earned on delegated crypto assets are sent directly to Delegators by the respective blockchain network and are never in BTCS’s possession. Therefore, BTCS does not obtain custody or facilitate transfers of any third-party crypto assets in its role as a Validator or StaaS provider.STRATEGY

BTCS’s growth strategy is centered on expanding high-margin scalable revenue opportunities. The Company’s strategy emphasizes operational scalability, and long-term shareholder value creation.

~~ChainQ~~Scaling Blockchain Infrastructure Operations

BTCS ~~has~~intends ~~developed~~to ~~ChainQ,~~continue anexpanding ~~AI-powered~~its ~~blockchain~~Builder+ ~~data~~operations ~~and~~by ~~analytics~~increasing ~~platform~~private ~~designed~~order toflow ~~increase~~integrations, ~~transparency~~enhancing block-building efficiency, and ~~accessibility~~deepening inrelationships with participants across the ~~blockchain~~ Ethereum transaction ecosystem. ~~Currently~~The inCompany ~~beta,~~believes ~~ChainQ~~that ~~indexes~~block ~~public~~building ~~blockchain~~represents a ~~data~~scalable, ~~from~~technology-driven ~~BTCS’s~~revenue ~~operations,~~opportunity ~~providing~~and anexpects ~~intuitive~~Builder+ ~~platform for~~to ~~users~~remain toa ~~explore~~significant ~~and~~contributor ~~analyze~~to ~~on-chain~~revenue ~~activity~~growth.

~~StakeSeeker~~Validator ~~Discontinuation~~node operations are expected to remain a core component of the Company’s infrastructure strategy, providing recurring ETH-denominated rewards while supporting network security. BTCS will continue to evaluate Validator deployment strategies based on expected revenue, network conditions, and capital requirements.

AsExpansion of ~~December~~Imperium ~~27, 2024, BTCS discontinued its StakeSeeker platform to focus its resources on Builder+~~ and ~~validator~~DeFi ~~node operations.~~Activities

~~Custody~~The Company expects Imperium to represent an increasingly important component of its operations. BTCS plans to expand asset deployments into DeFi protocols and ~~Key~~pursue ~~Storage~~additional integrations to broaden its on-chain activities. Imperium is intended to support scalable, high-margin, high-growth revenue while reinforcing BTCS’s integrated position within the Ethereum ecosystem.

BTCS ~~prioritizes~~anticipates ~~the~~that ~~secure~~DeFi ~~custody~~revenues ofwill ~~its~~contribute ~~crypto~~a ~~assets.~~growing ~~The~~percentage ~~Company~~of ~~primarily~~total ~~stores~~revenue ~~its assets~~ in ~~cold~~2026 ~~wallets, which are offline~~ and ~~encrypted~~beyond, ~~ensuring~~ ~~maximum~~subject ~~protection against potential breaches. BTCS aims~~ to ~~maintain~~market ~~less than 0.1% of its crypto assets on crypto exchanges~~conditions ~~at any given time, except during necessary transfers between wallets~~ and ~~exchanges~~protocol ~~to support purchase or sale activities~~performance. Occasionally, we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer crypto assets to more secure cold wallets when appropriate. As of December 31, 2024, 98% of BTCS’s crypto assets were held in cold storage wallets and the remaining crypto assets were held in other storage wallets, including hot wallets.

~~The~~Capital ~~Company~~Formation ~~currently~~and ~~does~~Use ~~not maintain any insurance policies that provide coverage for potential losses~~ of ~~crypto~~Digital ~~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.~~Assets

~~Our~~BTCS ~~cold~~seeks ~~wallet~~to ~~private~~expand ~~keys~~its ~~are~~operations ~~protected~~by ~~through~~accessing ~~multiple~~capital ~~redundant~~through ~~security~~a ~~measures,~~combination ~~industry-standard~~of ~~key~~traditional ~~sharding protocols, encryption,~~ and ~~geographically~~decentralized ~~distributed~~financing ~~offline~~arrangements ~~encrypted key storage in secured facilities and restricted access protocols. We believe this multi-layered~~that ~~approach~~support ~~ensures~~ the ~~utmost~~growth ~~security~~of ~~for~~its ~~our~~revenue-generating ~~crypto assets~~activities.

~~Our~~While ~~approach~~BTCS ofholds ~~prioritizing~~significant Ethereum assets, they are primarily maintained as operating assets that support the ~~self~~Company’s revenue-~~custody~~generating activities, ofinfrastructure ~~our~~participation, ~~crypto~~and ~~assets~~DeFi ~~minimizes~~activities. ~~exposure~~BTCS expects to ~~risks~~continue ~~associated~~utilizing ~~with~~ETH ~~centralized~~across ~~platforms~~its ~~and~~operations as it expands ~~third-party~~its ~~failures~~business.

Long-Term Strategic Objectives

BTCS’s long-term objectives include expanding its participation across Ethereum-related infrastructure activities, growing recurring on-chain revenues, improving operating leverage, and enhancing shareholder value. The Company believes that its operating model, infrastructure capabilities, and flexible capital raising strategies position it to participate meaningfully in the continued adoption and growth of decentralized technologies and to drive sustainable, long-term value for shareholders as decentralized networks continue to scale.

INDUSTRY AND MARKET OVERVIEW (DIGITAL ASSETS AND BLOCKCHAIN TECHNOLOGIES)

Overview of Blockchain Networks and Digital Assets

Blockchain networks are decentralized systems that enable the recording, validation, and settlement of transactions without reliance on a central intermediary. These networks rely on distributed participants operating software and infrastructure to maintain a shared ledger, enforce protocol rules, and provide network security. Digital assets, such as ETH, function as native units of value within these networks and are used to incentivize participation, pay transaction fees, and support network operations.

Public blockchains, including Ethereum, support a broad range of applications beyond simple value transfer, such as smart contracts, decentralized finance protocols, non-fungible tokens, and other on-chain services. The growth of these applications has increased demand for reliable infrastructure providers that support transaction processing, block construction, and network security.

Proof-of-Stake and Network Infrastructure Participants

Many modern blockchain networks, including Ethereum, operate under proof-of-stake (“PoS”) consensus mechanisms. Under PoS, network security and transaction validation are performed by Validators that commit digital assets to the network and operate specialized software and infrastructure. Validators are selected by the network to propose and attest to blocks, and in return earn protocol-defined rewards and transaction fees.

~~INDUSTRY~~In ~~AND~~addition ~~MARKET~~to ~~OVERVIEW~~Validators, ~~(CRYPTO~~blockchain ~~ASSET~~ecosystems ~~AND~~include ~~BLOCKCHAIN~~other ~~TECHNOLOGIES)~~specialized participants that support transaction execution and block formation. These participants include Builders, which assemble and optimize transactions into blocks, and other infrastructure providers that facilitate transaction submission, routing, and settlement. Together, these participants contribute to the efficient operation and scalability of blockchain networks.

~~Blockchain~~Block Building and ~~Cryptocurrencies~~Transaction Execution

~~Blockchain~~Following ~~technology~~the isimplementation aof ~~decentralized,~~proposer-builder ~~encrypted~~separation ~~ledger~~(“PBS”) ~~system~~on ~~designed~~certain toblockchain ~~securely~~networks, ~~store~~including ~~and~~Ethereum, ~~verify~~block ~~data~~building has ~~without~~emerged ~~the~~as ~~need~~a ~~for~~distinct ~~intermediaries~~function within these ecosystems. It ~~has~~Builders ~~been~~compete ~~widely~~to ~~adopted~~assemble ~~across~~transaction ~~industries~~blocks ~~due~~that tomaximize ~~its~~the ~~ability~~economic value toof ~~enhance~~included ~~transparency~~transactions, ~~security,~~taking ~~and~~into ~~efficiency~~account intransaction ~~processes~~fees, ~~that~~ordering ~~traditionally relied~~constraints, onand ~~centralized~~execution ~~systems~~considerations. ~~Blockchain~~Validators may ~~technology~~choose ~~underpins~~to ~~crypto~~select ~~assets,~~blocks aconstructed ~~class~~by ofcompeting ~~digital~~Builders ~~assets~~through ~~that~~auction-based ~~includes cryptocurrencies~~mechanisms, ~~which~~ ~~can~~typically ~~function~~proposing asthe ablock ~~medium~~associated with ofthe ~~exchange,~~highest ~~store~~bid ofand ~~value,~~enabling orBuilders ~~unit~~to ofcapture ~~account,~~the astransaction ~~well~~fees asand ~~enable~~other ~~non-financial~~value ~~applications~~associated ~~such~~with ~~as smart~~the ~~contracts,~~block ~~tokenized~~when ~~assets,~~those ~~and~~blocks are ~~decentralized~~successfully ~~applications~~included ~~(dApps)~~on-chain.

The ~~global~~evolution ~~adoption~~ of ~~blockchain~~block ~~technology~~building has ~~grown~~contributed ~~significantly~~to inthe ~~recent~~development ~~years,~~of ~~fueled~~more byspecialized ~~advancements in~~ infrastructure, ~~increasing institutional interest,~~ and ~~the~~software ~~development~~designed ofto ~~next-generation~~improve ~~use~~transaction efficiency, ~~cases.~~reduce ~~Beyond cryptocurrencies~~latency, ~~blockchain~~and ~~technology~~optimize isblock ~~being~~outcomes. ~~explored in~~As ~~sectors~~transaction ~~such~~activity ason ~~finance,~~blockchain ~~healthcare,~~networks ~~supply chain~~increases, ~~governance,~~block-building and related ~~digital~~infrastructure ~~identity~~services ~~management.~~are ~~These~~expected ~~innovations~~to ~~have~~play ~~the~~an ~~potential to~~increasingly ~~transform~~important ~~traditional~~role ~~industries,~~in ~~offering~~network ~~efficiencies~~performance and ~~capabilities not achievable with legacy systems~~economics.

~~Cryptocurrencies~~Decentralized ~~and~~Finance ~~Proof-of-Stake~~ Ecosystems

~~Cryptocurrencies~~Decentralized ~~operate~~finance onrefers ~~blockchain~~to ~~networks~~a ~~using~~category ~~cryptographic~~of ~~protocols~~blockchain-based toapplications ~~secure~~that ~~transactions~~provide ~~and~~financial ~~manage~~services ~~decentralized~~through ~~ledgers.~~smart ~~These~~contracts ~~networks~~rather than centralized ~~rely~~intermediaries. onDeFi ~~nodes,~~protocols ~~which~~enable ~~are~~activities ~~computers~~such ~~participating~~as inlending, ~~the~~borrowing, ~~network~~trading, toliquidity ~~validate~~provision, and ~~record~~revenue ~~transactions.~~generation Ausing digital ~~distinguishing~~assets. ~~feature~~Participants ofin ~~cryptocurrencies is~~DeFi ~~their~~ecosystems ~~ability~~may toearn ~~enable~~variable ~~secure~~returns ~~peer-to-peer~~based ~~transactions~~on ~~without~~protocol ~~requiring~~utilization, amarket ~~trusted intermediary~~conditions, ~~such~~and asrisk parameters adefined ~~financial~~by ~~institution or~~the ~~government~~underlying smart contracts.

~~Unlike~~DeFi ~~proof-of-work~~ecosystems ~~(“PoW”)~~continue ~~networks,~~to ~~which~~evolve ~~require~~as ~~significant~~new ~~energy~~protocols, ~~resources~~products, toand ~~validate~~risk ~~transactions,~~management ~~PoS)~~mechanisms ~~and~~are ~~dPoS~~introduced. ~~networks utilize~~Participation anin ~~efficient~~DeFi ~~consensus~~requires technical ~~mechanism~~infrastructure, ~~that~~proprietary ~~relies~~strategies onfor ~~validators~~utilizing ~~staking~~digital ~~their~~assets, ~~crypto~~and ~~assets~~an tounderstanding ~~secure~~of ~~the~~protocol-specific ~~network~~risks. ~~Validators,~~As ~~such~~DeFi asadoption ~~those operated by BTCS~~grows, ~~play~~demand afor ~~critical~~participants ~~role~~capable ~~in maintaining the integrity~~ of ~~these~~deploying ~~networks~~capital ~~by validating transactions~~ and ~~proposing new~~infrastructure ~~blocks~~efficiently ~~for~~is ~~inclusion~~expected into ~~the blockchain~~increase.

~~PoS~~Market ~~ecosystems~~Trends ~~have gained substantial traction due to their energy efficiency, scalability,~~ and ~~ability~~Industry to support diverse applications, including decentralized finance (DeFi), non-fungible tokens (NFTs), and other blockchain-based innovations. Ethereum’s transition to PoS in 2022 further solidified its position as a leading blockchain for smart contracts and decentralized applications. This evolution has also driven the development of new roles within the ecosystem, such as Builders, who optimize and propose blocks for on-chain validation, creating new opportunities for revenue generation.Dynamics

~~Advantages~~The digital asset and ~~Risks~~blockchain technology markets are characterized by rapid technological change, evolving regulatory frameworks, and significant market volatility. Adoption of ~~Crypto~~blockchain-based ~~Assets~~applications has expanded across financial services, payments, and digital commerce, driving increased transaction volumes and infrastructure demand on networks such as Ethereum.

~~Crypto~~At ~~assets~~the ~~offer~~same ~~numerous~~time, ~~advantages~~increased ~~over~~competition ~~traditional~~among ~~fiat~~infrastructure ~~currencies~~providers, protocol changes, and ~~legacy~~shifts ~~systems~~in network economics may affect the profitability and sustainability of blockchain-based operations. Companies operating in this space must continuously adapt their technology, strategies, ~~including:~~and risk management practices in response to these dynamics.

●BTCS operates ~~Fraud~~within ~~deterrence,~~this asevolving ~~digital~~industry ~~assets~~landscape ~~cannot be counterfeited or arbitrarily reversed~~ by afocusing ~~sender.~~on ●infrastructure ~~Immediate~~participation ~~settlement of transactions without intermediaries. ● Lower transaction fees~~ and ~~reduced~~other ~~counterparty~~on-chain ~~risk.~~activities ●that ~~Enhanced~~support the ~~security~~continued ~~through~~growth ~~cryptographic~~of ~~protocols~~blockchain networks, ~~preventing~~which ~~double~~the ~~spending~~Company ~~and~~believes ~~identity~~is ~~theft.~~important ~~● Accessibility~~ to ~~anyone~~the ~~with~~long-term ~~internet~~expansion ~~access,~~of ~~fostering~~its ~~financial inclusion~~operations. ~~● Decentralized governance, removing reliance on central authorities.~~

However, these advantages come with unique risks and challenges. The sector remains highly volatile, with market prices subject to significant fluctuations. Regulatory uncertainty, evolving legal frameworks, and the nascent stage of the technology introduce risks to businesses operating within this environment. Additionally, scalability and interoperability remain critical areas for improvement to meet growing demand.

Current State of the Blockchain Industry and Market Outlook

As of the end of 2024, the blockchain and cryptocurrency industry continued to mature, with increased institutional participation, technological advancements, and regulatory scrutiny shaping its trajectory. The adoption of PoS networks has accelerated, driven by the demand for sustainable and scalable blockchain infrastructure. Innovations such as Ethereum’s ecosystem of Builders, Relays, and Validators have created new opportunities for value creation, aligning with BTCS’s core operations.

In the future, the industry is expected to see continued integration of blockchain technology across traditional industries, advancements in Layer 2 scaling solutions, and broader adoption of decentralized finance and tokenized assets. Layer 2 solutions are designed to improve the efficiency of blockchain networks by processing transactions off the main blockchain (Layer 1) while still benefiting from its security. This helps reduce congestion and lower transaction costs, making blockchain applications more scalable.

BTCS is strategically positioned to benefit from these trends through its focus on blockchain infrastructure, especially regarding Ethereum block-building and validator node operations, ensuring its ability to capitalize on the evolving market landscape.

Business Profile and Risks

Operating within the blockchain and crypto asset industry exposes BTCS to unique risks and challenges associated with an emerging and rapidly evolving sector. The prices of crypto assets have experienced significant volatility, often driven by speculative activity, evolving technology, and shifting regulatory landscapes. This volatility may reflect “bubble-like” dynamics, where prices are influenced by rapidly changing investor sentiment, media coverage, or manipulation, rather than fundamental factors.

Additionally, the blockchain and crypto asset sector operates within an environment of regulatory uncertainty, with potential changes in laws or enforcement actions posing risks to businesses across the ecosystem. Fraudulent actors, technological vulnerabilities, and scalability limitations further contribute to the inherent risks of this untested strategic direction.

BTCS acknowledges these risks and remains committed to mitigating them through disciplined operational practices, robust technology infrastructure, and proactive engagement with emerging regulatory frameworks. Despite these challenges, the Company believes that its focus on blockchain infrastructure, including Ethereum block-building and validator node operations, positions it to capitalize on the transformative potential of blockchain technology while navigating the associated risks.

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.

President Trump’s administration’s approach to the regulatory environment for cryptocurrency and blockchain is expected to usher in significant changes, characterized by a more favorable stance towards these emerging technologies. With the appointment of a crypto-friendly chairman at the SEC and the establishment of a dedicated AI and Crypto Czar, the administration has indicated a commitment to fostering innovation and reducing regulatory burdens. This shift may lead to a reconsideration of existing regulations and potentially introduce new frameworks that support the growth of blockchain networks and crypto assets. However, while these changes are promising, the exact nature and extent of the regulatory adjustments remain uncertain, necessitating ongoing vigilance and adaptation by industry participants to comply with evolving legal requirements.

Throughout 2024 and early 2025, then Chairman Gensler maintained an aggressive regulatory stance toward cryptocurrency businesses, continuing his position that most cryptocurrency entrepreneurs operate outside regulatory compliance. Prior to President Trump taking office, actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, demonstrate the SEC’s position that many, if not most, crypto assets may be securities and therefore reflect the reality that we could 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. 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. 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, and we cannot guarantee that such review will conclusively determine the proper classification of any particular crypto asset. 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.

The Company may acquire additional crypto assets and continues to develop and expand upon its Builder+ operations and ChainQ 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. As a matter of practice, the Company typically targets maintaining in excess of 60% of the Company’s total assets (excluding cash and government securities) in Ethereum, though this target may be adjusted based on market conditions and regulatory developments. 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 materially impact our business, financial condition, and results of operations, though this determination is subject to change based on evolving regulatory guidance and enforcement actions. Provided, however, if over 40% of our assets are considered securities, excluding cash, we may be considered a 1940 Act company (see Risk Factors on page 14 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, including, Builder+, and ChainQ, we are subject to and must comply with an expanding framework of laws and regulations, including comprehensive data privacy laws (such as the American Data Privacy Protection Act, as amended), enhanced cybersecurity requirements, consumer protection standards, and evolving financial services regulations. For example, to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings and transactions, we are subject to various data privacy and security laws and regulations in the United States and other jurisdictions, including but not limited to the American Data Privacy Protection Act, state privacy laws, and international regulations such as GDPR, which impose specific requirements on the handling of personal data. 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.

The regulatory landscape for crypto assets continues to evolve rapidly across different jurisdictions, and we may become subject to new laws and regulations that could materially affect our business operations, compliance obligations, and financial performance. For a comprehensive discussion of the risks that existing and future regulations pose to our business, including specific regulatory developments that may materially affect our operations, see Risk Factors beginning on page 14 of this Annual Report.

COMPETITION

~~BTCS~~The ~~operates~~blockchain ininfrastructure aand ~~highly~~decentralized ~~competitive~~finance ~~and~~markets ~~rapidly~~in ~~evolving~~which ~~industry,~~BTCS ~~facing~~operates ~~challenges~~are ~~from~~highly ~~various~~competitive ~~companies~~ and ~~sectors,~~characterized ~~each~~by ~~leveraging~~rapid ~~different~~technological ~~strengths~~evolution, tolow ~~compete~~barriers into ~~blockchain~~entry ~~infrastructure,~~for ~~data~~certain ~~analytics~~activities, and ~~staking~~continuous ~~services~~innovation. ~~The~~Competition ~~competitive~~exists ~~landscape~~across iseach ~~broad~~of the Company’s business lines and includes ~~the~~a ~~following~~diverse ~~key~~set ~~areas:~~of participants ranging from individual operators to well-capitalized technology companies and financial institutions.

● Exchange-Based Companies: Cryptocurrency exchanges offering both custodial and non-custodial staking solutions, as well as blockchain infrastructure and data analytics services, present significant competition. Exchanges often benefit from extensive customer bases, allowing them to integrate staking services seamlessly and expand into blockchain infrastructure operations. Their substantial financial and technical resources further enable them to enhance existing offerings and enter new markets. ● Crypto Asset-Focused Companies and Node Operators: Companies specializing in crypto asset staking and validator node operations directly compete with BTCS’s non-custodial staking services. Key competitors in this space include Blockdaemon, Allnodes, Kiln, Everstake, Figment, P2P, Foundry, Stakin, and Stakefish. These competitors typically operate at scale and leverage established networks to attract Delegators and strengthen their market position. ● Ethereum Block Builders and Relay Providers: The Ethereum block-building ecosystem is highly competitive, with Builders and relay providers vying for market share. Builder+ faces competition from established Builders such as Beaverbuild, Titan Builder, Rsync, Flashbots, and others. These competitors may possess more extensive infrastructure, data access, and operational efficiencies, providing them with an advantage in the race to optimize block construction. ● Analytic Services Providers: Companies offering crypto asset portfolio management and on-chain analytics, such as CoinTracker, Koinly, CoinLedger, and Rotki, compete with analytics platforms like ChainQ. These competitors often focus on ease of use and advanced data aggregation, appealing to a wide range of users. ● On-Chain Blockchain Data Providers: Companies like Chainalysis and Elliptic provide accessible on-chain data and insights for crypto assets, directly competing in the space of blockchain analytics and data services. Their established brand recognition and user-friendly tools position them as strong rivals. ● Traditional Financial Service and Data Analytics Firms: Established financial institutions and data analytics firms serving traditional markets pose a potential threat as they expand into crypto asset custody, staking, and analytics. Leveraging extensive resources, market presence, and expertise, these firms could quickly develop competitive offerings in the blockchain space. ● New Entrants and Industry Consolidation: The potential for new entrants, as well as consolidation through mergers and alliances, presents ongoing competitive challenges. Consolidation can strengthen the positions of existing competitors by pooling resources and broadening capabilities.6

~~Many~~Validator ofNode ~~BTCS’s~~Operations current and potential competitors benefit from significant advantages, including greater financial resources, longer operational histories, larger teams, established brand recognition, and broader user bases. These competitors are also often privately held, enabling them to operate without the regulatory and reporting burdens associated with being a publicly traded company. This allows them to deploy resources more flexibly and develop solutions more rapidly than BTCS.Competition

~~Despite~~In ~~these~~its ~~challenges~~validator node operations, BTCS’s ~~strategic~~competes ~~focus~~with onother ~~Ethereum~~independent ~~block-building~~node ~~and~~operators, ~~blockchain~~ infrastructure ~~provides~~providers, ~~opportunities~~and toinstitutional ~~differentiate~~participants ~~its~~that ~~offerings.~~operate Byvalidator ~~leveraging~~infrastructure ~~its~~on ~~expertise~~the Ethereum network. Competitive factors in ~~proof-of-stake~~this ~~ecosystems~~area include technical reliability, ~~innovative~~operational uptime, ~~Builder+~~security ~~operations~~practices, and acost ~~non~~efficiency. Because validator rewards are largely protocol-~~custodial~~defined, ~~staking~~competition is primarily driven ~~model,~~by ~~BTCS~~operational ~~aims~~performance torather ~~navigate~~than ~~the~~pricing ~~competitive~~discretion. ~~landscape~~However, ~~and~~protocol ~~capture~~changes, ~~value~~network upgrades, or changes in validator economics could alter the ~~rapidly~~competitive ~~growing~~dynamics ~~blockchain~~in ~~industry~~this market.

9Block Building Competition

~~ASSETS~~Within block building, BTCS competes with other Builders and infrastructure providers that participate in Ethereum’s transaction execution ecosystem. Competition in block building is driven by technology performance, access to transaction flow, execution efficiency, latency, and the ability to consistently construct high-value blocks. The block-building market is dynamic, and competitive positions may change rapidly as network conditions, protocol rules, participant behavior, regulatory requirements, and technological capabilities evolve.

~~The~~Decentralized ~~Company’s~~Finance ~~primary assets consist of its crypto assets and cash as well as its human capital and intellectual property noted below.~~Competition

Through its Imperium operations, BTCS competes with a broad range of market participants deploying digital assets into decentralized finance protocols, including individual liquidity providers, proprietary trading firms, digital asset funds, and other infrastructure-focused companies. Competitive factors in DeFi participation include capital availability, risk management capabilities, technological sophistication, and the ability to efficiently allocate assets across protocols and strategies.

Unlike traditional financial markets, DeFi ecosystems are generally open and permissionless, which can increase competition and compress returns over time. As a result, participants must continuously evaluate deployment strategies, protocol risks, and market conditions to remain competitive.

Competitive Position

BTCS seeks to compete by leveraging its operating model across blockchain infrastructure and DeFi activities, disciplined capital allocation, and a focus on operational efficiency. The Company believes that its experience operating validator and block-building infrastructure, combined with its ability to actively deploy digital assets, provides a differentiated approach relative to participants focused solely on a single segment of the blockchain ecosystem.

Competition in the Company’s markets is further influenced by the potential for new entrants and industry consolidation. New participants may enter certain segments with limited upfront investment, while consolidation through mergers, alliances, or capital aggregation may strengthen the competitive positions of existing participants by pooling resources and expanding capabilities.

In addition, many competitors are privately held and therefore are not subject to the regulatory, reporting, and compliance requirements applicable to public companies. As a result, such competitors may be able to pursue certain initiatives more rapidly or at a greater scale than BTCS.

The Company faces competition from entities that may have greater financial resources, technological capabilities, and market reach. There can be no assurance that BTCS will be able to maintain or improve its competitive position as the blockchain and digital asset markets continue to evolve.

INTELLECTUAL PROPERTY AND TRADE SECRETS

BTCS relies on proprietary technology, ~~and~~software ~~intellectual property~~configurations, ~~which~~and ~~are~~operational ~~critical~~know-how to support its blockchain infrastructure ~~operations~~ and ~~strategic~~decentralized ~~initiatives~~finance activities. These include ~~the~~internally ~~development~~developed ~~efforts~~tools, systems, and ~~operation~~processes ofused in connection with validator ~~nodes,~~node operations, block ~~builders~~building through Builder+, and ~~ChainQ,~~the ~~as well~~operation asand development of the Company’s ~~proprietary~~Imperium ~~tools~~platform and ~~systems~~related ~~that~~on-chain ~~enable efficient and secure operations~~activities.

The Company protects its intellectual property and trade secrets through a combination of trademark, domain name, and trade secret laws, alongside confidentiality and licensing agreements with employees, contractors, consultants, and other third parties. These measures safeguard BTCS’s proprietary technology, internal processes, and brand equity, enabling the Company to maintain its competitive edge in blockchain infrastructure and Ethereum block-building.7

The Company’s intellectual property primarily consists of trade secrets, software configurations, proprietary algorithms, workflows, and internal systems, as well as trademarks and domain names associated with its brand. While certain components of the Company’s operations rely on open-source software, BTCS believes that its proprietary implementations, integrations, and operational expertise provide differentiation in its infrastructure activities.

BTCS seeks to protect its intellectual property and trade secrets through confidentiality and proprietary rights agreements with employees and certain contractors, non-disclosure agreements with consultants and other third parties, and applicable trademark and domain name protections. The Company believes these measures are appropriate to safeguard its proprietary information and support its competitive position.

HUMAN CAPITAL / EMPLOYEES

As of ~~December~~March 3122, ~~2024~~2026, wethe Company had ~~seven~~ nine full-time employees. The Company’s limited workforce presents operational risks, ~~all~~including dependence ofon ~~whom~~key ~~work~~personnel, ~~full-time~~limited redundancy in critical functions, ~~none~~and potential challenges in scaling operations. None of ~~which~~the Company’s employees are represented by a labor union or covered by a collective bargaining agreement. WeIn ~~engage~~addition to its employees, BTCS engages third-party contractors and consultants on an as-needed basis to support its operations.

WeBTCS ~~are~~operates as a remote-first ~~Company.~~company Weand ~~believe~~believes that ~~allowing~~this ~~our~~approach ~~employees~~provides access to ~~work~~a inbroader ~~the~~talent ~~location~~pool ~~that~~and ~~best~~enhances ~~suits~~its ~~them provides us access to~~ability ato ~~larger~~attract ~~talent pool~~ and aretain ~~sustained~~skilled ~~advantage~~professionals. inThe ~~hiring~~Company’s ~~and~~workforce ~~retaining~~includes employees ~~and~~with ~~consultants~~expertise in ~~the~~blockchain ~~United~~infrastructure, software ~~States~~development, finance, and ~~worldwide~~operations.

Human capital management is ~~critical~~an toimportant ~~our~~component ~~ongoing~~of ~~business~~the ~~success,~~Company’s ~~which~~business ~~requires investing in our people~~strategy. ~~Our~~BTCS ~~aim~~seeks is to ~~create~~foster aan ~~highly~~ engaged and motivated workforce ~~where~~by ~~employees~~promoting ~~are~~a ~~inspired~~culture byof ~~leadership~~accountability, ~~engaged~~professional ~~in purpose-driven~~development, ~~meaningful work,~~ and ~~have opportunities for growth and development~~respect. WeThe ~~are~~Company is committed to ~~creating~~providing equal employment opportunities and maintaining a work environment infree ~~which~~from ~~employees~~discrimination, ~~are~~harassment, ~~treated~~or ~~with~~retaliation, ~~respect and~~in ~~dignity.~~compliance Wewith applicable ~~value~~laws ~~our diverse employees,~~ and ~~provide career and professional development opportunities that foster the success of our Company~~regulations.

WeThe ~~are~~Compensation ~~committed~~Committee toof the ~~principles~~Board of ~~equal~~Directors ~~employment~~(the ~~and~~“Board”) ~~complying~~oversees ~~with~~executive ~~all~~compensation ~~federal, state,~~ and ~~local~~succession ~~laws~~planning. ~~providing equal employment~~The ~~opportunities,~~Company ~~and~~seeks ~~all~~to ~~other~~offer ~~employment~~compensation ~~laws~~arrangements ~~and~~that ~~regulations.~~are Itcompetitive isand ~~our~~appropriate ~~intent~~for ~~to maintain~~ a ~~work~~company ~~environment that is free~~ of ~~harassment, discrimination,~~its orsize ~~retaliation~~and ~~because~~stage of ~~age, race, color, national origin, ancestry, religion, sex, sexual orientation (including transgender~~development. ~~status,~~BTCS ~~gender~~offers ~~identity~~employees oraccess ~~expression),~~to ~~pregnancy~~health ~~(including~~insurance ~~childbirth, lactation,~~ and ~~related~~a ~~medical conditions), physical or mental disability, genetic information~~ 401(~~including testing and characteristics~~k), ~~veteran~~retirement ~~status,~~plan ~~uniformed~~with ~~servicemember~~employer ~~status,~~matching ~~or any other status protected by federal~~contributions, ~~state,~~subject ~~or local laws. We are dedicated~~ to ~~the fulfillment of this policy in regard to all aspects of employment,~~applicable ~~including but not limited to recruiting~~limits, ~~hiring,~~as ~~placement,~~well ~~transfer,~~as ~~training, promotion, rates of pay, and~~ other ~~compensation,~~employee ~~termination, and~~benefits ~~all~~consistent ~~other~~with ~~terms,~~market ~~conditions, and privileges of employment~~practice.

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.

GROWTH STRATEGY

BTCS aims to grow revenue and margins by scaling Ethereum block-building under Builder+ and expanding NodeOps. This strategy focuses on three key objectives: (1) enhancing its technology stack, (2) increasing Builder+ order flow, and (3) gaining more control over block space. These initiatives are essential for strengthening BTCS’s position in blockchain infrastructure and ensuring long-term success.

Enhancing the Technology Stack to Match or Surpass Competitors

As competition intensifies in block-building and validator operations, BTCS is prioritizing continuous improvements to its technology stack to optimize efficiency, scalability, and execution. Enhancing Builder+ requires refining block optimization algorithms, strengthening infrastructure resilience, and improving transaction execution speed to compete with leading Builders. Similarly, BTCS is investing in validator performance optimization within its NodeOps operations to maximize staking efficiency and network participation. By staying at the forefront of technological advancements, BTCS aims to improve margins and maintain a competitive edge in an evolving industry.

Boosting Order Flow to Builder+

Builder+ operates within a highly competitive environment where access to order flow directly impacts revenue generation and margins. BTCS is focused on expanding its role in Ethereum’s transaction cycle by actively pursuing strategic partnerships, network integrations, and ecosystem participation that increase order flow to Builder+. By increasing the number of transactions processed, BTCS aims to enhance its ability to optimize block construction, capture more MEV opportunities, and improve overall Builder+ profitability.

Increasing Control Over Block Space

A crucial aspect of BTCS’s strategy is expanding its influence over block space. Greater control over block production enables the Company to better optimize gas fee revenue, manage Validator Payments, and refine transaction selection strategies. BTCS plans to scale Builder+ block production, develop strategies to strengthen its position in the block-building ecosystem, and further integrate into the broader blockchain infrastructure. These efforts are designed to increase revenue and improve revenue predictability, transaction efficiency, and long-term sustainability.

BTCS is committed to executing these strategic initiatives in 2025 and beyond, positioning itself as a leader in blockchain infrastructure by leveraging its Builder+ operations, validator expertise, and continuous technological innovation.

CAPITALIZATION

The following table details the Company’s capitalization as of March 1722, ~~2025~~2026.

Class of Security	~~Shares of CommonStock as Converted~~	Shares of Common Stock as Converted
Common Stock Issued and Outstanding		2046,~~087~~684,~~981~~968
Restricted Common Stock (Not Vested) (1)		13,~~299~~069,~~801~~272
Options to Purchase Common Stock (weighted average exercise price of $2.22)		2,729,568
Restricted Stock Units Issued (Not Vested) (1)		2,681,835
Warrants to Purchase Common Stock (weighted average exercise price of $11.50)		712,500
Convertible Debt (weighted average conversion price of $8.47)		2,107,757
Total Common Shares Diluted		23,530,049
Options to Purchase Common Stock (weighted average exercise price of $2.72)		2,632,695
Series V Preferred Stock (non-convertible)		14,934,937
Warrants to Purchase Common Stock (weighted average exercise price of $6.02)		1,411,566
Restricted Series V Preferred Stock (non-convertible) (2)		1,069,801
Total Common Shares Diluted		58,588,093
Series V Preferred Stock (non-convertible)		15,393,030
Restricted Series V Preferred Stock (non-convertible) (2)		278,375

(1) As of March 1722, ~~2025~~2026, a total of 13,~~170~~069,~~834~~272 shares of restricted common stock and 2,681,835 restricted stock units remain unvested and subject to forfeiture,. ~~contingent~~These ~~upon~~awards ~~the~~are ~~achievement~~ subject to a combination of ~~specified~~performance-based vesting conditions, including market capitalization and stock price thresholds, ~~within~~as ~~the~~well ~~applicable~~as ~~performance~~time-based ~~measurement~~service ~~period~~conditions. OfCertain ~~these,~~awards ~~316,668~~require ~~shares~~the ~~are~~achievement ~~also~~of performance conditions ~~subject~~alone, towhile ~~time-based~~others ~~vesting~~require ~~conditions,~~both ~~requiring~~performance and continued service. ~~over~~In addition, the ~~vesting~~settlement ~~period.~~of ~~Additionally,~~certain ~~128,967~~restricted ~~shares~~stock ~~are~~units ~~subject~~is subject to ~~time-based~~stockholder ~~vesting~~approval ~~conditions,~~of ~~requiring~~an ~~continued~~increase ~~service~~in ~~over~~the number of shares available for issuance under the ~~vesting~~Company’s ~~period~~equity incentive plan. If ~~these~~the applicable vesting conditions or stockholder approval requirements are not satisfied, the ~~applicable restricted~~awards ~~shares~~ will be forfeited ~~and~~or ~~returned~~will not tobe ~~the~~settled ~~Company~~in shares.

(2) As of March 1722, ~~2025~~2026, a total of 1278,~~020,834~~375 shares of restricted Series V preferred stock remain subject to forfeiture, ~~contingent~~and ~~upon the~~have ~~achievement~~not ofyet ~~specified market capitalization thresholds within the applicable performance measurement period~~vested. ~~Of these, 166,668~~These shares are ~~also~~ subject to ~~time~~a combination of performance-based vesting conditions, ~~requiring~~including ~~continued~~market ~~service~~capitalization ~~over~~thresholds ~~the~~as ~~vesting~~well ~~period.~~as ~~Additionally, 48,967 shares are subject to~~ time-based service ~~vesting~~ conditions,. ~~requiring~~Certain ~~continued~~awards ~~service~~require ~~over~~both ~~the~~performance ~~vesting~~and ~~period~~continued service. If ~~these~~the applicable vesting conditions are not satisfied, the ~~applicable restricted~~ shares will be forfeited and returned to the Company.

128

Cautionary Note Regarding Forward Looking Statements

This report contains “forward-looking statements,” ~~including~~within ~~our~~the ~~liquidity,~~meaning ~~potential~~of ~~for~~Section ~~Builder+~~27A toof ~~drive~~the ~~revenue~~Securities ~~growth,~~Act ~~our~~of ~~belief~~1933, ~~that~~and Section ~~our~~21E ~~blockchain~~of ~~infrastructure~~the ~~efforts~~Securities ~~will~~Exchange ~~form~~Act ~~the~~of ~~core~~1934. ~~growth~~These ~~for~~forward-looking ~~our~~statements ~~business~~include, ~~including~~ but are not limited to ~~Builder+~~, ~~and~~statements ~~ChainQ~~concerning our strategy, ~~plans~~future tooperations, ~~expand~~future ~~our~~financial ~~PoS operations~~position, ~~growth~~future ~~opportunities~~revenues, ~~for~~projected ~~the~~costs, ~~Company~~prospects, ~~our~~plans ~~belief~~and ~~regarding~~objectives ~~blockchain~~of management, ~~expected~~and ~~increase~~any inother ~~our~~statements ~~revenues~~that ~~and~~are ~~gross~~not ~~margins~~statements ~~and~~of ~~future~~historical ~~business plans~~fact. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “may,” “might,” “will,” “would,” “could,” “should,” “potential,” “continues,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” “forecasts,” “targets,” “outlook,” “guidance” and similar references to future periods, or by the use of the negative of such terms or other comparable terminology.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, capital markets, regulatory environment and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements, and you should not place undue reliance on any forward-looking statement. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include, but are ~~contained~~not limited to, the risks described in ~~the~~“Item ~~Risk~~7. ~~Factors~~Management’s ~~below~~Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by ~~law~~applicable securities laws.

ITEM 1A. RISK FACTORS

Not applicable to smaller reporting companies. However, our principal risk factors are described under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C. CYBERSECURITY

WeCybersecurity are subject to various cyber and other security threats, including attempts to gain unauthorized access to sensitive information and networks; virtual and cyber threats to our directors, officers, and employees; and threats to the security of our infrastructure and assets. To mitigate the threats to our business, we take a comprehensive approach to cybersecurity risk management. Our Board and our management oversee our risk management program, including the management of cybersecurity risks. We have established policies, standards, processes, and practices for assessing, identifying, and managing material risks from cybersecurity threats, including those discussed in our Risk ~~Factors,~~Management and have integrated these processes into our overall risk management systems and processes. We have devoted financial and personnel resources to implement and maintain security measures to meet regulatory requirements and stakeholder expectations, and we intend to continue to make investments as may be required to maintain the security of our data and cybersecurity infrastructure. While we cannot guarantee complete effectiveness of our cybersecurity measures despite our best efforts and continuous monitoring, we believe that the Company’s sustained investment in people and technologies has contributed to a culture of continuous improvement that has put the Company in a position to protect against potential compromises.Strategy

AsWe ofare ~~the~~subject ~~date~~to ofvarious ~~this~~cyber ~~report~~and other security threats, weincluding ~~are~~attempts ~~not~~to ~~aware~~gain ofunauthorized ~~any~~access ~~cybersecurity~~to sensitive information and networks; virtual and cyber threats to our directors, ~~including~~officers, asand aemployees; ~~result~~and ofthreats ~~any~~to ~~previous~~the ~~cybersecurity~~security ~~incidents~~of our infrastructure, digital ~~that~~assets, ~~have~~and ~~materially~~operational ~~affected~~systems. orTo ~~are~~mitigate ~~reasonably~~the ~~likely~~threats to ~~materially~~our ~~affect us~~business, ~~including~~we ~~our~~take ~~business~~a ~~strategy,~~comprehensive ~~results~~approach ofto ~~operations, or~~cybersecurity ~~financial~~risk ~~condition~~management. Our WeBoard ~~can~~and ~~provide~~our nomanagement ~~assurance~~oversee ~~that~~our ~~there~~risk ~~will~~management ~~not~~program, beincluding ~~incidents~~the inmanagement ~~the~~of ~~future~~cybersecurity orrisks. ~~that~~We ~~past~~have orestablished policies, ~~future~~standards, ~~attacks~~processes, ~~will not~~and ~~materially~~practices ~~affect~~for usassessing, identifying, and managing material risks from cybersecurity threats, including those discussed in our ~~business~~Risk ~~strategy~~Factors, ~~results~~and ofhave ~~operations,~~integrated orthese ~~financial~~processes ~~condition~~into our overall enterprise risk management (“ERM”) systems and processes.

We have devoted financial and personnel resources to implement and maintain security measures designed to address cybersecurity risks in a manner consistent with our size, operational complexity, and risk profile, and we intend to continue to make investments as may be required to maintain the security of our data and cybersecurity infrastructure. While we cannot guarantee complete effectiveness of our cybersecurity measures despite our best efforts and continuous monitoring, we believe that the Company’s sustained investment in people, processes, and technologies has contributed to a culture of continuous improvement that positions us to identify, assess, and respond to potential cybersecurity threats.

As of the date of this report, we are not aware of any cybersecurity threats or incidents, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. We can provide no assurance that there will not be incidents in the future or that past or future cybersecurity incidents will not materially affect us, including our business strategy, results of operations, or financial condition.

Risk Management and Strategy

Our cybersecurity risk management program (“~~cybersecurity~~Cybersecurity ~~program~~Program”) is designed and assessed by leveraging the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”), customized to align with our entity size, risk profile, and industry best practices. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a ~~guide~~reference framework to help us identify, assess, and manage cybersecurity risks relevant to our business. Our cybersecurity program is an integral part of our broader Enterprise Risk Management (ERM) framework and business continuity efforts. By incorporating cybersecurity into our overall risk assessment and management processes, we aim to address interconnected risks that could impact critical operations, systems, and assets. This alignment allows us to proactively evaluate and prioritize cybersecurity risks in the context of broader organizational objectives and resilience planning, ensuring a comprehensive approach to safeguarding the Company’s infrastructure and stakeholders.

~~The~~Our ~~key~~Cybersecurity ~~objectives~~Program ~~for~~is ~~the~~an ~~Company’s~~integral ~~cybersecurity~~part ~~program~~of ~~are~~our tobroader ~~implement~~ERM framework and ~~sustain~~business ~~effective~~continuity ~~security~~efforts. ~~controls~~By toincorporating ~~stop intrusion~~cybersecurity ~~attempts~~into ~~and~~our tooverall ~~maintain~~risk assessment and ~~continuously~~management ~~improve~~processes, ~~its~~we ~~ability~~aim to ~~respond~~address tointerconnected ~~attacks~~risks ~~and~~that ~~incidents.~~could ~~Success~~impact incritical ~~achieving these objectives~~operations, ~~relies~~systems, ~~upon~~digital ~~using quality technology solutions~~assets, ~~cultivating~~ and ~~maintaining~~infrastructure. aThis ~~team~~alignment ofallows ~~skilled~~us ~~professionals,~~to ~~and~~proactively ~~continuously~~evaluate ~~improving processes.~~and ~~Our~~prioritize cybersecurity ~~program~~risks in ~~particular~~the context ~~focuses~~of onbroader ~~the~~organizational ~~following~~objectives ~~key~~and ~~areas:~~resilience planning.

~~Risk~~The ~~Assessment:~~key Weobjectives ~~conduct risk assessments to identify cybersecurity threats, as well as assessments in the event~~ of ~~a material change in~~ our ~~business~~Cybersecurity ~~practices~~Program ~~that may affect information systems that~~ are ~~vulnerable~~ to ~~such~~implement ~~cybersecurity~~and ~~threats.~~sustain ~~These~~effective ~~risk~~security ~~assessments are~~controls designed to ~~identify~~prevent ~~reasonably~~unauthorized access ~~foreseeable internal and external material cybersecurity risks~~ to ~~our~~digital ~~critical~~assets, systems, ~~information, products, services,~~ and ~~our broader Company-wide IT environment~~data, ~~the likelihood~~ and ~~potential~~to ~~damage~~maintain ~~that could result from such risks,~~ and ~~the~~continuously ~~sufficiency~~improve ofour ~~existing~~ability ~~policies,~~to ~~procedures~~detect, ~~systems,~~respond ~~and safeguards in place~~ to ~~manage such risks. Risk assessments take into account information from internal stakeholders~~, ~~known information security vulnerabilities,~~ and ~~information~~recover from ~~external sources, including~~ ~~reported~~cybersecurity ~~security~~ incidents. ~~that~~Success ~~have~~in ~~impacted~~achieving ~~other~~these ~~companies,~~objectives ~~industry~~relies ~~trends,~~upon ~~and~~using ~~evaluations~~appropriate bytechnology ~~third~~solutions, ~~parties~~cultivating and ~~consultants as~~maintaining ~~needed.~~skilled ~~The~~personnel ~~results~~(including ofexternal ~~our assessments are used to develop initiatives to enhance our security controls~~specialists, ~~make~~as ~~recommendations to improve processes~~appropriate), and ~~inform~~continuously aimproving ~~broader~~policies ~~Company-wide risk assessment that is then periodically reported to our Board~~ and ~~Audit Committee~~procedures.

14Our Cybersecurity Program focuses on the following key areas:

~~Technical~~Risk Safeguards: We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on vulnerability assessments, cybersecurity threat intelligence, and incident response experience.Assessment

~~Incident~~We ~~Response~~conduct periodic cybersecurity risk assessments to identify reasonably foreseeable internal and ~~Recovery~~external ~~Planning:~~cybersecurity Wethreats, ~~have~~including assessments ~~established~~conducted ain ~~comprehensive~~connection ~~incident~~with ~~response~~material changes to our business operations, systems, or third-party relationships. These risk assessments evaluate, among other things, the potential likelihood and ~~recovery~~magnitude ~~plan~~of ~~that~~harm ~~guides~~from ~~our~~such ~~response~~risks, including potential impacts inon our operations, financial condition, reputation, digital assets, and business strategy, as well as the ~~event~~effectiveness of aexisting ~~cybersecurity~~controls and ~~incident~~safeguards.

~~Vendor~~ Risk assessments ~~Management:~~consider Weinformation ~~have~~from ~~implemented~~internal ~~a robust vendor risk management program~~stakeholders, ~~which~~known ~~is designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers. Such providers are subject to~~ security ~~risk assessments at the time of onboarding~~vulnerabilities, ~~contract~~threat ~~renewal~~intelligence, ~~and~~reported ~~upon~~incidents affecting ~~detection~~other ofcompanies ~~an increase~~ in ~~risk~~our ~~profile. We use a variety of inputs in such risk assessments~~industry, ~~including~~ and information ~~supplied~~obtained byfrom ~~providers~~third inparties ~~response to questionnaires~~ and ~~meetings~~external asadvisors, ~~well~~ as ~~information from third parties~~appropriate. InThe results ~~addition,~~of wethese ~~require~~assessments ~~our~~are ~~providers~~used to ~~meet~~inform ~~appropriate~~enhancements ~~security~~to ~~requirements,~~our cybersecurity controls, ~~and~~operational ~~responsibilities~~processes, and ~~investigate~~broader ~~security incidents that have impacted our third~~Company-~~party~~wide ~~providers~~risk management activities, aswhich ~~appropriate.~~are Weperiodically ~~also~~reported ~~obtain~~to ~~and~~management ~~review Systems~~ and ~~Organization~~the ~~Control~~Audit ~~(“SOC”) reports from several of our key service providers~~Committee.

~~Education~~Technical and Awareness: Our policies require each of our employees to contribute to our data security efforts. We regularly remind employees and third-party contractors of the importance of handling and protecting data, including through privacy and security training to enhance employee awareness of how to detect and respond to cybersecurity threats. All employees and third-party contractors are directed to report to our senior management any irregular or suspicious activity that could indicate a cybersecurity threat or incident.Safeguards

We assess and deploy technical safeguards designed to protect our information systems, infrastructure, and digital assets from cybersecurity threats. These safeguards are evaluated and updated based on vulnerability assessments, threat intelligence, and lessons learned from cybersecurity events and incident response activities.

Incident Response and Recovery Planning

We maintain a cybersecurity incident response and recovery plan designed to guide our response to cybersecurity incidents. The plan provides a structured framework for incident identification, containment, investigation, remediation, and recovery, and includes defined escalation and communication protocols. In the event of a cybersecurity incident, management evaluates the incident to determine its severity and potential impact, including whether the incident is reasonably likely to be material, based on both quantitative and qualitative factors.

Vendor and Third-Party Risk Management

We maintain a vendor risk management program designed to identify and mitigate cybersecurity risks associated with third-party service providers. Third-party providers are subject to cybersecurity risk assessments during onboarding, contract renewal, and upon the identification of elevated risk. These assessments may include questionnaires, management discussions, third-party intelligence, and review of available SOC reports or similar assurances. Cybersecurity incidents affecting third-party providers are evaluated for potential impact to the Company, as appropriate.

Education and Awareness

Our policies require employees and relevant third-party contractors to contribute to our cybersecurity efforts. We provide periodic cybersecurity and data protection awareness training and require the prompt reporting of suspicious activity or potential cybersecurity incidents to management.

Governance

Our ~~senior~~Board ~~management~~retains ~~team,~~ultimate ~~led~~oversight byresponsibility ~~our Chief Financial Officer and Chief Operating Officer, is responsible~~ for ~~assessing and managing our material risks from~~ cybersecurity ~~threats~~risk. ~~Our~~The ~~management~~Board ~~team~~has ~~supervises~~delegated ~~efforts~~primary tooversight ~~prevent,~~of ~~detect, mitigate, and remediate~~ cybersecurity ~~risks~~ and ~~incidents through various means, which may include briefings from internal security personnel;~~ ~~threat intelligence, and other~~ information ~~obtained~~technology ~~from~~risks ~~governmental,~~to ~~public,~~the orAudit ~~private~~Committee ~~sources,~~as ~~including~~part ~~external~~of ~~consultants~~its ~~engaged by~~risk ~~us;~~oversight ~~and alerts and reports produced by security tools deployed in the IT environment~~function.

Our ~~Audit~~senior ~~Committee~~management ~~considers~~team, ~~cybersecurity~~led ~~risks~~by ~~and~~our ~~other~~Chief ~~information~~Financial ~~technology~~Officer ~~risks~~and asChief ~~part~~Technology ofOfficer, ~~its~~is ~~risk~~responsible ~~oversight~~for ~~function~~assessing and ~~evaluates~~managing material ~~our~~risks ~~risk~~from ~~assessment~~cybersecurity threats and ~~management~~for ~~policies,~~implementing ~~including~~the ~~periodic~~Company’s ~~discussions~~Cybersecurity ~~with~~Program. ~~our~~Management ~~senior~~supervises ~~officers.~~efforts Into ~~addition~~prevent, ~~management updates~~ ~~the Board of Directors~~detect, ~~as necessary~~mitigate, ~~regarding~~and ~~any~~remediate ~~material~~ cybersecurity ~~incidents,~~risks asand ~~well~~incidents asthrough ~~any~~various ~~incidents~~means, ~~with~~which ~~lesser~~may ~~impact~~include ~~potential. Our~~briefings ~~Audit~~from ~~Committee~~internal ~~also~~or external ~~meets~~security atpersonnel, ~~least~~threat ~~quarterly~~intelligence, ~~with~~reports ~~our~~generated ~~independent~~by ~~registered~~security ~~accounting~~tools, ~~firm~~ and ~~communicates~~information ~~with~~obtained ~~them~~from ~~regarding~~governmental, public, ~~any~~or ~~cybersecurity-related~~private ~~risks~~sources.

In the event of a cybersecurity incident, management evaluates the incident and, as appropriate, escalates matters to the Audit Committee and the Board. The Audit Committee receives periodic updates regarding cybersecurity risks, program effectiveness, and any material cybersecurity incidents. The Audit Committee also meets regularly with the Company’s independent registered public accounting firm and discusses cybersecurity risks relevant to financial reporting and internal controls, as appropriate.

ITEM 2. PROPERTIES.

As of the date of this report, the Company did not have any owned or leased properties.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, we ~~are~~may be party to certain legal proceedings that arise in the ordinary course and are incidental to our business. As of the filing date of this report, to our knowledge, there are no material, active or pending legal proceedings against us.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

1511

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET INFORMATION

Our Common Stock is listed and traded on the Nasdaq Stock Market under the symbol “BTCS”. The last reported sale price of our Common Stock on March 1722, ~~2025~~2026 was $1.9155.

HOLDERS

As of March 1722, ~~2025,~~2026 there were ~~180~~234 stockholders of record of our Common Stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC. Shares of Common Stock that are held by financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC and are considered to be held of record by Cede & Co. as one stockholder.

DIVIDENDS

During fiscal year 2025, the Company declared a special dividend of $0.05 per share on its common stock and Series V Preferred Stock. Holders of common stock were permitted to elect to receive the dividend in either cash or ETH, while holders of Series V Preferred Stock received the dividend solely in cash. The dividend was paid in October 2025 through a combination of cash payments and ETH distributions.

In addition, the Company authorized a one-time loyalty payment of $0.35 per share, payable solely in ETH, to eligible holders of common stock who opted in and satisfied the specified holding requirement. The loyalty payment was paid in February 2026.

The declaration and payment of future dividends or other distributions, whether in cash, digital assets, or other forms, if any, will be at the discretion of the Board and will depend on, among other factors, the Company’s financial condition, results of operations, capital requirements, and other factors deemed relevant by the Board. The Company does not currently anticipate declaring regular cash or digital asset dividends.

ISSUER PURCHASES OF EQUITY SECURITIES

On September 4, 2025, the Board approved a share repurchase program authorizing the Company to repurchase up to $50 million of its common stock over a three-year period. Repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, in such quantities, at such prices, and in such manner as determined by the Company’s Chief Executive Officer consistent with the Board’s authorization. Repurchases will be conducted in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and applicable state law. The Company has engaged H.C. Wainwright & Co., LLC as the sole broker to implement the program. In addition: (i) no repurchases may occur at a price per share greater than the current fair market value of the Company’s digital assets and cash divided by its outstanding common shares, as determined in good faith by the CEO; and (ii) repurchases may not occur if the purchase price is less than a 25% discount to any limit orders in any 10b5-1 plan of a named executive officer, or within 20 calendar days of any market-based order under any such plan. The program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended, or discontinued at any time.

The following table summarizes our purchases of common stock in the three months ended December 31, 2025:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program
October 1 – October 31, 2025		236,657	$	4.16		236,657	$	46,000,000
November 1 – November 30, 2025		0		-		0	$	46,000,000
December 1 – December 30, 2025 (1)		0		-		0	$	46,000,000
Total for Quarter Ended December 31, 2025		236,657	$	4.16		236,657	$	46,000,000

RECENT SALES OF UNREGISTERED SECURITIES

In addition to those unregistered securities previously disclosed in reports filed with the SEC, during the year ended December 31, ~~2024~~2025, we issued securities without registration under the Securities Act of 1933 (the “Securities Act”), as described below.

Name or Class of Investor	Date of Sale	No. of Securities	Reason for Issuance
Non-Employee Directors (1)	March 31, ~~2024~~2025	1425,~~206~~002 shares of restricted stock	Compensation for services
Non-Employee Directors (1)	June 30, ~~2024~~2025	2517,~~781~~046 shares of restricted stock	Compensation for services
Non-Employee Directors (1)	September 30, ~~2024~~2025	327,~~328~~764 shares of restricted stock	Compensation for services
Non-Executive Employees	December 12, 2024	12,500 shares of restricted stock	Performance awards
Non-Employee Directors (1)	December 31, 2025	14,205 shares of restricted stock	Compensation for services
Non-Employee Directors (1)	December 31, 2024	15,183 shares of restricted stock	Compensation for services

(1)	Exempt under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder. The securities were issued to an accredited investor and there was no general solicitation.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~INTRODUCTION~~Introduction

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical financial statements and the notes to those statements that appear elsewhere in this report. Certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Risk Factors and elsewhere in this report. When we refer to ~~the~~ “Fiscal 2025”, ~~“Fiscal 2024”~~ and ~~the~~ “Fiscal ~~2023~~2024”, we are referring to the years ended December 31, 2025, ~~December 31, 2024~~ and December 31, ~~2023~~2024, respectively.

~~COMPANY~~Company ~~OVERVIEW~~Overview

~~BTCS~~Executive Inc., a Nasdaq-listed U.S.-based blockchain technology company, focuses on advancing blockchain infrastructure. With a primary emphasis on the Ethereum network, BTCS drives scalable growth through block-building and validator node operations, leveraging advanced technology and robust operational expertise.Overview

~~Blockchain~~BTCS ~~Infrastructure~~Inc. is a blockchain technology company focused on revenue generation through blockchain infrastructure and decentralized finance (“DeFi”) activities, primarily on the Ethereum network. During 2025, the Company continued to execute a strategic repositioning toward Ethereum-native operations designed to generate recurring on-chain revenues, improve capital efficiency, and actively deploy digital assets in support of long-term growth.

~~BTCS~~The Company’s ~~blockchain~~ ~~infrastructure~~business ~~center~~model onis ~~supporting~~centered ~~the~~on ~~validation~~participating ofdirectly ~~transactions~~in ~~and~~core ~~securing~~components ~~proof-~~of~~-stake~~ ~~(“PoS”)~~the ~~and~~Ethereum ~~delegated proof-of-stake~~ecosystem, ~~(“dPoS”)~~including ~~blockchain~~validator node ~~networks.~~operations ~~The~~as ~~Company manages~~ a ~~network~~validator of(“Validator”), ~~cloud~~block-~~based~~building ~~validator~~activities ~~nodes~~as ~~that~~a ~~perform~~block ~~essential network~~builder ~~functions, including transaction validation~~ (“~~attestation~~Builder”), ~~activities~~ and ~~proposing~~DeFi asset ~~new blocks~~deployment. ~~Through~~While ~~these activities,~~ BTCS ~~earns~~holds ~~native~~significant ~~token~~Ethereum ~~rewards~~(“ETH”) byassets, ~~staking~~they ~~its~~are ~~own~~primarily ~~crypto~~maintained as operating assets that onsupport ~~validator~~the ~~nodes~~Company’s ~~operated~~revenue-generating byactivities, ~~BTCS~~infrastructure participation, and ~~third~~DeFi ~~parties~~activities.

~~Our~~Strategic ~~evaluation~~Evolution ~~of blockchain networks involves comprehensive due diligence procedures, including assessments of blockchain quality, reward potential,~~ and ~~the~~Operating technical challenges associated with running validator nodes. Criteria for assessing blockchain quality encompass factors such as i) market and on-chain statistics, ii) liquidity, iii) potential blockchain utility, iv) history and milestones, v) growth and development roadmap, vi) use cases, vii) community interest, viii) quality of documentation, ix) decentralization, and x) any other publicly available information. This process ensures BTCS focuses on high-potential blockchain networks while mitigating technical and operational risks.Focus

~~Ethereum Block Building – Builder+~~13

ADuring ~~central~~2025, ~~focus~~BTCS ofcompleted ~~BTCS’s~~a ~~current~~strategic ~~operations~~realignment isof its ~~Ethereum block-building initiatives under Builder+, which commenced~~ operations in ~~2024. Through Builder+ we purchase block space~~ and ~~leverage~~capital ~~advanced~~allocation ~~algorithmic processes~~ to ~~construct~~focus ~~blocks~~primarily ~~for~~ on Ethereum-~~chain~~based ~~validation~~activities. ~~The~~As ~~goal~~part of ~~Builder+~~this istransition, tothe ~~maximize~~Company ~~gas~~discontinued ~~fee~~validator ~~revenue~~node byoperations ~~optimizing~~on ~~the~~non-Ethereum ~~contents~~blockchains and ~~structure~~liquidated the majority of ~~each~~its ~~block~~non-Ethereum digital asset holdings. The Company ~~aims~~also todiscontinued ~~maximize~~ the ~~value~~development and operation of ~~gas~~legacy ~~fees~~technology ~~earned~~platforms, including byStakeSeeker ~~increasing~~in ~~the~~2024 ~~number~~and ofChainQ ~~blocks~~in we2025, ~~purchase~~in ~~while~~order ~~minimizing~~to ~~the~~concentrate ~~payments~~resources toon ~~validators~~scalable, ~~required~~revenue-generating ~~for~~infrastructure and ~~purchasing~~DeFi ~~block space~~initiatives.

~~Builder+~~This ~~has~~repositioning ~~rapidly~~reflects ~~become a key driver of BTCS~~management’s ~~revenue~~assessment ~~growth,~~that ~~leveraging~~Ethereum ~~its~~provides ~~scalable~~the ~~and~~most ~~efficient~~compelling ~~technology~~long-term toopportunity ~~expand~~for ~~its operational~~infrastructure ~~footprint~~participation, ~~within~~transaction ~~the~~execution, ~~Ethereum~~and ~~ecosystem.~~DeFi ~~While~~activity, ~~Builder+~~given ~~currently~~its ~~operates~~network ~~exclusively on Ethereum~~scale, ~~its flexible design enables potential adaptation to other blockchain networks~~liquidity, ~~aligning~~and ~~with~~ecosystem ~~BTCS’s vision to diversify its infrastructure operations over time~~maturity.

17Growth of Blockchain Infrastructure Operations

~~Staking~~Blockchain infrastructure activities, consisting primarily of validator node operations (NodeOps) and block building (Builder+), represent a core driver of the Company’s revenues. Validator operations provide recurring ETH-asdenominated revenues through protocol-defined incentives and transaction fees, while Builder+ has emerged as a higher-~~Service –~~growth, ~~NodeOps~~technology-driven revenue opportunity.

~~BTCS~~Builder+ ~~operates~~participates ain ~~non-custodial~~Ethereum’s ~~Staking-as-a-Service~~transaction ~~(“StaaS”)~~execution ~~business~~ecosystem ~~model that enables crypto asset holders to participate in network consensus mechanisms~~ by ~~staking~~constructing and ~~delegating~~submitting tooptimized ~~BTCS-operated~~transaction ~~validator nodes~~blocks. ~~As a non-custodial validator operator~~During 2025, the Company ~~receives~~ acontinued ~~percentage~~to ofscale aBuilder+ ~~crypto~~operations ~~asset~~by ~~holders’~~expanding ~~staking~~private ~~rewards~~order ~~generated~~flow ~~as a validator node fee~~integrations, ~~for~~enhancing ~~our~~infrastructure ~~ministerial role in~~efficiency, ~~hosting the validator node. This creates an opportunity for scalable revenue~~ and ~~business~~increasing ~~growth~~participation ~~with~~across ~~limited~~Ethereum ~~additional~~blockspace ~~costs~~markets. ~~The~~As ~~Company’s StaaS strategy provides~~ a ~~more~~result, ~~accessible~~block ~~and~~building ~~cost-effective~~became ~~alternative~~an ~~for~~increasingly ~~crypto~~significant ~~asset holders~~ contributor to ~~participate~~the ~~in blockchain networks~~Company’ ~~consensus~~s ~~mechanisms~~revenue mix, ~~promoting~~reflecting ~~the~~both ~~growth~~increased ~~and~~transaction ~~adoption~~activity ofand ~~blockchain~~improved ~~technology~~execution performance.

AManagement ~~StaaS~~believes ~~provider~~that ~~maintains~~block abuilding ~~ministerial~~represents ~~role in validating transactions on~~ a ~~given~~scalable ~~dPoS~~opportunity, ~~network~~driven ~~on behalf of its Delegators~~ by ~~(1)~~technology, ~~using open-source~~infrastructure ~~software~~optimization, ~~to stake the relevant crypto assets; (2) monitoring~~ and ~~maintaining~~access ~~the nodes it is operating~~ to ~~ensure the computers~~transaction ~~remain~~flow ~~online~~rather tothan ~~validate~~asset ~~transactions;~~lock-up ~~and (3) verifying transactions on the network when required~~requirements.

AsExpansion ainto ~~non-custodial~~Decentralized ~~StaaS~~Finance provider, we do not hold or take possession of any Delegator funds, crypto assets, or crypto asset rewards at any point during the staking or delegation process. Delegation does not involve the transfer of crypto asset ownership to a Validator. During the process of staking, delegated crypto assets remain in the Delegator’s digital wallets. The blockchain network calculates rewards earned, which are then distributed directly to the Delegator’s wallet. The blockchain network does not distribute any of the Delegator’s earned crypto rewards to BTCS. At no point does the Validator gain access, control, or custody of the original staked crypto assets or the earned crypto rewards through staking to its node. Therefore, the Company does not have any exposure to the custodial risks that a crypto exchange would have related to excessive redemptions or withdrawals of crypto assets, suspension of redemptions, or withdrawals. Further, we do not issue or hold crypto assets on behalf of third parties and have no exposure to the risks an exchange would have with respect to loans, rehypothecation, or margin.Imperium

~~The~~In ~~following~~2025, ~~table~~BTCS ~~details~~launched ~~the~~Imperium, ~~blockchain~~a ~~networks~~DeFi-focused onoperating ~~which~~segment ~~BTCS~~designed ~~operates~~to ~~nodes~~deploy ~~that~~digital ~~support~~assets ~~third-party~~into ~~delegations~~decentralized protocols as ~~part~~a ofliquidity provider ~~our~~and ~~staking-as-a-service operations,~~market ~~including~~participant. ~~the~~Imperium ~~amount~~enables ofthe ~~third-party~~Company ~~crypto~~to allocate assets ~~delegated~~across toDeFi ~~our~~protocols ~~non-custodial~~that ~~validator~~facilitate ~~nodes~~lending, asborrowing, liquidity ofprovision, ~~December~~and ~~31,~~other ~~2024~~on-chain financial activities.

Blockchain Network	Validator Fee Percentage %		Delegated Crypto Assets (Native Tokens)	Delegated Crypto Assets ($USD)
Cosmos		5%	94,000 ATOM	$	580,248
Akash		5%	172,000 AKT	$	479,121
Kava		5%	20,000 KAVA	$	8,947
Avalanche		5%	300 AVAX	$	10,665
Total				$	1,078,981

In contrast to traditional staking, which is subject to protocol-defined reward structures and lock-up mechanics, DeFi participation allows for more dynamic capital allocation based on market conditions, liquidity needs, and risk considerations. Revenues generated through Imperium are variable and dependent on protocol utilization and prevailing market conditions.

~~Supporting~~Management ~~Platforms:~~expects ~~ChainQ~~Imperium to represent an increasingly important component of the Company’s operations and believes that DeFi activities provide opportunities to enhance risk-adjusted returns, improve capital flexibility, and complement the Company’s blockchain infrastructure operations, although there can be no assurance that these objectives will be achieved. BTCS plans to further expand asset deployments into DeFi protocols and pursue additional integrations to broaden its on-chain activities, subject to market conditions, available capital, regulatory developments, and risk management considerations.

ToCapital complement our core blockchain infrastructure, BTCS has developed “ChainQ,” an AI-powered blockchain data and analytics platform designed to increase accessibility and transparency within the blockchain ecosystem. Currently in beta, ChainQ simplifies on-chain data access and analysis for cryptocurrency holders, delivering deeper insights into blockchain activity. By indexing public data from our blockchain infrastructure operations, ChainQ provides an intuitive platform for exploring on-chain data.Strategy

AsA ofcentral ~~December~~element ~~27,~~of ~~2024,~~ BTCS’s ~~has~~operating ~~discontinued~~model is its ~~StakeSeeker~~integrated ~~platform~~capital tostrategy, ~~focus~~which oncombines ~~Builder+~~decentralized ~~and~~finance ~~NodeOps,~~mechanisms ~~reflecting~~with traditional capital markets activities. During 2025, the Company’s utilized a combination of at-the-market equity (“ATM”) offerings, ~~strategic~~structured ~~emphasis~~convertible onnotes, ~~scalable~~and ~~blockchain~~ETH-backed DeFi borrowing to fund operations, scale infrastructure, and deploy digital assets.

18This approach is designed to support growth while managing liquidity and minimizing reliance on equity issuance alone. Management actively evaluates capital allocation across validator operations, block-building support, and DeFi deployments based on expected returns, risk profiles, and market conditions.

~~CRYPTO ASSETS~~14

~~The tables below detail BTCS’s quarterly crypto assets holdings as of the end of each fiscal quarter from the fourth quarter of Fiscal 2023 through the end of Fiscal 2024.~~Outlook

~~Crypto~~BTCS ~~Assets~~enters ~~Held~~2026 atwith ~~the~~a ~~End~~business model centered on expanding high-margin scalable revenue opportunities. Management believes that continued expansion of Builder+ operations and increased deployment through Imperium position the ~~Following~~Company ~~Calendar~~to ~~Quarters:~~participate meaningfully in the ongoing growth of decentralized technologies and crate long-term shareholder value.

Asset	2023 Q4		2024 Q1		2024 Q2		2024 Q3		2024 Q4
Ethereum (ETH)		7,815		7,868		7,935		7,978		9,060
Cosmos (ATOM)		270,098		281,264		293,886		307,489		322,547
Solana (SOL)		7,845		7,964		6,821		6,936		7,038
Avalanche (AVAX)		17,842		17,842		18,510		18,510		19,085
Axie Infinity (AXS)		60,552		65,932		71,704		77,500		83,546
NEAR Protocol (NEAR)		80,267		80,981		82,867		84,748		86,650
Akash (AKT)		119,071		123,646		129,891		136,042		142,090
Kusama (KSM)		7,313		7,796		8,074		8,362		8,440
Kava (KAVA)		345,394		351,685		358,318		365,364		372,126
Polkadot (DOT)		8,650		9,010		9,386		9,784		9,904
Rocket Pool (RPL)		-		-		-		584		599
Polygon (POL fka MATIC)		506,010		512,241		518,554		525,405		-
Cardano (ADA)		265,254		266,543		268,582		270,264		-
Mina (MINA)		90,017		92,897		95,777		96,497		-
Tezos (XTZ)		26,174		26,492		26,845		27,440		-
Evmos (EVMOS)		345,777		357,203		364,037		367,358		-
Band Protocol (BAND)		992		992		992		992		-
Oasis Network (ROSE)		2,647,629		2,663,766		-		-		-

The following sections of Management’s Discussion and Analysis provide additional detail regarding the Company’s digital asset and treasury management practices, known trends and uncertainties, results of operations, and liquidity and capital resources.

~~Fair~~Use ~~Market Value~~ of ~~Crypto~~Digital Assets atin ~~the~~our ~~End of the Following Calendar Quarters:~~Operations

Asset	2023 Q4			2024 Q1			2024 Q2			2024 Q3			2024 Q4
Ethereum (ETH)		17,829,264			28,700,380			27,235,107			20,767,299			30,198,638
Cosmos (ATOM)		2,860,870			3,455,299			1,975,032			1,452,240			1,995,181
Solana (SOL)		796,327			1,613,543			999,138			1,058,786			1,329,855
Avalanche (AVAX)		687,713			964,888			542,525			513,465			678,454
Axie Infinity (AXS)		535,546			726,572			434,956			390,911			517,820
NEAR Protocol (NEAR)		293,204			591,162			438,780			448,572			424,934
Akash (AKT)		291,574			592,956			466,154			376,836			396,659
Kusama (KSM)		329,353			377,395			191,929			167,245			277,773
Kava (KAVA)		301,429			374,932			158,376			131,275			164,889
Polkadot (DOT)		70,879			86,858			58,218			43,406			65,701
Rocket Pool (RPL)		-			-			-			6,702			6,779
Polygon (POL fka MATIC)		491,138			514,187			290,027			208,271			-
Cardano (ADA)		157,615			173,350			105,270			100,930			-
Mina (MINA)		122,007			115,192			51,720			53,749			-
Tezos (XTZ)		26,379			37,118			21,296			19,309			-
Evmos (EVMOS)		43,886			28,612			11,249			7,310			-
Band Protocol (BAND)		2,174			2,223			1,221			1,216			-
Oasis Network (ROSE)		363,571			366,108			-			-			-
Total		25,202,929			38,720,775			32,980,998			25,747,522			36,056,683
QoQ Change		53	%		54	%		-15	%		-22	%		40	%
YoY Change		101	%		101	%		70	%		56	%		43	%

Digital assets, primarily ETH, play a central role in the Company’s operating model. Unlike companies that hold digital assets primarily for investment or appreciation purposes, BTCS uses its digital asset holdings as operating assets to support revenue generation, infrastructure participation, and decentralized finance (DeFi) activities.

~~Prices~~Operating ofUse ~~Crypto Assets at the End~~ of ~~the~~Digital Following Calendar Quarters:*Assets

Asset	2023 Q4		2024 Q1		2024 Q2		2024 Q3		2024 Q4
Ethereum (ETH)	$	2,281	$	3,648	$	3,432	$	2,603	$	3,333
Cosmos (ATOM)		10.59		12.28		6.72		4.72		6.19
Solana (SOL)		102		203		146		153		189
Avalanche (AVAX)		38.54		54.08		29.31		27.74		35.55
Axie Infinity (AXS)		8.84		11.02		6.07		5.04		6.20
NEAR Protocol (NEAR)		3.65		7.30		5.30		5.29		4.90
Akash (AKT)		2.45		4.80		3.59		2.77		2.79
Kusama (KSM)		45.04		48.41		23.77		20.00		32.91
Kava (KAVA)		0.87		1.07		0.44		0.36		0.44
Polkadot (DOT)		8.19		9.64		6.20		4.44		6.63
Rocket Pool (RPL)		-		-		-		11.47		11.32
Polygon (POL fka MATIC)		0.97		1.00		0.56		0.40		-
Cardano (ADA)		0.59		0.65		0.39		0.37		-
Mina (MINA)		1.36		1.24		0.54		0.56		-
Tezos (XTZ)		1.01		1.40		0.79		0.70		-
Evmos (EVMOS)		0.13		0.08		0.03		0.02		-
Band Protocol (BAND)		2.19		2.24		1.23		1.23		-
Oasis Network (ROSE)		0.14		0.14		-		-		-

ETH held by the Company is actively deployed across its business lines, including validator node operations, block building support, and DeFi activities conducted through the Imperium operating segment. Management continuously evaluates how digital assets are utilized among these activities based on revenue, gross profit, liquidity requirements, risk considerations, and prevailing market conditions.

*As ~~The~~a ~~prices~~result, ~~have~~the ~~been~~Company’s ~~rounded~~digital asset balances may fluctuate period over period due to operational activities, redeployments, protocol participation, borrowing activity, and market price movements. These fluctuations are a function of the ~~nearest~~Company’s ~~whole~~operating ~~dollar~~strategy and ~~for~~may ~~prices~~materially ~~above~~impact ~~$100~~reported financial results.

19Treasury Management Philosophy

The ~~tables~~Company’s ~~below~~treasury ~~detail~~management strategy is designed to balance capital efficiency, liquidity, and risk management. BTCS’s ~~quarterly~~seeks ~~crypto~~to maintain sufficient liquidity to support ongoing operations while deploying excess digital assets ~~earned~~in ~~during~~a ~~each~~manner ofintended ~~the~~to ~~following~~generate ~~quarters:~~incremental on-chain returns.

~~Crypto~~Management ~~Asset~~does ~~Rewards~~not maintain a fixed allocation policy for digital assets across staking, block building support, or DeFi activities. Instead, allocation decisions are made dynamically, taking into account market conditions, protocol economics, and the Company’s capital requirements.

~~Crypto~~In ~~assets~~certain ~~earned~~circumstances, ~~from~~the ~~blockchain~~Company ~~infrastructure~~may ~~staking~~convert ~~activities~~a ~~through~~portion ~~NodeOps~~of its digital asset holdings to cash to fund operations, meet obligations, or manage liquidity. Conversely, the Company may deploy cash or stablecoins into digital assets to support infrastructure operations or DeFi participation.

Asset	2023 Q4		2024 Q1		2024 Q2		2024 Q3		2024 Q4
Ethereum (ETH)		67		65		72		65		59
Cosmos (ATOM)		13,314		11,166		12,565		13,603		15,175
Axie Infinity (AXS) *		4,967		5,381		5,772		5,796		6,048
Akash (AKT)		3,337		4,575		6,246		6,151		5,771
Solana (SOL) *		93		119		139		97		64
Avalanche (AVAX)		18		-		668		-		569
NEAR Protocol (NEAR) *		1,200		714		1,886		1,881		1,960
Kava (KAVA)		17,532		6,292		6,632		7,046		7,174
Kusama (KSM)		67		10		279		288		75
Polygon (POL fka MATIC) *		6,462		6,230		6,314		6,851		1,575
Polkadot (DOT) *		366		360		376		398		110
Rocket Pool (RPL)		-		-		-		-		14
Tezos (XTZ) *		414		318		354		594		88
Mina (MINA)		5,760		2,880		2,880		720		-
Oasis Network (ROSE)		21,029		16,137		10,431		-		-
Cardano (ADA) *		503		1,289		2,039		1,683		-
Evmos (EVMOS) *		30,084		11,426		6,834		3,321		-

Decentralized Finance Asset Deployment

*Through ~~All~~Imperium, orBTCS adeploys ~~portion~~digital ofassets ~~revenue~~into ~~earned~~decentralized ~~from~~finance ~~staking~~protocols that facilitate lending, borrowing, liquidity provision, and other on-chain financial activities. These deployments are intended to ~~third~~enhance capital flexibility and improve risk-~~party~~adjusted ~~validator~~returns relative ~~nodes~~to traditional staking activities.

~~Crypto~~Returns ~~assets~~generated ~~earned~~through ~~from~~DeFi ~~Ethereum~~participation ~~block-building~~are ~~through~~variable ~~Builder+~~and subject to factors such as protocol utilization, market demand, interest rates, liquidity conditions, and smart contract risks. Management actively monitors these factors and may adjust deployment strategies in response to changes in market conditions or protocol performance.

Asset		2023 Q4				2024 Q1				2024 Q2				2024 Q3				2024 Q4
Ethereum (ETH)			-				11				23				152				700

Risk Management Considerations

~~Fair~~The ~~Market~~Company’s ~~Value~~digital asset and treasury management activities expose it to risks including digital asset price volatility, protocol changes, smart contract vulnerabilities, and liquidity constraints. Management seeks to mitigate these risks through diversification of ~~Crypto~~deployments, ~~Asset~~active ~~Rewards~~monitoring ~~Earned~~of ~~Recognized~~protocol asperformance, ~~Revenue~~conservative leverage practices, and disciplined capital allocation.

The ~~following~~Company’s ~~table~~approach ~~summarizes~~to ~~the~~digital ~~revenues~~asset ~~earned~~custody, ~~from~~wallet ~~the~~management, ~~Company’s~~and ~~operations~~security bycontrols ~~revenue~~is ~~segment~~described ~~during~~in ~~the~~Item ~~following~~1 ~~calendar~~- ~~quarters:~~Our Business and Growth Strategy and is designed to support operational flexibility while minimizing exposure to third-party custody and counterparty risks.

~~Revenue~~Role byof ~~Segment~~Digital Assets in Ongoing Operations

	2023 Q4		2024 Q1		2024 Q2		2024 Q3		2024 Q4
Total revenue from blockchain infrastructure staking activities through NodeOps	$	326,125	$	418,353	$	485,340	$	334,654	$	381,958
Total revenue from Ethereum block-building through Builder+		-		33,033		75,852		404,503		1,939,825
Total revenue	$	326,125	$	451,386	$	561,192	$	739,157	$	2,321,783

Management believes that the active deployment of digital assets across blockchain infrastructure and DeFi activities is a core differentiator of the Company’s operating model. As the Company continues to scale Builder+ operations and expand Imperium, digital assets are expected to remain central to the Company’s treasury strategy and overall business performance.

~~The tables below detail the fair market value of BTCS’s quarterly crypto assets earned as revenue in each respective segment during the following calendar quarters:~~15

~~Revenue~~Known ~~from~~Trends, ~~blockchain~~Market ~~infrastructure~~Conditions, ~~staking~~and ~~activities through NodeOps~~Uncertainties

Asset	2023 Q4		2024 Q1		2024 Q2		2024 Q3		2024 Q4
Ethereum (ETH)	$	131,903	$	188,078	$	241,588	$	180,487	$	182,289
Cosmos (ATOM)		116,726		121,074		104,580		69,534		95,552
Axie Infinity (AXS) *		34,595		48,322		36,379		29,236		37,711
Akash (AKT)		5,341		18,746		26,740		17,763		18,043
Solana (SOL) *		3,620		15,372		21,353		14,414		11,071
Avalanche (AVAX)		714		-		18,491		-		20,764
NEAR Protocol (NEAR) *		1,834		4,422		12,500		8,802		10,733
Kava (KAVA)		13,033		5,252		4,305		2,508		3,198
Kusama (KSM)		1,193		474		8,108		5,782		1,382
Polygon (POL fka MATIC) *		5,143		5,731		3,758		2,716		523
Polkadot (DOT) *		1,999		2,957		2,619		1,980		465
Rocket Pool (RPL)		-		-		-		-		170
Tezos (XTZ) *		337		368		338		419		57
Mina (MINA)		4,818		3,646		2,439		319		-
Oasis Network (ROSE)		1,688		2,218		1,036		-		-
Cardano (ADA) *		252		753		837		628		-
Evmos (EVMOS) *		2,929		940		269		66		-
Total revenue from blockchain infrastructure staking activities through NodeOps	$	326,125	$	418,353	$	485,340	$	334,654	$	381,958

BTCS operates in blockchain infrastructure and decentralized finance (DeFi) markets that are characterized by rapid technological change, evolving market structures, and significant variability in economic outcomes. The Company’s operating results and financial condition are influenced by a number of known trends, market conditions, and uncertainties, many of which are interrelated.

*Digital ~~All~~Asset orMarket ~~a portion of revenue earned from staking to third-party validator nodes~~Volatility

~~Revenue~~The ~~from~~market ~~Ethereum~~prices ~~block-building~~of ~~through~~digital ~~Builder+~~assets, particularly ETH, are subject to significant volatility driven by a variety of factors, including macroeconomic conditions, investor sentiment, regulatory developments, technological changes, and activity within decentralized ecosystems. Because ETH is a core operating asset for the Company, fluctuations in its market price may significantly affect the value of the Company’s digital asset holdings, reported results, and liquidity.

Asset	2023 Q4		2024 Q1		2024 Q2		2024 Q3		2024 Q4
Ethereum (ETH)	$	-	$	33,033	$	75,852	$	404,503	$	1,939,825
Total revenue from Ethereum block-building through Builder+	$	-	$	33,033	$	75,852	$	404,503	$	1,939,825

While management actively deploys ETH to support revenue generation and operational activities, changes in ETH prices may impact period-to-period financial results independent of underlying operating performance.

20Blockchain Network and Protocol Dynamics

~~RESULTS~~The OFCompany’s ~~OPERATIONS~~infrastructure ~~FOR~~and ~~THE~~DeFi ~~YEARS~~activities ~~ENDED~~depend ~~DECEMBER~~on 31the continued operation and adoption of the Ethereum network and related protocols. Changes to network protocols, ~~2024~~including ~~AND~~updates ~~2023~~to consensus mechanisms, transaction fee structures, validator economics, or block-building dynamics, may materially and adversely affect the profitability, scalability, and economics of the Company’s operations. The Company has no control over such protocol changes and may have limited ability to adapt its operations in response.

~~The~~In ~~following~~addition, ~~tables~~transaction ~~reflect~~volumes, ~~our~~network ~~operating~~congestion, ~~results~~and ~~for~~user ~~the~~activity ~~years~~levels ~~ended~~can ~~December~~influence 31execution-layer rewards, ~~2024~~block-building opportunities, and ~~2023:~~validator returns. These factors may vary significantly over time and are entirely outside the Company’s control.

	For the Year Ended
	December 31,					$ Change			% Change
	2024			2023		2024			2024
Revenues
Blockchain infrastructure revenues (net of fees)	$	4,073,518		$	1,339,628	$	2,733,890			204	%
Total revenues		4,073,518			1,339,628		2,733,890			204	%
Cost of revenues
Blockchain infrastructure costs		3,127,509			359,778	$	2,767,731			769	%
Gross profit		946,009			979,850		(33,841	)		(3	)%
Operating expenses:
General and administrative		1,672,276			1,450,724	$	221,552			15	%
Research and development		755,813			687,288		68,525			10	%
Compensation and related expenses		6,598,348			2,542,336		4,056,012			160	%
Marketing		80,993			12,153		68,840			566	%
Realized (gains) losses on crypto asset transactions		767,375			604,269		163,106			27	%
Total operating expenses		9,874,805			5,296,770		4,578,035			86	%
Other income (expenses):
Change in unrealized appreciation (depreciation) on crypto assets		7,683,772			12,135,648	$	(4,451,876	)		(37	)%
Change in fair value of warrant liabilities		(54,150	)		-		(54,150	)		100	%
Other income		28,000			-		28,000			100	%
Total other income (expenses)		7,657,622			12,135,648		(4,478,026	)		(37	)%
Net income (loss)	$	(1,271,174	)	$	7,818,728	$	(9,089,902	)		(116	)%

Block Building Market Conditions

Block building is a competitive and evolving segment of the Ethereum ecosystem. Builder+ performance is influenced by access to transaction flow, infrastructure efficiency, latency, competition among Builders, and Validator participation patterns. As transaction execution markets mature, competitive dynamics may change, and margins may fluctuate as participants optimize strategies or new entrants emerge.

Management continues to invest in technology, infrastructure optimization, and business development initiatives to adapt to these evolving conditions, but there can be no assurance that current market conditions will persist or that such investments will yield positive returns or competitive advantages.

Decentralized Finance Revenue Variability

Revenues generated through Imperium’s DeFi activities are inherently variable and depend on protocol utilization, prevailing fee rates, liquidity conditions, and market demand for decentralized financial services. DeFi rewards may compress or fluctuate over time as capital flows into or out of protocols, new products are introduced, or risk parameters are adjusted.

In addition, DeFi participation exposes the Company to protocol-specific risks, including smart contract vulnerabilities, governance decisions, and liquidity constraints, which may affect returns or result in losses.

Regulatory Environment

The regulatory landscape for digital assets and blockchain-based activities continues to evolve in the United States and internationally, including in Nevada where the Company is organized. Changes in federal or state laws, regulations, or regulatory interpretations (including those promulgated by the SEC, CFTC, FinCEN, or state regulators) could materially affect the Company’s operations, access to capital, ability to participate in certain activities, or compliance obligations. The Company may be or may become subject to registration, licensing, reporting, or other compliance requirements at the federal, state, or international level, which could impose significant costs and operational constraints on the Company. While management monitors regulatory developments and seeks to adapt its operating model accordingly, regulatory outcomes remain uncertain and may result in material adverse effects on the Company’s business, financial condition, and results of operations.

Implications for Operating Performance

Management believes that these trends and uncertainties are inherent to operating in blockchain infrastructure and DeFi markets. The Company seeks to manage these dynamics through disciplined capital allocation, active asset deployment, diversification of operating activities, and ongoing evaluation of market conditions. However, the impact of these factors on future operating results and financial condition may be material.

Results of Operations for the Years Ended December 31, 2025 and 2024

The following table reflect our operating results for the years ended December 31, 2025 and 2024:

	For the Year Ended
	December 31,						$ Change			% Change
	2025			2024			2025			2025

Revenues
Blockchain infrastructure revenues	$	15,177,667		$	4,073,518		$	11,104,149			273	%
DeFi revenues		1,313,917			-			1,313,917			100	%
Total revenues		16,491,584			4,073,518			12,418,066			305	%

Cost of revenues
Blockchain infrastructure costs		14,469,354			3,127,509			11,341,845			363	%
DeFi costs		12,300			-			12,300			100	%
Total cost of revenues		14,481,654			3,127,509			11,354,145			363	%

Gross profit		2,009,930			946,009			1,063,921			112	%

Operating expenses:
Professional fees		1,657,024			645,143		$	1,011,881			157	%
General and administrative		1,562,940			1,027,133			535,807			52	%
Research and development		679,434			755,813			(76,379	)		(10	)%
Compensation and related expenses		3,502,872			6,598,348			(3,095,476	)		(47	)%
Marketing		602,456			80,993			521,463			644	%
Realized losses on digital asset transactions		8,184,469			767,375			7,417,094			967	%
Unrealized loss (gain) on digital assets		15,713,307			(7,683,772	)		23,397,079			(304	)%
Total operating expenses		31,902,502			2,191,033			29,711,469			1,356	%

Other income (expenses):
Interest expense		(3,517,671	)		-			(3,517,671	)		100	%
Change in fair value of warrant liabilities		267,900			(54,150	)		322,050			(595	)%
Impairment loss on non-fungible tokens		(149,566	)		-			(149,566	)		100	%
Loss on settlement of dividend payable		(52,793	)		-			(52,793	)		100	%
Loss on extinguishment of debt		(8,731	)		-			(8,731	)		100	%
Other income		-			28,000			(28,000	)		(100	)%
Total other income (expenses)		(3,460,861	)		(26,150	)		(3,434,711	)		13,135	%

Net loss	$	(33,353,433	)	$	(1,271,174	)	$	(32,082,259	)		2,524	%

Revenues

~~For~~Revenue ~~the~~for ~~year~~Fiscal ~~ended~~2025 ~~December 31, 2024, revenue~~ increased tosignificantly ~~approximately $4,073,000~~ compared to ~~approximately~~Fiscal $12024,~~340,000~~ ~~in 2023,~~ primarily ~~driven~~ bydue to the continued expansion of our Builder+ operations., which ~~Builder+~~focus ~~contributed~~on ~~approximately~~block-building ~~$2,453,000~~activities inacross ~~revenue~~the inEthereum ~~2024~~and Binance Smart Chain (BSC) networks, ~~while~~and ~~NodeOps~~the ~~revenue~~addition of Imperium DeFi ~~grew~~activities toduring ~~approximately~~the ~~$1,620,000~~period.

~~The~~During ~~significant~~Fiscal ~~increase~~2025, inBuilder+ ~~revenue~~operations ~~during~~accounted ~~Fiscal~~for ~~2024~~approximately ~~was~~80% ~~primarily~~of ~~due~~total torevenue, ~~the~~NodeOps ~~launch~~contributed ~~and~~approximately ~~scaling~~12%, ofand ~~BTCS’s Ethereum block-building~~Imperium ~~operations~~DeFi ~~under~~revenue ~~Builder+,~~represented ~~which~~the ~~resulted~~remaining in8%. aThe ~~substantial~~year-over-year increase inreflects ~~block~~the ~~rewards~~scaling ~~earned.~~of ~~Additionally,~~Builder+ ~~higher~~operations ~~market~~and ~~prices~~the ~~for crypto~~commencement ~~assets~~of ~~during~~block ~~Fiscal~~building ~~2024~~on ~~contributed~~BSC, towhich ~~the~~together ~~increased~~resulted ~~fair~~in ~~value~~a ofsubstantial ~~crypto~~increase ~~asset~~in block rewards earned ~~from~~during ~~both~~the ~~staking~~period. ~~(NodeOps)~~Increases ~~and~~in ~~block-building~~NodeOps ~~(Builder+).~~and ~~While~~Imperium werevenues ~~anticipate~~were ~~continued~~supported ~~growth~~by in the ~~number~~deployment of ~~block~~additional ~~rewards~~digital ~~and~~assets ~~staking~~acquired ~~rewards~~through ~~earned,~~capital-raising ~~crypto~~activities ~~asset market volatility~~during ~~may~~Fiscal ~~impact the fair value of rewards earned and recognized in future periods~~2025.

While we anticipate continued growth across Builder+, NodeOps, and Imperium as we expand block-building, staking, and DeFi activities, the fair value of rewards may fluctuate due to the inherent volatility of digital assets markets. Accordingly, revenue recognized in future periods may be materially affected by changes in the market prices of the underlying digital assets at the time of reward receipt or recognition.

Cost of Revenues

Cost of revenues for Fiscal 2025 increased ~~during~~compared Fiscal 2024, primarily due to higher validator payments (“Validator Payments ”) made ~~for~~to ~~purchasing~~external parties to secure block space as part of our ~~Ethereum~~ Builder+ block-building activities ~~under Builder+~~. ~~Validator~~The ~~Payments~~increase ~~totaled~~also ~~approximately~~reflects ~~$2,766,000~~higher inblockchain infrastructure ~~2024.~~and ~~These~~network ~~increased~~operation costs ~~were~~associated ~~partially offset~~with bythe ~~efficiency~~expansion ~~improvements~~of inblock-building ~~web~~and ~~service~~DeFi ~~hosting~~activities. ~~fees~~These ~~related~~higher tocosts ~~NodeOps, which~~ were partially ~~reduced~~offset ~~from~~by ~~approximately~~efficiencies ~~$325,000~~realized inwithin ~~2023 to~~our ~~approximately~~validating ~~$142~~infrastructure,~~000~~ inincluding ~~2024.~~lower ~~Cloud and server~~ hosting ~~costs~~fees ~~related~~and toreduced ~~Builder+~~reliance ~~totaled~~on third-party ~~approximately~~service ~~$125,000 in 2024~~providers.

AsAlthough werevenue ~~continue~~increased year over year due to ~~expand~~the ~~block-building~~scaling of Builder+ operations and ~~increase~~the ~~block~~addition ~~production,~~of weImperium ~~expect~~activities, cost of revenues increased toat ~~rise~~a ~~correspondingly.~~faster ~~However~~rate than revenues, reflecting higher Validator Payments and infrastructure costs ~~may~~associated ~~grow~~with atexpanded block-building activity. As a ~~greater~~result, ~~rate~~gross ~~than~~margins ~~revenue~~remain insensitive ~~Fiscal~~to ~~2025~~validator economics, ~~likely~~execution-layer ~~reducing~~reward ~~gross~~dynamics, ~~margins~~and broader crypto market conditions.

21We expect cost of revenues to continue to rise in line with the scaling of Builder+ and DeFi operations. Gross margins may fluctuate depending on the level of Validator Payments required to secure block inclusion and on broader crypto market conditions that influence block reward values.

Operating Expenses

Professional fees

Professional fees for Fiscal 2025 increased compared to Fiscal 2024, primarily due to higher legal and accounting costs associated with the Company’s new Form S-3 registration statement and the expansion of its ATM program during Fiscal 2025. The increase also reflects higher investor relations expenses.

We expect professional fees to decrease in Fiscal 2026, as the Fiscal 2025 fees related to the S-3 filing and ATM program are non-recurring. Investor relations expenses may continue to fluctuate based on timing, opportunities, and the scope of shareholder engagement initiatives.

General and Administrative Expenses

General and administrative expenses for Fiscal 2025 increased ~~during~~compared to Fiscal 2024, primarily due to: higher payments for order flow incurred in connection with supporting the Company’s expanding Builder+ block-building activities, as well as SEC filing fees associated with the filing of the new Form S-3 registration statement. These increases were partially offset by continued discipline in overall administrative spending.

●We expect ~~Audit~~general ~~Fees: Increased by approximately $130,000, driven by a broader audit scope resulting from heightened operational complexity~~ and ~~services~~administrative ~~related~~expenses to ~~our~~fluctuate ~~Form~~based ~~S-3~~on ~~registration~~operational ~~during~~growth, ~~Fiscal~~regulatory ~~2024.~~filing ~~● Proxy Service Fees: Increased by approximately $120~~activity,~~000~~ ~~related to our 2024 annual meeting~~ and ~~solicitation~~the oflevel ~~shareholder vote. ● Order flow fees: Increase by approximately $104,000, attributed to purchases~~ of block-building and order flow to support ~~Ethereum~~required ~~block production~~ as ~~part~~operations ofcontinue ~~Builder+~~to scale.

These increases were partially offset by a $119,000 reduction in legal fees, which were elevated in Fiscal 2023 due to services related to the Series V Preferred Distribution and its related listing on the Upstream Exchange.

We anticipate that audit fees may continue to rise due to expanding operational scope, while legal and proxy-related expenses are expected to decline in Fiscal 2025. Additionally, we anticipate future increases in order flow expenditures as we scale our block-building operations.

Research and Development Expenses

Research and development expenses ~~increased~~for ~~during~~Fiscal 2025 decreased compared to Fiscal 2024, asprimarily ~~resources~~due ~~shifted~~to ~~from~~ the ~~beta~~completion ~~release~~and wind-down of ~~our~~development activities related to legacy technology platforms, including StakeSeeker ~~platform~~in 2024 and ChainQ in ~~Fiscal 2023~~2025, toand the ~~launch~~transition of certain Builder+ initiatives from development into routine, revenue-generating operations. ~~and~~During ~~continued~~2025, research and development ofactivities ~~ChainQ,~~were ~~which~~more limited ~~launched~~and inconsisted ~~July~~primarily ~~2024.~~of Wefeasibility ~~expect~~assessments, ~~research~~testing, and ~~development costs~~evaluation toof ~~either~~blockchain ~~increase~~infrastructure orenhancements ~~remain~~and ~~consistent~~decentralized finance initiatives, ~~with~~resulting ain ~~focus~~lower onoverall ~~cost~~R&D ~~management~~spending ~~for~~compared ~~third-party~~to ~~development~~the ~~services~~prior year.

Research and development expenses may fluctuate in future periods based on the scope and timing of exploratory initiatives and infrastructure enhancements.

Compensation and Related Expenses

Compensation and related expenses ~~increased~~for ~~significantly~~Fiscal in2025 decreased compared to Fiscal 2024, primarily due to ~~higher~~the ~~equity~~timing of performance-based bonus accruals and a reduction in stock-based compensation ~~expenses,~~expense ~~which~~resulting ~~totaled~~from the forfeiture of unvested restricted stock following certain executive ~~approximately~~transitions ~~$5,340,000,~~earlier ~~compared~~in the year. On a year-to-date ~~approximately~~basis, $1compensation expenses remained relatively consistent,~~643,000~~ reflecting continued salary and benefits costs associated with core personnel and estimated accruals for ~~Fiscal~~performance-based ~~2023~~incentives.

A substantial portion of the equity-based compensation expense relates to performance bonus accruals for Fiscal 2024. These accruals primarily increased due to the Company’s exceeding the maximum revenue performance milestone of $3,712,500 during the year, triggering equity-based awards under employee incentive plans.18

~~While~~The ~~the~~Company ~~total~~continues ~~bonus~~to ~~amounts~~utilize ~~for~~equity-based ~~officers~~compensation ~~approved~~as ~~for~~a ~~Fiscal~~key ~~2024~~component ~~were~~of ~~approximately~~its ~~$1,917,000~~total ~~(as~~rewards ~~disclosed~~strategy into ~~Note~~align 7employee ~~– Executive~~incentives ~~Compensation),~~with ~~the~~long-term ~~portion~~shareholder ~~allocated~~value. toWe ~~incentive~~expect ~~stock~~total ~~options~~compensation ~~was~~costs ~~recognized~~to atfluctuate abased ~~higher~~on ~~GAAP~~headcount ~~expense~~changes, asthe ~~required~~timing ~~under~~of ~~U.S. GAAP. The stock~~performance-based accruals, ~~compensation~~and ~~charges for~~ the ~~options~~issuance ~~component~~or ~~were~~forfeiture ~~determined~~of ~~using~~equity ~~the Black-Scholes valuation model, resulting in a higher accrued amount~~awards.

As part of the payment of accrued bonus compensation for the year ended December 31, 2024, the Company issued 1,312,068 options to employees and officers. The fair value of the options was estimated at approximately $2,872,000 using the Black-Scholes valuation model.

Additionally, the increase in equity-based compensation expenses includes approximately $380,000 in payroll taxes primarily driven by costs related to the net settlement of shares issued upon the vesting of certain RSUs as well as increased salaries in Fiscal 2024.

Looking ahead, we anticipate compensation expenses may decrease as the balance of unamortized stock-based compensation related to prior grants, as well as the balance of unvested RSUs, declines. However, equity-based incentives remain a key component of our compensation strategy, and future fluctuations in expense levels may occur based on the timing and structure of future grants.

Marketing Costs

Marketing expenses ~~rose~~for ~~during~~Fiscal 2025 increased compared to Fiscal 2024, primarily due to ~~additional~~expanded adadvertising campaigns ~~executed~~and activities aimed at enhancing brand visibility and supporting business development initiatives. WeMarketing ~~anticipate~~spend ~~similar~~is expected to ~~more~~remain ~~significant~~at ~~increases~~or inabove ~~advertising~~current levels as ~~spend~~the inCompany ~~Fiscal~~continues ~~2025~~to pursue strategic growth and community engagement efforts.

Realized Losses on ~~Crypto~~Digital ~~Asset~~Assets Transactions

Realized losses on ~~crypto~~digital ~~asset~~assets transactions for Fiscal 2025 increased ~~during~~compared to Fiscal 2024, primarily due to ~~Validator~~the ~~Payments~~sale ~~for~~of ~~block~~non-~~building~~core, ~~and~~non-ETH digital ~~sales~~assets ofthat ~~crypto~~had ~~assets to~~previously ~~fund~~carried ~~operations~~unrealized losses. ~~The~~These ~~Company~~transactions ~~may~~were ~~realize~~executed ~~additional~~as ~~gains~~part orof ~~losses~~a inbroader ~~the~~effort ~~future~~to ~~depending~~reallocate resources ontoward ~~the~~core ~~sale~~staking ofand ~~crypto~~block-building ~~assets~~operations. toFuture ~~meet~~realized ~~operational and~~gains ~~cash~~or ~~needs~~losses aswill ~~well~~depend ason the timing and market conditions of any additional digital asset sales.

~~Other~~Overall ~~Income~~Operating (Expense) Trend

~~Changes~~Total inoperating ~~other~~expenses ~~income~~ for Fiscal ~~2024~~2025 ~~were~~increased ~~primarily~~compared ~~attributed~~ to ~~the~~Fiscal ~~recognition~~2024, ofreflecting ~~unrealized~~the ~~appreciation~~continued onscaling ~~crypto~~of ~~assets~~the ~~due~~Company’s ~~to favorable~~blockchain ~~market~~infrastructure ~~conditions.~~and ~~However~~DeFi operations, ~~the~~including ~~unrealized~~higher ~~appreciation~~costs inassociated ~~Fiscal~~with ~~2024~~block-building ~~was~~activities, ~~lower compared to Fiscal 2023~~personnel, ~~which~~and ~~experienced~~public ~~greater~~company ~~increases~~compliance. inOperating ~~crypto~~expenses ~~asset~~for ~~market~~the ~~values.~~current ~~Changes~~year inalso included unrealized ~~appreciation~~losses oron ~~depreciation~~digital ~~of crypto~~ assets ~~are directly influenced by crypto market volatility~~, ~~which~~reflecting ~~can~~changes bein ~~challenging~~the ~~for~~fair ~~management~~value toof ~~predict.~~ETH and ~~This~~other ~~volatility~~digital ~~can~~assets ~~significantly~~held ~~impact~~and ~~other~~deployed ~~income~~ in ~~future reporting~~the ~~periods~~Company’s operations.

~~Net~~While ~~Income~~management ~~(Loss)~~continues to focus on disciplined expense management, operating expenses may fluctuate significantly from period to period due to changes in digital asset prices, non-cash compensation expense, and the level of infrastructure and DeFi activity required to support the Company’s operating strategy.

~~The~~Other ~~decline~~Income in net income for Fiscal 2024 compared to Fiscal 2023 is primarily due to smaller increases in the fair value of crypto assets during Fiscal 2024. Additionally, increased compensation expenses, including larger performance bonus accruals related to revenue milestones, contributed to the decline. Net income or loss may continue to fluctuate significantly due to crypto asset market volatility, impacting changes in fair value during future periods.(Expenses)

22Interest Expense

~~LIQUIDITY~~Interest ~~AND~~expense ~~CAPITAL~~for ~~RESOURCES~~Fiscal 2025 increased compared to Fiscal 2024, primarily due to interest accrued on decentralized borrowings through Aave and other DeFi lending protocols, as well as interest and amortization expense related to the Company’s May 2025 and July 2025 Senior Secured Convertible Notes (the “Notes”). This includes both cash interest paid and the amortization of debt discount over the term of the Notes.

We expect interest expense to rise in future periods as a result of ongoing utilization of DeFi borrowings and the full-term amortization of outstanding convertible notes.

Unrealized Loss (Gain) on Digital Assets

The Company recognized significant unrealized losses in the fair value of its digital asset holdings for Fiscal 2025, compared to unrealized gains for Fiscal 2024. The change was primarily driven by declines in the market prices of Ethereum and other digital assets held by the Company during the latter portion of the year, reflecting the inherent volatility of digital asset markets, which may continue to materially affect the reported fair value of digital assets in future periods.

Change in Fair Value of Warrant Liabilities

The Company recognized a non-cash gain resulting from the change in the fair value of warrant liabilities for Fiscal 2025, compared to a loss for Fiscal 2024. The change was primarily attributable to movements in the Company’s stock price and related volatility during the period. Because these warrant liabilities are remeasured at fair value each reporting date, future gains or losses will depend on changes in the Company’s share price and other valuation inputs.

Impairment loss on non-fungible tokens

For Fiscal 2025, the Company recorded an impairment loss on non-fungible tokens (“NFTs”). The loss reflects a decline in the estimated fair value of the Company’s NFTs below their carrying value during the period. The Company does not currently anticipate significant NFT-related activity as part of its ongoing operations.

Loss on settlement of dividend payable

For Fiscal 2025, the Company recorded a loss on settlement of dividend payable related to the settlement of a special dividend distributed in Ethereum. The loss reflects changes in the fair value of Ethereum between the date the dividend payable was recorded and the date the dividend was settled. The Company does not currently anticipate declaring similar digital asset dividends on a recurring basis.

Loss on Extinguishment of Debt

The Company recorded a loss on extinguishment of debt for Fiscal 2025 related to on-chain debt swaps executed through decentralized finance (DeFi) lending protocols. Future gains or losses from such transactions may vary depending on the timing and structure of debt refinancings or restructurings undertaken within DeFi platforms.

Overall Other Income (Expense) Impact

Total other income (expenses), net, reflected a net expense for both the years ended Fiscal 2025 and 2024. The net expense for 2025 was primarily driven by interest expense incurred in connection with DeFi borrowings and outstanding convertible notes, partially offset by non-cash gains from the remeasurement of warrant liabilities. Other income (expenses) in 2024 were comparatively lower, reflecting the absence of similar interest-bearing obligations during that period.

Net Loss

Net loss for Fiscal 2025 increased compared to Fiscal 2024 primarily due to unrealized losses on the fair value of the Company’s digital asset holdings resulting from declines in digital asset market prices during the year, as well as realized losses associated with the sale of non-core, non-Ethereum digital assets as part of the Company’s strategic realignment. These items were non-cash in nature, except for realized losses on asset sales.

Net loss was also affected by higher interest expense related to decentralized finance borrowings and convertible notes, as well as changes in the fair value of warrant liabilities. These impacts were partially offset by increased revenues from blockchain infrastructure operations, including Builder+ and NodeOps activities. The Company’s results of operations may continue to fluctuate materially from period to period due to digital asset price volatility, financing activities, and changes in valuation-related items.

Liquidity and Capital Resources

ATM Financing

On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time- to- time, shares of its ~~Common~~common ~~Stock~~stock through H.C. Wainwright~~. Initially~~, ~~the~~subject ~~aggregate~~to ~~offering~~the ~~price~~availability of ~~shares~~an ~~issuable~~effective ~~under~~registration ~~the~~statement on Form S-3. The initial ATM ~~Agreement~~sales ~~was~~were conducted under a $98100,~~767~~000,~~500~~000 shelf registration statement that became effective in September 2021.

On October 4, 2024, ~~the~~a ~~Company’s~~ new Form S-3 registration statement became effective, increasing the total amount of securities that may be offered and sold under the ~~prospectus~~Company’s shelf registration to $250,000,000. As of the date of this report, there was approximately $103,380,000 available for sale under this Form S-3 registration statement.

~~From~~On ~~the~~July ~~period~~22, ~~September 14~~2025, ~~2021~~the ~~through~~Company ~~March~~entered ~~17,~~into ~~2025,~~an ~~the~~amendment ~~Company~~to ~~sold~~its aengagement ~~total~~with ofH.C. ~~6,401,461~~Wainwright ~~shares~~in ofconnection ~~Common~~with ~~Stock~~a ~~under~~new ~~the~~Form ~~ATM~~S-3 ~~Agreement~~registration ~~for~~statement ~~aggregate~~filed ~~total~~on ~~gross~~July ~~proceeds~~23, of2025, ~~approximately~~to register up to $242,~~230~~000,000,000 atof ansecurities ~~average~~for ~~selling~~future ~~price~~issuance of(the $3“New Registration Statement”).79 The ~~per~~New ~~share~~Registration Statement was approved by the SEC and declared effective on August 1, ~~resulting~~2025. inAs ~~net~~of ~~proceeds~~ the date of ~~approximately~~this ~~$23~~report,~~445,000~~ ~~after~~the ~~deducting~~Company had ~~commissions~~not ~~and~~sold ~~other~~any ~~transaction~~securities ~~costs~~under the New Registration Statement.

However, due to the SEC’s baby shelf requirements, the Company is currently limited in its sales of Common Stock under the ATM Agreement to no more than one-third of its public float (calculated as the aggregate market value of outstanding Common Stock held by non-affiliates) during any 12-month period, provided that the amount of securities that may be sold under the Form S-3 may fluctuate based on changes in the Company’s public float and stock price. As of March 17, 2025, the Company would be limited in its sale of shares under the ATM Agreement to approximately $13,747,000, subject to ongoing changes in the Company’s public float and stock price.20

From September 14, 2021 through March 22, 2026, the Company sold a total of 32,762,523 shares of common stock under the ATM Agreement for aggregate total gross proceeds of approximately $163,597,000 at an average selling price of $4.99 per share, resulting in net proceeds of approximately $158,539,000 after deducting commissions and other transaction costs.

Share Repurchase Program

On September 4, 2025, the Board authorized a share repurchase program permitting the Company to repurchase up to $50 million of its common stock over a three-year period. Repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and applicable state law. We have engaged H.C. Wainwright & Co., LLC as the sole broker to implement the program. The program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended, or discontinued at any time.

From September 11, 2025 through March 22, 2026, the Company repurchased and retired 888,677 shares of our common stock for an aggregate purchase price of approximately $4,000,000. The repurchases were funded from available cash on hand and are presented as a financing cash outflow in our statement of cash flows. All repurchased shares were immediately retired and are no longer considered issued or outstanding. As of March 22, 2026, approximately $46,000,000 remained available for repurchases under the authorization.

The Company expects that any future repurchases will be subject to our liquidity position, prevailing market conditions, and other capital allocation priorities, including funding of operations and strategic initiatives.

DeFi Borrowing

From January 1, 2025 through March 22, 2026, the Company borrowed an aggregate of approximately $123,477,000 in stablecoins, primarily USDT and GHO, through Aave, a DeFi lending protocol, using ETH as collateral, and repaid approximately $79,669,000 during the same period. These borrowings included transactions executed in connection with on-chain debt refinancing activities. As of March 22, 2026, the Company had approximately $43,965,000 in outstanding DeFi borrowings, inclusive of accrued interest, collateralized by approximately 49,949 ETH with an aggregate fair market value of $103,000,000, based on the closing price of $2,062 per ETH on that date. Because these borrowings are overcollateralized, declines in the market price of ETH could require the Company to post additional collateral or repay a portion of the borrowings to maintain required collateralization levels under the Aave protocol. Management monitors the collateral value and associated loan health factors on an ongoing basis and may add collateral or reduce borrowings in response to significant market movements.

Borrowings through Aave accrue interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically based on protocol liquidity and market utilization. ETH collateral posted to Aave simultaneously accrues variable interest at rates that fluctuate based on the same market factors. These rates are determined algorithmically by the protocol based on market conditions and are publicly available through on-chain protocol data. As a result, the Company’s net cost of capital may vary depending on prevailing protocol-level conditions. The Company has no control over these rate adjustments and is subject to the risk of significant rate increases. As of March 22, 2026, the Company had outstanding borrowings denominated in USDT and GHO, with variable borrowing rates on the Aave protocol applicable to those borrowings of approximately 3.04% and 3.05% per annum, respectively.

Borrowings through DeFi protocols are subject to risks not present in traditional financing arrangements, including collateral liquidation risk, protocol governance changes, smart contract vulnerabilities, manipulation risk, market volatility affecting collateral values, and the absence of traditional legal recourse or bankruptcy protections. Management actively monitors collateralization ratios and protocol conditions and may reduce or repay borrowings in response to market movements or changes in risk tolerance. As of March 22, 2026, the Company has not experienced any full or partial liquidation events related to its DeFi borrowings.

Convertible Notes Payable

In May 2025, the Company completed a private placement of Senior Secured Convertible Notes in the aggregate principal amount of approximately $7,811,000, for net cash proceeds of approximately $7,306,000. In connection with the offering, the Company also issued approximately 1.9 million five-year warrants, exercisable at $2.75 per share. The notes mature in May 2027, bear interest at a rate of 6% per annum, and are convertible into shares of common stock at a conversion price of $5.85 per share.

In July 2025, the Company completed an additional private placement of Senior Secured Convertible Notes in the aggregate principal amount of approximately $10,050,000, for net cash proceeds of approximately $9,538,000. In connection with the offering, the Company agreed to issue approximately 879,000 five-year warrants, exercisable at $8.00 per share. The notes mature in July 2027, bear interest at 6% per annum, and are convertible into shares of common stock at a conversion price of $13.00 per share.

The Company used the proceeds from both offerings primarily to accelerate the accumulation of ETH, expand operational capacity, and support the continued expansion of its blockchain infrastructure operations. The notes from the May and July 2025 offerings are secured by all of the Company’s assets as collateral, except for Ethereum deposited as collateral for USDT borrowings on Aave and certain other exclusions.

Dividends and Capital Distributions

During fiscal year 2025, the Company utilized a combination of cash and digital asset distributions as part of its capital allocation strategy.

In August 2025, the Board approved a special dividend of $0.05 per share on the Company’s common stock and Series V Preferred Stock. Holders of common stock were permitted to elect to receive the dividend in either cash or ETH, while holders of Series V Preferred Stock received the dividend solely in cash. The dividend was paid in October 2025 through aggregate cash payments of approximately $2,680,000 and distributions of ETH to common stockholders who elected to receive ETH. The cash portion of the dividend was funded from existing cash balances, while the ETH distributions were settled using digital assets held by the Company.

In addition, the Board authorized a one-time loyalty payment of $0.35 per share, payable solely in ETH, to eligible holders of common stock who satisfied specified opt-in and share-holding requirements. The loyalty payment was designed to reward long-term stockholders and was settled in February 2026 through the distribution of ETH. Because the loyalty payment was settled in digital assets, it did not require the use of incremental cash resources at the time of payment, although it reduced the Company’s digital asset holdings available for operational use and staking activities.

As of December 31, 2025, the Company did not have any recorded dividend payables or other obligations related to these distributions. The Company does not currently anticipate declaring regular cash or digital asset dividends, and the declaration of future dividends or other capital distributions, if any, will depend on the Company’s financial condition, results of operations, liquidity position, capital requirements, and other factors considered by the Board.

Liquidity

The Company’s ~~consolidated~~ financial statements have been prepared assuming that it will continue as a going concern, which contemplates ~~continuity~~ continuity of operations, realization of assets, and settlement of liabilities in the normal course of business.

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At December 31, ~~2024~~2025, the Company had approximately $1,~~978~~526,000 of cash and cash equivalents and working capital of approximately $33150,~~893~~645,000.

As of March 1722, ~~2025~~2026, the Company had approximately $~~261~~7,498,000 of cash and ~~cash~~stablecoins ~~equivalents~~ and the fair market value of the Company’s liquid digital ~~crypto~~ assets was approximately $21118,~~440~~951,000. ~~The Company has no outstanding debt.~~

~~The Company believes that~~As ~~its~~of ~~existing~~March ~~cash~~22, ~~and liquid crypto assets~~2026, ~~in addition to~~ the ~~funds available to the~~ Company ~~from~~had ~~the~~total ~~issuance~~debt obligations of ~~additional~~approximately ~~stock through the ATM Agreement~~$61, ~~provide sufficient liquidity to meet working capital requirements~~826,000, ~~anticipated~~consisting ~~capital expenditures and contractual obligations for at least the next twelve months from the filing date~~ of ~~this~~approximately ~~report. However~~$43,965,000 ~~this~~under ~~belief~~its lending isarrangement ~~based~~with onAave ~~current~~Protocol ~~market conditions, regulatory environment,~~ and ~~operational~~approximately ~~plans~~$17,861,000 ~~all~~convertible ofnotes ~~which are subject to change~~payable.

~~Certain~~The Company ofbelieves ~~our~~that ~~staked~~its ~~crypto~~existing ~~assets~~cash ~~may~~and bedigital ~~locked~~assets, uptogether ~~for~~with ~~varying~~the ~~durations, depending~~proceeds onfrom ~~the~~recent ~~specific~~convertible ~~blockchain~~note ~~protocol,~~financings and ~~we may be unable~~ access to ~~unstake~~capital ~~them~~through inits aATM ~~timely manner to liquidate to the extent desired~~Agreement, ~~which~~ ~~could~~provide ~~materially~~sufficient ~~impact our~~ liquidity ~~position.~~to ~~Additionally,~~meet ~~technical~~working ~~issues,~~capital ~~network congestion~~requirements, oranticipated ~~regulatory~~capital ~~changes could~~expenditures, ~~further~~strategic ~~restrict~~initiatives, ~~our~~and ~~ability~~contractual toobligations ~~access or liquidate these assets. Lock-up periods~~ for ~~our~~at ~~staked~~least ~~crypto~~the ~~assets~~next ~~range~~twelve ~~from several hours to six~~ months. ~~During~~from ~~times of instability in~~ the ~~cryptocurrency~~filing ~~markets,~~date ~~the~~of ~~Company~~this ~~may~~report. ~~not~~This ~~be able to sell its crypto assets at prices~~assessment ~~reflecting~~is ~~their~~based ~~perceived~~on ~~value~~current ormarket ~~at all~~conditions, ~~which~~regulatory ~~could~~environment, ~~result~~and inmanagement’s ~~substantial~~operational ~~losses given the historical volatility of cryptocurrency prices. As a result~~plans, ~~our~~all ~~crypto assets may not be able to serve as a source~~ of ~~liquidity~~which ~~for~~remain us subject to ~~the same extent as cash and cash equivalents~~change.

Certain digital assets may be subject to protocol-defined unstaking or withdrawal periods, which could limit the Company’s ability to rapidly convert those assets to cash. As of March 22, 2026, unstaking periods for the Company’s staked digital assets generally ranged from several hours to seven days, though such periods may change based on protocol upgrades or network conditions. Market volatility, network congestion, or regulatory developments could further restrict liquidity or adversely affect realized prices.

Cash Flows

Cash Used in Operating Activities

Cash used in operating activities was approximately $39,~~530~~784,000 for Fiscal ~~2024~~2025, compared to approximately $3,~~562~~530,000 for Fiscal ~~2023,~~2024. ~~reflecting~~The ~~consistent~~increase reflects the Company’s expanded operating ~~cash~~activity ~~outflows~~during ~~year-over-year.~~the ~~Significant~~period, ~~non~~including the scaling of Builder+ block-~~cash~~building activities ~~adjustments~~and ~~impacting~~the ~~operating~~introduction ~~cash~~of ~~flows~~Imperium ~~included:~~DeFi operations, as well as changes in working capital associated with the growth of the business.

●	Positive Adjustments:
		○	Approximately $2,424,000 related to stock-based compensation, reflecting the issuance of equity-based awards to employees, including performance-based equity awards.
		○	Approximately $2,766,000 related to Validator Payments made in ETH tokens as part of our Ethereum block-building operations.
●	Negative Adjustments:
		○	Approximately $7,684,000 in unrealized appreciation on crypto assets, driven by market value increases during Fiscal 2024.
		○	Approximately $4,074,000 in revenue earned in native crypto assets, which does not result in immediate cash inflows.

Operating cash flows are significantly influenced by non-cash items associated with the Company’s blockchain operating model, particularly digital asset-denominated revenues, Validator Payments, and fair value adjustments to digital assets. Although revenues are earned in digital assets, these assets are typically retained to support staking, block-building, and DeFi activities rather than immediately converted into cash, which may cause operating cash flows to differ significantly from reported revenues.

WeSignificant ~~expect equity~~non-~~based compensation to either increase or remain consistent with Fiscal 2024 levels, given its central role in our compensation strategy. Non-~~cash adjustments ~~related~~impacting tooperating ~~revenue~~cash ~~earned~~flows ~~in crypto assets and Validator Payments are anticipated to grow as our Ethereum block-building activities scale, though these factors are influenced by crypto market volatility.~~included:

	●	Digital asset-denominated revenues of approximately $16,480,000 earned from blockchain infrastructure and DeFi activities, which increased net income but did not result in operating cash inflows.
	●	Validator Payments of approximately $14,300,000 made in native digital tokens to external validators as part of Builder+ block-building activities.
	●	Realized losses on digital asset transactions of approximately $8,184,000, primarily from the sale of non-Ethereum digital asset holdings.
	●	A non-cash adjustment of approximately $15,713,000 related to unrealized losses from the fair value measurement of digital assets, particularly Ethereum.
	●	Stock-based compensation expense of approximately $657,000, primarily reflecting the issuance and ongoing amortization of equity-based awards to employees, including performance-based grants.
	●	Amortization of debt discount and issuance costs of approximately $1,497,000 related to the outstanding convertible notes.

As Builder+ and Imperium operations continue to scale, we expect non-cash adjustments such as digital asset-denominated revenues, Validator Payments, and fair value changes in digital assets to may continue to have a significant effect on reported operating cash flows. The magnitude and direction of these effects will depend on market conditions and the timing of digital asset-related transactions.

Cash Used in Investing Activities

~~Cash~~Net cash used in investing activities was approximately $2197,~~632~~497,000 ~~for~~during Fiscal ~~2024~~2025, compared to net cash provided by investing activities of approximately $~~186~~2,632,000 in the Fiscal ~~2023~~2024. The ~~primary~~2025 ~~driver~~activity ofprimarily ~~the~~reflects ~~outflows in Fiscal 2024 was~~ the purchase of ~~crypto~~approximately $201,348,000 of digital assets, primarily ~~Ethereum~~ETH, to support ~~and expand~~scaling ~~our~~of ~~blockchain~~Validator ~~infrastructure~~(NodeOps) and DeFi (Imperium) operations.

~~Fiscal~~Investing ~~2023~~cash ~~investing~~outflows ~~activities~~also included an$500,000 ~~atypically~~of ~~high~~investments ~~volume~~in ofthree ~~crypto~~private ~~asset~~blockchain-based ~~sales,~~technology ~~primarily~~companies ~~from~~during ~~reallocating~~Fiscal ~~Ethereum~~2025, ~~rewards into~~partially ~~other~~offset ~~productive~~by ~~crypto~~proceeds ~~assets~~of ~~for~~approximately ~~staking.~~$4,362,000 ~~Looking~~from ~~forward,~~sales weof ~~anticipate~~non-core ~~that~~productive ~~purchasing~~digital ~~activity~~assets ~~will~~as ~~grow~~we ~~subject~~continue to ~~additional~~streamline ~~financing or remain consistent~~operations.

Cash Provided by Financing Activities

Cash provided by financing activities was approximately $6206,~~682~~830,000 ~~for~~during Fiscal ~~2024~~2025, compared to approximately $26,~~688~~682,000 ~~for~~in ~~Fiscal~~the ~~2023~~2024 Period. ~~The cash~~Financing inflows ~~from~~during ~~financing activities in~~ Fiscal ~~2024~~2025 ~~and Fiscal 2023~~ were ~~entirely~~primarily ~~from~~driven ~~proceeds of Common Stock sold pursuant to the ATM Agreement.~~by:

~~The Company~~● ~~anticipates~~Net ~~continuing~~proceeds toof ~~raise~~approximately ~~proceeds~~$135,161,000 ~~through~~from ~~Common~~common ~~Stock~~stock sales under the Company’s ATM ~~Agreement~~equity toprogram. ~~fund~~● ~~operational~~Net ~~needs.~~proceeds ~~Future financing~~of ~~activities~~approximately ~~will~~$16,844,000 ~~remain~~from ~~aligned~~the ~~with~~May ~~our~~and ~~strategic~~July ~~priorities,~~2025 ~~including~~issuances ~~the~~of ~~scaling~~senior ofsecured ~~block-building~~convertible ~~operations~~notes and ~~ongoing blockchain~~related ~~infrastructure~~five-year ~~development~~warrants ● Net proceeds from borrowings of approximately $61,500,000 in stablecoins via Aave, a decentralized finance (DeFi) lending protocol.

Off Balance Sheet Transactions

As of December 31, 2024, there were no off-balance sheet arrangements and we were not a party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.

The Company also paid approximately $4,000,000 for share repurchases of the Company’s common stock, cash dividends of approximately $2,680,000, ETH dividends of approximately $496,000 and debt issuance costs of approximately $131,000 during Fiscal 2025.

We anticipate future financing activity may include additional DeFi borrowings and capital raised through the ATM program or through other financing instruments, as we continue to scale blockchain infrastructure and DeFi operations, enhance liquidity, and accumulate ETH in support of long-term growth.

Off Balance Sheet Transactions

As of December 31, 2025, there were no off-balance sheet arrangements, and we were not a party to any off-balance sheet transactions. We have no guarantees or obligations other than those that arise out of normal business operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

WeThe ~~believe~~preparation ~~that~~of the ~~following~~Company’s financial statements in conformity with U.S. generally accepted accounting ~~policies~~principles ~~are~~(“GAAP”) requires management to make estimates, judgments, and assumptions that affect the ~~most~~reported ~~critical~~amounts toof ~~aid~~assets ~~you~~and inliabilities, ~~fully~~revenues and ~~understanding~~expenses, and ~~evaluating~~related ~~this~~disclosures. These estimates and assumptions are based on management ~~discussion~~’s experience and ~~analysis:~~on various other assumptions believed to be reasonable under the circumstances. Actual results may differ materially from these estimates.

~~Accounting~~Management ~~Treatment~~believes that the following accounting policies and estimates are critical to the understanding of ~~Crypto~~the ~~Assets~~Company’s financial condition and results of operations because they involve significant judgment, are inherently subjective, and could have a material impact on the Company’s financial statements.

~~Fair~~Accounting for Digital Assets and Fair Value Measurement

~~The~~Digital ~~Company accounts for the fair value measurement for its crypto~~ assets, inprimarily ~~accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820~~Ethereum, ~~Fair~~represent ~~Value Measurement. ASC 820 defines fair value as the price that would be received for an asset in~~ a ~~current~~significant ~~sale,~~portion ~~assuming~~of ~~an orderly transaction between market participants on~~ the ~~measurement date.~~Company’s ~~Market~~assets ~~participants~~and are ~~considered~~central to bethe ~~independent,~~Company’s ~~knowledgeable, and willing and able to transact~~operating model. ItThe ~~requires the~~ Company to ~~assume~~accounts ~~that~~for its ~~crypto~~digital assets ~~are~~as ~~sold~~indefinite-lived inintangible ~~their~~assets ~~principal~~under ~~market~~ASC ~~or,~~350-60 inand ~~the~~measures ~~absence~~them ofat afair ~~principal~~value in ~~market,~~accordance ~~the~~with ~~most~~ASC ~~advantageous market~~820.

~~Kraken~~Fair ~~serves~~value asrepresents the ~~principal~~price ~~market~~that would be received for ~~the~~an ~~Company’s~~asset ~~crypto~~in ~~assets~~a current sale, ~~being~~assuming an orderly transaction between market participants on the measurement date. The Company’s ~~primary~~determines ~~cryptocurrency~~fair ~~exchange~~value ~~for~~using ~~both purchases~~observable market prices and ~~sales.~~assumes ~~Coinbase~~that isits ~~designated~~digital asassets ~~the~~are ~~secondary~~sold in their principal market. ~~This~~or, ~~determination~~in ~~results~~the ~~from~~absence of a ~~comprehensive~~principal ~~evaluation considering~~market, ~~various~~the ~~factors,~~most ~~including~~advantageous ~~compliance,~~market ~~trading~~to ~~activity,~~which ~~and~~it ~~price~~has ~~stability~~access.

~~The~~Changes in the fair value of ~~crypto~~digital assets isare ~~primarily~~recorded ~~determined~~in ~~based~~the onstatements ~~pricing~~of ~~data~~operations ~~obtained~~and ~~from~~may ~~Kraken~~result in significant unrealized gains or losses during a reporting period. Because digital asset markets are subject to significant volatility, changes in market prices may materially affect the Company’s ~~principal~~reported ~~market. In~~financial ~~the~~position, ~~absence~~results of ~~Kraken~~operations, ~~data~~and liquidity. As a result, ~~pricing~~the Company’s reported operating results may fluctuate significantly from ~~Coinbase~~period ~~serves~~to asperiod adue ~~secondary~~to ~~source~~changes in digital asset prices, even when underlying operating activity is relatively consistent.

~~While~~Classification Kraken is designated as the primary exchange, the Company retains flexibility to conduct cryptocurrency transactions on other exchanges where it maintains accounts. This flexibility allows the Company to adapt to changing market conditions and ~~explore~~Liquidity ~~alternative~~of ~~platforms when~~Digital ~~necessary to ensure cost-effective execution and fair value measurement using the most advantageous market.~~Assets

The ~~selection~~Company ofdeploys ~~Kraken~~digital asassets ~~the~~across ~~principal~~staking ~~market~~and ~~reflects~~DeFi ~~the~~activities ~~Company’s~~as ~~commitment~~part toof ~~informed~~its ~~decision-making~~operations. ~~and~~Digital ~~achieving~~assets ~~the~~are ~~most~~presented as current ~~accurate~~assets ~~representation~~unless ofthey ~~fair~~are ~~value~~subject ~~for~~to ~~its~~protocol-imposed ~~crypto~~restrictions ~~assets.~~exceeding ~~Regular~~twelve ~~reviews~~months. ~~ensure~~Staked ~~alignment~~digital ~~with~~assets ~~the~~are ~~Company’s~~classified ~~objectives~~as ~~and~~non-current ~~cryptocurrency~~if ~~market~~their ~~dynamics~~lock-up periods extend beyond one year.

~~Accounting~~The ~~for~~majority ~~Crypto~~of ~~Assets~~the Company’s digital assets are deployed either in staking arrangements with average lock-up periods of less than seven days or in DeFi arrangements that permit redemption on a near-immediate basis. Accordingly, these assets are classified as current because management expects they may be used to support operations or liquidity needs within the normal operating cycle.

~~The~~These ~~cost~~classifications ~~basis~~require ofmanagement ~~the~~judgment ~~Company’s~~and ~~crypto~~are ~~assets~~subject isto ~~initially~~change ~~recorded~~based aton ~~their~~protocol ~~fair~~rules, ~~value~~network ~~using~~conditions, ~~the~~and ~~last~~market ~~close price of the day in the UTC (Coordinated Universal Time) time zone on the date of receipt~~liquidity.

~~Crypto~~Revenue ~~assets~~Recognition ~~are~~from ~~measured~~Blockchain atInfrastructure ~~their respective fair market values at each reporting period end on the balance sheets~~ and ~~classified~~DeFi as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances. Staked crypto assets are presented as current assets if their lock-up periods are less than 12 months, and as long-term other assets if the lock-up extends beyond one year. The majority of our crypto assets are staked, typically with lock-up periods of less than 21 days, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet, due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that they will be realized in cash or sold or consumed during the normal operating cycle of our business to support operations when needed.Activities

The ~~classification~~Company ofrecognizes ~~purchases~~revenue ~~and~~under ~~sales~~ASC ~~in the consolidated statements of cash flows is determined based on the nature of the crypto assets~~606, ~~which~~ ~~can~~Revenue befrom ~~categorized~~Contracts aswith ~~‘productive’ (i~~Customers.e. ~~acquired~~The ~~for purposes of staking) or ‘non-productive~~Company’s ~~(e.g.~~revenues ~~bitcoin). Acquisitions~~are ofgenerated ~~non~~from blockchain-~~productive~~based ~~crypto~~operations ~~assets~~and ~~are~~comprise ~~treated~~staking asrewards ~~operating~~earned ~~activities,~~from ~~while~~validator ~~acquisitions~~node ~~of productive crypto assets are classified as investing activities in accordance with ASC 230-10-20~~operations, ~~Investing activities. Productive crypto assets staked with lock~~execution-~~up periods~~layer oftransaction ~~less~~fees ~~than 12 months are listed as current assets in the ‘Staked Crypto Assets’ line item on the balance sheet.~~and ~~Staked~~rewards ~~crypto~~earned ~~assets~~from ~~with lock~~block-upbuilding ~~periods~~activities, ~~exceeding~~and ~~12 months are categorized as long~~protocol-~~term~~driven ~~other~~rewards ~~assets.~~earned ~~Non-productive~~from ~~crypto~~participation ~~assets are included~~ in ~~the~~DeFi ~~‘Crypto Assets’ line item on the balance sheet~~protocols.

Effective January 1, 2023, the Company has elected to early adopt ASU No. 2023-08, resulting in a material change in accounting principle related to the Company’s accounting treatment of crypto assets. The impacts of the change in accounting principle are discussed further in Note 3 - Changes in Accounting Principle.

The Company employs the specific identification method to determine the cost basis of our assets for the computation of gains and losses, in accordance with ASC 350-60-50-2a. This method involves identifying and using the actual cost of each individual asset sold or disposed of to calculate the gain or loss on its sale. Realized gains (losses) on sale of crypto assets are included in other income (expenses) in the consolidated statements of operations. The Company recorded realized losses on crypto assets of approximately $766,000 and $604,000 during the years ended December 31, 2024 and 2023, respectively.

Substantially all revenue is earned and settled in native digital assets, which represent non-cash consideration measured at fair value on the date earned. Revenue is recognized when the Company satisfies its performance obligations, which generally occurs when validation activities ~~Recognition~~are completed, blocks are successfully finalized on-chain, or DeFi rewards are earned and accrue to the Company.

~~The~~Because ~~Company~~revenues ~~recognizes~~are ~~revenue~~earned ~~under~~in ~~ASC~~digital ~~606,~~assets ~~Revenue~~and ~~from~~measured ~~Contracts~~at ~~with~~fair ~~Customers.~~value ~~The~~at ~~core~~the ~~principle~~time ofearned, ~~the~~reported ~~new~~revenues ~~revenue~~may ~~standard~~fluctuate issignificantly ~~that~~from aperiod ~~company~~to ~~should~~period ~~recognize~~due ~~revenue~~ to ~~depict~~changes ~~the~~in ~~transfer~~network ofactivity, ~~promised~~protocol ~~goods~~mechanics, orand ~~services~~digital toasset ~~customers~~market inprices. anIn ~~amount~~addition, ~~that~~because ~~reflects the consideration~~revenue torecognition ~~which~~is ~~the~~based ~~company~~on ~~expects~~blockchain toprotocol berules ~~entitled~~and inon-chain ~~exchange~~activity, ~~for~~management ~~those~~must ~~goods~~apply orjudgment ~~services.~~in ~~The~~evaluating ~~following~~the ~~five~~timing ~~steps~~of when rewards are ~~applied~~earned toand ~~achieve that~~available ~~core~~for ~~principle:~~transfer.

●DeFi Arrangements ~~Step~~and 1:Collateralized Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligationBorrowings

~~Revenue~~The ~~is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the~~ Company ~~expects~~participates ~~to be entitled to~~ in ~~exchange~~DeFi ~~for~~arrangements, ~~those~~including ~~goods~~lending orand ~~services.~~borrowing ~~The~~activities ~~Company~~conducted ~~generates revenue~~ through 1)decentralized ~~staking~~protocols ~~rewards~~such ~~generated~~as ~~from~~Aave. ~~its~~When ~~blockchain~~the ~~infrastructure~~Company ~~operations,~~supplies ~~and~~ETH 2)into ~~gas~~DeFi ~~fees~~protocols, ~~earned~~the ~~from~~ETH ~~successful~~may ~~Ethereum~~serve ~~block~~as ~~building~~collateral ~~through~~supporting ~~Builder+. These~~on-chain ~~revenues~~borrowing ~~are collectively termed ‘Blockchain infrastructure revenues’ in the consolidated statements of operations~~activities.

~~The~~Borrowings ~~transaction~~through ~~consideration~~DeFi ~~the~~protocols ~~Company~~accrue ~~receives~~interest at variable rates determined by on-chain ~~the~~smart ~~crypto~~contracts, ~~asset~~which ~~awards~~adjust dynamically based on protocol liquidity and ~~gas~~market ~~fees~~utilization. -The ~~are~~Company ais ~~non-cash~~subject ~~consideration,~~to ~~which~~collateral liquidation risk if the ~~Company~~value of collateral declines relative ~~measures~~to atoutstanding ~~fair~~borrowings. ~~value~~For onexample, as a result of the ~~date~~drop ~~received~~in the price of ETH, in February 2026, BTCS sold approximately 10,000 ETH for total net proceeds of $18.7 million, and used net proceeds to repay outstanding principal indebtedness on Aave.

~~Blockchain~~Management ~~Infrastructure~~actively ~~(NodeOps)~~monitors collateralization ratios, protocol conditions, and market movements and may reduce or repay borrowings in response to changes in market conditions or risk tolerance. These arrangements require judgment in evaluating liquidity, collateral sufficiency, and the timing and classification of related interest expense.

The Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”) crypto assets directly to both its own validator nodes and nodes run by third-party operators. Through these contracts, the Company provides crypto assets to stake to a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and typically last from a few days to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the staked crypto assets remain locked up during the duration of the smart contract.

In exchange for staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset awards earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the fixed crypto asset awards a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain. The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time.

On certain blockchain networks on which the Company operates a validator node, the Company earns a validator node fee (“Validator Fee”), determined as a node operator’s published percentage of the crypto asset rewards earned on crypto assets delegated to its node.

Token rewards earned from staking, as well as tokens earned as Validator Fees, are calculated and distributed directly to BTCS digital wallets by the blockchain networks as part of their consensus mechanisms.

The provision of validating blockchain transactions is an output of the Company’s ordinary activities. Each separate block creation or validation under a smart contract with a network represents a performance obligation. The satisfaction of the performance obligation for processing and validating blockchain transactions occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer. At that point, revenue is recognized.

Ethereum Block Building (Builder+)

The Company participates in the Ethereum blockchain network by engaging in the construction of blocks (“block building”) containing strategically bundled transactions from the Ethereum mempool and from searchers who connect to the Company’s endpoint with the intent of the Company’s builder proposing their transactions. Revenue recognition for these activities, conducted through Builder+, entails the recognition of gas fees (or “transaction fees”) earned in exchange for successfully constructing blocks of bundled transactions and having these blocks selected and proposed by a validator to the Ethereum network for validation and successfully finalized on the network.

These gas fees are earned as a direct result of the Company’s fulfillment of its performance obligations, which include the construction of blocks by bundling transactions to maximize the value of the included fees and the proposal of that block by a Validator. Each constructed block under a smart contract with the Ethereum network signifies a distinct performance obligation.

As part of the block construction and proposal process, the Company’s Builder purchases block space through a fixed non-negotiable fee paid to a Validator (a “Validator Payment”) embedded in each proposed block. The Validator Payment, predetermined by the Builder, is paid to Validators as compensation for selecting and proposing the Company’s block to the network for validation. The Validator Payment is intrinsically linked to the Company’s performance obligations and is disbursed in the block constructed by the Builder if the Builder’s block is both selected by a Validator and successfully proposed to, and finalized on, the Ethereum network; otherwise, our Validator Payment may be included in a subsequent block. The Validator Payment represents a direct and fixed pre-determined cost.

The satisfaction of the performance obligation occurs at a point in time when the constructed block is both proposed by a Validator and successfully finalized on the Ethereum network. At this juncture, the Company has fulfilled its obligations, and the gas fees associated with the transactions included in the block become available and are transferred to the Company’s digital wallet.

The Company recognizes revenue, reflecting the fair value of the total gas fees earned from the constructed block.

Cost of Revenues

The Company’s cost of revenues related to its blockchain infrastructure operations primarily includes direct production costs associated with transaction validation on the network, cloud-based server hosting expenses related to our validator nodes and Builders, and allocated employee salaries dedicated to node maintenance and support. Additionally, the cost of revenues encompasses Validator Payments made from our Builder to Validators as well as fees paid to third parties for their assistance in software maintenance and node operations. These costs directly related to the production of revenues are collectively termed ‘Blockchain infrastructure expenses’ in the consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation –- Stock Compensation. ~~ASC 718 addresses all forms of share~~Stock-based ~~payment awards including shares issued under employee stock purchase plans and stock incentive~~compensation ~~shares.~~expense ~~Under ASC 718, awards result in a cost that~~ is measured at fair value on the ~~awards’~~ grant date, ~~based on the estimated number of awards that are expected to vest~~ and ~~will~~recognized ~~result~~over inthe arequisite ~~charge~~service ~~to operations~~period.

~~Share-based~~The ~~payment~~estimation ~~awards~~of ~~exchanged~~fair value for ~~services~~stock ~~are~~options ~~accounted~~and ~~for~~market-based atrestricted ~~the~~stock ~~fair~~units ~~value~~requires ofmanagement ~~the~~to ~~award~~make assumptions regarding expected volatility, expected term, risk-free interest rates, and other inputs. These assumptions are based on ~~the~~historical ~~estimated~~data ~~grant~~and ~~date~~management judgment and involve inherent uncertainties.

~~Options~~Changes in assumptions, forfeiture rates, or the Company’s stock price may materially affect the amount of stock-based compensation expense recognized in a given period.

Stock options issued under the Company’s equity incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. For options granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent to the expected term of the option. For the most recent options granted on January 1, 2025, historical volatility was determined using a two-year lookback period. Management selected this approach to better reflect the Company’s current market conditions and exclude periods of non-representative volatility associated with significant changes in the Company’s business, market conditions, and capital structure. The two-year lookback period balances capturing industry and market cycles with avoiding outdated and non-representative data.

Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option.

Expected Term – The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.

Expected Dividend – The Company has not historically declared or paid any cash dividends on its common shares and does not plan to pay any recurring cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

Restricted Stock Units (RSUs)

For awards vesting upon the achievement of a service condition, compensation cost measured on the grant date will be recognized on a straight-line basis over the vesting period. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these RSUs to vest.

The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period.

Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the RSUs.

Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the RSUs.

Expected Term – The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected to be outstanding. The expected term is based on the stipulated 5-year period from the grant date until the market-based criteria are achieved. If the market-based criteria are not achieved within the five-year period from the grant date, the RSUs will not vest and shall expire.

Vesting Hurdle Price – The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding as of the valuation dates.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 3 - ~~Changes~~Summary inof Significant Accounting ~~Principle~~Policies to the financial statements for a discussion of recent accounting standards and pronouncements.

INFLATION

We have experienced, and are experiencing, the impact of domestic and global inflationary pressures largely outside of our control. This inflationary pressure impacts our cost structure, leading to operational adjustments, and increasing the cost of retaining talent and certain professional costs, despite our continued focus on controlling our costs where possible. Management is unable to accurately predict when, or if, these national and global inflationary pressures will subside, or their long-term impacts on our business and results of operations. We are actively monitoring the situation and assessing potential mitigation strategies.

2825

RISK FACTORS

~~There~~ITEM ~~are numerous and varied risks, known and unknown, that may prevent us from achieving our goals~~1A. ~~The~~RISK risks described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially adversely affect our business. If any of these risks actually occur, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our Common Stock could decline substantially and investors could lose all or part of their investment.FACTORS

The following risk factors should be considered, together with all other information contained in this Annual Report on Form 10-K, including our financial statements and the related notes thereto. The risks described below are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business, financial condition, results of operations, cash flows, and prospects. If any of the risks described below occur, our business, financial condition, results of operations, cash flows, and prospects could be materially adversely affected. In that event, the trading price of our common stock could decline, and you could lose all or part of your investment.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that you should consider before investing in our common stock. ~~Set~~The ~~forth below~~principal isrisks awe ~~summary~~face ofinclude, ~~the~~among ~~principal~~others, ~~risks~~the ~~we face~~following:

● WeOur ~~have~~business amodel ~~limited~~is ~~operating~~evolving ~~history,~~and ~~particularly~~depends ~~with~~on ~~respect~~our ability to ~~our~~operate and scale blockchain infrastructure ~~solutions~~and ~~business,~~DeFi ~~Builder+~~activities efficiently and ~~ChainQ operations~~profitably. ● WeOur ~~have~~operating ~~an evolving business model which we may be unable to develop~~results, ~~adapt or execute effectively~~liquidity, and wefinancial ~~may~~condition beare ~~unable~~materially toimpacted ~~manage~~by ~~our~~the ~~growth~~price orvolatility ~~implement~~of ~~our~~Ethereum ~~business~~(“ETH”) ~~plan~~and asother ~~intended~~digital ~~or at all~~assets. ● WeOur ~~are~~operations ~~highly~~depend ~~dependent~~ on ~~our~~the ~~executive~~continued ~~officers~~adoption, ~~particularly Charles Allen~~functionality, ~~our Chairman~~ and ~~Chief~~economics ~~Executive~~of ~~Officer,~~the ~~Michal~~Ethereum ~~Handerhan,~~network ~~our Chief Operating Officer,~~ and ~~Michael~~related ~~Prevoznik~~protocols, ~~our Chief Financial Officer,~~ and ~~the~~changes ~~loss of the services of any of these individuals could materially harm our business. ● We may be subject~~ to ~~regulatory~~protocol ~~actions~~rules, ~~private~~market ~~causes of actions due to our operations in the cryptocurrency industry~~structure, ~~and regulatory~~ or ~~other~~participant ~~adverse~~behavior ~~developments in the cryptocurrency industry~~ could ~~otherwise~~materially adversely affect us. ● ~~Because~~Our ofblock-building ~~our~~operations ~~involvement~~depend inon ~~staking~~highly ofcompetitive ~~crypto~~transaction ~~assets~~execution ~~through~~markets, ~~delegations~~including asproposer-builder ~~part~~separation of(“PBS”), ~~our~~MEV ~~StaaS~~relay ~~strategy~~ecosystems, weand ~~are~~access ~~subject~~ to ~~risks~~transaction ~~inherent~~flow, inand ~~engaging~~changes in ~~activities~~these ~~involving~~markets ~~financial~~could ~~instruments~~materially ~~owned~~adversely byaffect ~~third-party users, notwithstanding the non-custodial nature of~~ our ~~operations management believes to constitute meaningful distinctions for regulatory, compliance and other purposes~~results. ● AOur ~~particular~~DeFi ~~crypto~~activities, ~~asset’s~~including ~~status~~ETH-backed asborrowing aand ~~“security”~~liquidity ~~in any relevant jurisdiction is subject to a high degree of uncertainty~~deployment, ~~and~~expose ifus ~~we are unable~~ to ~~correctly~~smart ~~characterize~~contract ~~a crypto asset~~risks, weprotocol ~~may~~governance ~~be subject to regulatory scrutiny~~risks, ~~investigations,~~liquidity ~~fines~~risks, ~~sanctions, penalties~~ and ~~other~~potential ~~adverse~~liquidation ~~consequences,~~events ~~including~~that ~~potentially~~could ~~becoming~~result ~~subject~~in ~~to the Investment Company Act of 1940 which would impose~~ significant ~~regulatory burdens and compliance costs~~losses. ● ~~Crypto~~We ~~assets~~rely ~~and~~on ~~our~~third-party ~~related~~infrastructure ~~activities~~providers, ~~are~~decentralized ~~characterized~~protocols, byand ~~numerous~~ other ~~risks~~ecosystem ~~and uncertainties~~participants, ~~including~~and ~~the possibility for adverse developments such as regulatory actions~~disruptions, ~~bans or restrictions~~failures, ~~declines in the price of, demand for~~ or ~~public~~regulatory ~~perception~~actions ofaffecting ~~crypto~~these ~~assets,~~third ~~theft,~~parties ~~fraud,~~could ~~hacking,~~materially ~~manipulation~~adversely oraffect ~~malicious~~our ~~coding,~~business. ~~price~~● ~~volatility,~~Our ~~the~~operations ~~potential~~depend ~~for~~on ~~one~~access ~~cryptocurrency~~ to ~~branch~~banking ~~into~~services ~~two,~~and ~~variations~~financial ~~among~~infrastructure, and ~~the~~disruptions ~~potential for adverse changes~~ to ~~blockchain~~these ~~algorithms,~~relationships ~~and~~could ~~other~~materially ~~external~~adversely ~~forces~~affect ~~beyond~~ our ~~control described more fully below~~business. ● The ~~future~~regulatory ~~development~~landscape ~~and growth of cryptocurrencies is subject to a variety of factors that are difficult to predict and evaluate, and the market~~ for ~~the~~digital ~~crypto~~ assets, weblockchain ~~obtain~~infrastructure, ~~and hold may not grow as we expect or the prices may decline~~DeFi, ~~including~~and ~~due~~related toactivities ~~political or economic crises or other factors which we neither predict nor control. ● The cryptocurrency space~~ is ~~subject~~rapidly ~~to continuous regulatory uncertainty~~evolving, and ~~any adverse~~ regulatory ~~changes or other~~ developments ~~with respect to our operations~~ or ~~the~~enforcement ~~crypto~~actions ~~assets~~could ~~with~~materially ~~which~~adversely weaffect ~~transact may require us to alter~~ our business ~~model or suspend or cease some or all of our operations~~. ● ~~Our~~We ~~focus~~may onbe ~~PoS~~subject ~~blockchain networks exposes us~~ to ~~risk~~cybersecurity ofincidents, ~~loss~~digital ~~due~~asset ~~to features unique to those networks~~theft, ~~including~~loss ~~by virtue~~ of ~~being~~private ~~locked~~keys, inand byother ~~smart~~security ~~contracts~~risks, ~~such~~and ~~that~~ we ~~cannot~~do ~~liquidate~~not amaintain ~~portion~~insurance ofcovering ~~the~~losses ~~relevant crypto assets for a period~~ of ~~time~~digital ~~during and after the staking process, during which the price or value of the crypto~~ assets ~~may depreciate~~. ● We ~~are~~depend ~~subject~~on tokey ~~various~~personnel, ~~other risks~~ and ~~uncertainties~~the ~~relating to our StaaS and other elements of our business, including potential~~ loss of ~~revenue~~services ~~if we experience excessive removal~~ of ~~delegated crypto assets on~~ our ~~validator~~executive ~~nodes,~~officers ~~potential~~or ~~shifts in the block building landscape, and competitive forces for Ethereum and~~ other ~~crypto~~highly ~~assets~~skilled ~~for~~employees ~~which~~could ~~our~~materially ~~services~~harm ~~are offered, technical failures, bugs, or vulnerabilities in~~ our ~~block builder software, and our efforts with respect to new features and services which were recently launched or are still under development~~business. ● Our stock price has inbeen ~~the past~~ and may incontinue ~~the~~to ~~future~~ be ~~subject to significant volatility due to a variety of factors~~volatile, ~~many~~and ofinvestors ~~which are beyond our control, including its potential connection to the price of one or more of the crypto assets with which we are or~~ may ~~become~~experience ~~involved~~substantial losses.

Risks Related to Our Business Model, Strategy, and Operating Environment

We operate in a rapidly evolving industry, and our business model and strategy may not be successful.

BTCS operates in blockchain infrastructure and decentralized finance (“DeFi”) markets that are characterized by rapid technological change, evolving market structures, shifting participant behavior, and significant market volatility. Our business model depends on our ability to operate and scale revenue-generating blockchain infrastructure activities, including validator node operations and block building, and to deploy digital assets into DeFi protocols. There can be no assurance that our operating model will continue to generate revenue at levels consistent with our expectations or that we will be able to achieve or maintain profitability.

Our results of operations may be materially affected by changes in Ethereum network activity, transaction fee dynamics, block-building market structure, protocol economics, competition, regulatory developments, and broader market conditions. We may also be required to invest significant resources in technology, security, compliance, and personnel to remain competitive.

Our business is highly dependent on Ethereum, and our concentration in ETH exposes us to significant risks that could materially adversely affect our business, financial condition, and results of operations.

A substantial portion of our operations are conducted on the Ethereum network, including validator node operations, block building, and DeFi activities, and we hold a substantial majority of our digital assets in ETH. Our financial condition, liquidity, and results of operations are materially dependent on the market price of ETH and the continued adoption and development of the Ethereum ecosystem. Our future performance depends in significant part on the continued adoption, use, and development of Ethereum, including its ability to scale transaction throughput, maintain network security and decentralization, support decentralized applications, attract and retain developers, and sustain user and institutional adoption. Ethereum is an open-source, decentralized network that is not controlled by any single entity, and its development and governance are conducted through a community-driven process. We have no ability to control the direction, pace, or outcome of Ethereum’s development, and changes to the Ethereum protocol or ecosystem may be implemented without our input or consent.

The Ethereum network faces competition from other blockchain networks, including established networks and emerging technologies. Competing networks may offer faster transaction speeds, lower fees, different security models, or other features that attract users, developers, and capital away from Ethereum. If Ethereum fails to maintain its competitive position, loses market share to competing networks, or experiences a sustained decline in developer activity, transaction volume, or total value locked in DeFi protocols, the economic value of our Ethereum-based operations could be materially reduced. In addition, the emergence of new technologies, such as alternative consensus mechanisms, cross-chain interoperability solutions, or entirely new blockchain architectures, could reduce the relevance or utility of Ethereum over time.

ETH has historically experienced significant price volatility and may continue to do so in the future. A sustained decline in the price of ETH, increased volatility, reduced liquidity, or adverse market sentiment could materially reduce the value of our digital asset holdings, impair our ability to raise capital, reduce revenue from our operations, and adversely affect our liquidity and ability to fund operations. In addition, adverse developments specific to Ethereum, including protocol changes, security incidents, reduced network activity, increased competition from other networks, regulatory actions, or changes in transaction execution markets, could materially adversely affect the profitability and scalability of our operations. Any decline in Ethereum adoption, transaction activity, network security, developer engagement, or ecosystem growth could reduce the economic value of block building, validator rewards, and DeFi opportunities. Because we have concentrated our operations on the Ethereum network, and hold a substantial majority of our digital assets in ETH, we may be less able to adapt to adverse developments affecting Ethereum than competitors with more diversified blockchain infrastructure operations, or digital asset holdings, and any sustained deterioration in the Ethereum ecosystem could have a disproportionate impact on our business.

We may not be able to successfully execute our strategy to scale our blockchain infrastructure operations and DeFi activities.

Our growth strategy includes expanding our Builder+ block building operations, maintaining and optimizing our validator node operations, and increasing digital asset deployments through Imperium. This strategy requires significant operational execution, infrastructure scaling, ongoing technology development, and disciplined capital allocation.

If we are unable to execute this strategy, including by failing to scale efficiently, manage risks, secure access to transaction flow, or deploy capital effectively, our revenues and profitability could be materially adversely affected.

We may be required to sell digital assets to fund operations, meet obligations, or respond to market conditions, which could result in realized losses and adversely affect our financial condition and results of operations.

We may, from time to time, sell digital assets to fund operations, meet obligations, manage liquidity, satisfy margin or collateral requirements, repay borrowings, or respond to adverse market conditions. We do not have a formal policy governing the timing, amount, or circumstances of digital asset sales, and such decisions are made by management based on operational needs, market conditions, and other factors. If we sell digital assets during periods of unfavorable market conditions or declining prices, we may incur realized losses that could materially reduce our net income or increase our net loss. In addition, sales of digital assets reduce the amount of assets available to support our revenue-generating activities, including staking, block building, and DeFi deployments, which could reduce future revenues.

We may also be required to sell digital assets at inopportune times to meet financial obligations, including obligations under our Senior Convertible Notes or DeFi borrowing arrangements. For example, if we experience a liquidity shortfall, a DeFi liquidation event, or an acceleration of amounts owed under our Senior Convertible Notes, we may be forced to sell digital assets rapidly and at unfavorable prices to satisfy such obligations. Forced sales during periods of market stress could result in significant realized losses and could further impair our liquidity and financial condition.

Digital asset market disruptions, exchange failures, or loss of liquidity could impair our ability to access or convert digital assets.

Digital asset markets may experience disruptions, reduced liquidity, operational failures, or insolvencies of centralized exchanges or other market participants. Such events could limit our ability to convert digital assets into cash or stablecoins, impair our ability to manage collateral, and materially adversely affect our liquidity.

Risks Related to Validator Node Operations (NodeOps)

Our validator node operations, including operations through pooled staking protocols, depend on reliable infrastructure, may be subject to reduced rewards, penalties, or slashing.

Validator node operations require continuous uptime, accurate performance, and secure infrastructure. If our validator nodes fail to perform properly due to software errors, misconfiguration, infrastructure outages, cybersecurity incidents, or other disruptions, we may earn reduced staking rewards and could be subject to penalties or slashing.

Slashing is a protocol-level penalty mechanism that can result in the loss of a portion of staked ETH. Any slashing event could result in a loss of digital assets and harm our business and reputation.

Risks related to our validator node operations through pooled staking protocols such as Rocket Pool could adversely affect our business, results of operations, and financial condition.

A portion of our validator node operations are conducted through pooled staking protocols, including Rocket Pool, where we contribute a portion of the ETH required to activate a validator and the remaining ETH is provided through protocol smart contracts funded by third-party participants. This operating structure exposes us to additional risks beyond traditional self-funded validator operations, including risks associated with smart contract performance, protocol design, and the actions of third-party participants.

If Rocket Pool or similar protocols experience smart contract vulnerabilities, governance changes, operational failures, liquidity constraints, or other disruptions, our ability to operate validator nodes, earn staking rewards, or access staked ETH may be adversely impacted. Changes to protocol parameters, incentive structures, or validator selection mechanics could reduce the profitability of these operations or increase the risks associated with participation. Because these protocols operate through autonomous smart contracts and decentralized governance, we may have limited ability to influence outcomes or mitigate losses in the event of protocol failure.

Changes to Ethereum staking economics, validator requirements, or protocol rules could reduce our staking revenues.

Ethereum protocol upgrades or changes may affect staking reward rates, validator requirements, penalties, withdrawal mechanics, minimum staking amounts, or other economic factors. The Ethereum community and core developers periodically implement protocol upgrades through a governance process that we do not control. Such changes could reduce the profitability of our validator operations, increase operational complexity, require additional capital investment, or materially adversely affect our results. In addition, future protocol changes could alter the competitive dynamics among validators or introduce new requirements that favor certain types of participants over others.

Staked ETH may be subject to withdrawal delays or other constraints that could adversely affect liquidity.

ETH staked in validator operations may be subject to protocol-level withdrawal queues, exit delays, or other technical constraints. During periods of network congestion or market stress, we may be unable to withdraw staked ETH in a timely manner, which could adversely affect liquidity and our ability to respond to market conditions.

Risks Related to Block Building (Builder+), MEV, and Transaction Execution

Our Builder+ revenues depend on highly competitive and rapidly evolving transaction execution markets.

Block building is a highly competitive activity where builders compete to assemble and submit optimized blocks. Our ability to earn revenue through Builder+ depends on our technology, infrastructure performance, latency, algorithm optimization, and our ability to consistently construct blocks selected by validators. The block-building market is characterized by rapid technological change, and competitors may deploy advanced algorithms, artificial intelligence, machine learning, or other technologies that improve their competitive position relative to ours. If we are unable to keep pace with technological developments or maintain competitive infrastructure performance, our block inclusion rates and revenues could decline.

Competitive dynamics may change rapidly, and we may be unable to maintain or improve our position. Increased competition may reduce margins, reduce block inclusion rates, or require increased payments to validators or other participants.

Our Builder+ operations depend on the continued functioning and adoption of the broader block-building and MEV relay ecosystem, and disruptions to that ecosystem could materially reduce our revenues.

Our block-building operations depend on the continued functioning of Ethereum’s proposer-builder separation (PBS) architecture and the related ecosystem of relays, validators, and transaction sources. The builder ecosystem is highly competitive and relies on third-party participants, including relays and validators, to transmit blocks and include them on-chain.

~~Risks~~If ~~Related~~relays, validators, or other critical participants modify their policies, restrict access, experience outages, impose additional requirements, or discontinue support for certain builders, our ability to ~~Our~~deliver ~~Company~~blocks competitively and generate execution-layer rewards may be adversely affected. In addition, changes in ~~General~~Ethereum protocol rules, validator behavior, relay concentration, or market structure could change the economics of block building or limit the effectiveness of our strategies.

WeBecause block ~~have~~building is a ~~history~~rapidly evolving market, the continued viability of ~~operating~~our ~~losses~~Builder+ ~~and~~operations ~~expect~~depends in part on factors outside of toour ~~incur~~control, ~~additional~~and ~~operating~~adverse ~~losses~~developments ascould wematerially ~~scale~~reduce ~~our~~revenues ~~business~~and operating results.

~~BTCS has operated as a publicly~~Changes ~~traded company for over a decade and commenced its blockchain infrastructure operations in 2021. While the Company continues~~ to ~~expand its business model,~~ the ~~blockchain~~Ethereum ~~and~~protocol ~~cryptocurrency~~could ~~industries~~adversely ~~remain~~affect ~~highly dynamic and subject to rapid technological, regulatory, and market changes. As a result, there is uncertainty regarding~~ the ~~future~~economics ~~profitability~~ of our Builder+ operations.

WeEthereum’s protocol ~~incurred~~continues ato ~~net~~evolve ~~loss~~through ofperiodic ~~$1.3 million~~upgrades ~~for~~and ~~the~~design ~~year~~changes ~~ended~~that ~~December~~may ~~31,~~affect ~~2024~~transaction execution, ~~and~~block weconstruction, validator ~~expect~~behavior, toand ~~incur~~the ~~additional~~distribution ~~losses~~of inrewards within the ~~near~~network. ~~term~~Future asprotocol weupgrades ~~invest~~or inchanges ~~scaling~~to ~~our~~ Ethereum’s transaction processing or block construction mechanisms could reduce block-building ~~operations~~opportunities, ~~under~~alter ~~Builder+~~the availability or distribution of transaction fees and ~~expanding~~other ~~NodeOps~~block-related ~~validator~~revenues, ~~operations.~~or ~~The~~otherwise ~~amount~~materially ~~and~~change ~~timing~~the economics of ~~future~~our ~~losses,~~Builder+ ~~and~~operations. ~~whether we~~Any ~~will~~such ~~ultimately~~changes ~~achieve~~could adversely ~~sustained~~affect ~~profitability,~~our ~~remain~~revenues ~~uncertain~~and operating results.

Our ~~ability to achieve profitability depends on various factors, including~~ ~~successfully~~block-building ~~scaling~~activities ~~our~~may ~~Builder+~~be ~~operations,~~subject ~~improving~~to ~~margins,~~reputational ~~securing greater order flow~~risks, ~~and managing infrastructure costs efficiently. If we fail to execute our business plan effectively or encounter unexpected challenges in the~~ regulatory, ~~competitive~~scrutiny, ~~or technological landscape, our business, financial condition,~~ and ~~results~~evolving ofmarket ~~operations could be materially adversely affected~~norms.

WeBlock ~~have~~building aninvolves ~~evolving~~determining ~~business~~the ~~model~~order in which wetransactions are included in a block before submitting it to the network. In some cases, the ordering or selection of transactions may beallow ~~unable~~builders to ~~develop~~capture additional transaction-related value. Certain participants in the blockchain ecosystem view some of these practices as controversial or potentially unfair. As a result, ~~adapt~~regulators, network participants, or ~~execute~~other ~~effectively~~stakeholders may increase scrutiny of block-building activities or advocate for changes to market practices or protocol rules. If our block-building activities are perceived negatively or become subject to regulatory action or changing industry norms, our reputation, relationships with ecosystem participants, and ability to operate could be adversely affected.

AsRisks ~~crypto~~Related ~~assets and blockchain technologies continue~~ to ~~develop~~DeFi ~~and~~Operations ~~achieve wider adoption~~(Imperium), weSmart ~~expect the associated services and products to evolve rapidly and potentially in unpredictable ways. The SEC has brought enforcement actions with respect to crypto assets and related activities~~Contracts, ~~including custodial staking-as-a-service models,~~ and ~~the~~Protocol SEC and courts have issued further orders and guidance as the crypto asset industry continues to develop and evolve, as more particularly described later in these Risk Factors. These or future developments may force or cause us to potentially change our future business in order to comply fully with the federal securities laws as well as applicable state securities laws. As a result, to stay current with the industry, our business model may need to evolve in the future as well. From time to time we may modify aspects of our business model relating to our product mix and service offerings. Our goals related to investments into development efforts may not come to fruition, including due to adverse developments in regulatory, technological, competitive or other aspects that are beyond our control. As the crypto industry and technology surrounding it continues to develop, new market entrants offering the same, similar or alternative products and services to ours could arise, challenging our business model and market share. For example, disruptive technologies such as generative artificial intelligence (AI) may fundamentally alter the use of crypto assets and related infrastructure in unpredictable ways.Participation

~~Because~~Our ofparticipation ~~the~~in ~~foregoing~~DeFi ~~realities~~protocols and ~~uncertainties~~pooled ~~surrounding~~staking ~~our~~arrangements ~~business~~exposes ~~and~~us ~~industry, we may invest substantial resources towards developing additional ChainQ platform features, or new offerings such as Builder+, that ultimately fail~~ to ~~achieve~~smart ~~the~~contract ~~goals or benefits sought~~risk, or ~~need~~oracle ~~to be suspended~~risk, ~~due~~governance ~~to competitive~~risk, ~~regulatory, technological or other conditions or developments beyond our control. Further,~~and ~~any~~protocol ~~success~~failure ~~we have achieved or may in the future achieve towards our goal could be stifled by these forces~~risk, ~~particularly if we are unable to adequately or quickly adapt to them,~~ which could render some or all of our offerings obsolete. We cannot offer any assurance that our current business plan or any other modifications or undertakings with respect thereto will be successful or will not result in ~~harm to~~ the ~~business.~~loss In addition, we may not be able to manage our growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. If we are unable to effectively develop, execute and adjust our business plan, or successfully manage our growth, you could lose some or all of ~~your~~digital ~~investment~~assets.

~~The~~Our ~~loss~~operations ofinvolve ~~our~~deploying ~~executive~~digital ~~officers~~assets into decentralized finance protocols and pooled staking arrangements that rely on smart contracts to facilitate lending, borrowing, liquidity provision, staking, and other on-chain activities. Smart contracts may contain coding errors, vulnerabilities, or design flaws that could be exploited by malicious actors or result in unintended outcomes. Although we seek to deploy assets only to protocols that have undergone third-party security audits, such audits do not guarantee the absence of vulnerabilities, and previously audited protocols have experienced exploits resulting in significant losses. In addition, DeFi protocols and pooled staking arrangements may be subject to governance decisions, parameter changes, or upgrades that adversely affect revenue, liquidity, or the ability to withdraw assets. We may have limited or no ability to reverse transactions, recover assets, or seek recourse in the event of a ~~material~~smart ~~adverse~~contract ~~effect~~exploit onor usprotocol failure.

~~Our~~DeFi ~~success~~protocols ~~depends~~and onpooled ~~the~~staking ~~continued~~arrangements ~~services~~may ofalso ~~our~~experience ~~executive~~oracle ~~officers~~failures, ~~who~~liquidity ~~have~~shocks, ~~extensive~~or ~~technological~~cascading ~~and~~liquidations ~~market~~that ~~knowledge and long-standing~~impair ~~industry~~the ~~relationships.~~functioning Inof ~~particular,~~the weprotocol ~~have~~or ~~relied~~result ~~and~~in ~~will~~losses. ~~continue~~DeFi tolending protocols rely on ~~Charles~~price ~~Allen,~~oracles ~~our Chairman~~ and ~~Chief~~automated ~~Executive~~smart ~~Officer, Michal~~contract ~~Handerhan~~mechanisms, ~~our Chief Operating Officer,~~ and ~~Michael~~oracle ~~Prevoznik~~failures, ~~our Chief Financial Officer~~manipulation, toor ~~continue~~delays ~~and~~could ~~grow~~trigger ~~our~~liquidations ~~operations and~~or ~~execute our business plan~~mispricing. ~~Our~~If ~~reputation~~a ~~among~~protocol ~~and~~in ~~our~~which ~~relationships~~we ~~with~~participate ~~key cryptocurrency industry leaders are the direct result~~experiences of a ~~significant~~failure, ~~investment~~exploit, ofor ~~time~~other ~~and~~adverse ~~effort~~event, bywe ~~these~~may ~~individuals~~lose tosome ~~build~~or ~~our~~all ~~credibility in a highly specialized industry. The loss~~ of ~~services~~the ofdigital ~~any~~assets ofdeployed ~~our~~in ~~executive~~that ~~officers~~protocol, which could materially ~~and~~ adversely affect our ~~business~~financial ~~and~~condition ~~growth opportunities, including by damaging our relationships with key leaders in the crypto asset industry, disrupting our operations,~~ and ~~impairing~~results ~~our~~of ~~ability to execute our business strategy~~operations.

~~Financial institutions may refuse to provide~~DeFi ~~banking~~revenue ~~services~~is tovariable, ~~businesses~~may ~~engaged in cryptocurrency-related activities~~decline, and ~~broader~~may ~~financial~~not ~~sector~~be ~~instability could materially and adversely affect us and our industry~~sustainable.

~~Companies operating in the cryptocurrency~~Revenue ~~sector,~~generated ~~including~~through ~~blockchain~~DeFi ~~infrastructure~~protocols ~~providers~~are ~~like~~variable ~~BTCS, have historically faced challenges in securing~~ and ~~maintaining~~depend ~~banking relationships.~~on ~~Some~~market ~~financial~~conditions, ~~institutions~~protocol ~~remain~~utilization, ~~hesitant~~interest ~~to provide services to businesses engaged in crypto asset activities due to regulatory uncertainty~~rates, ~~compliance concerns~~liquidity, and ~~perceived risks associated with digital assets~~participant behavior. ~~This~~Revenue ~~reluctance~~may ~~could~~decline ~~limit~~as ~~our ability~~additional tocapital ~~access~~enters ~~essential~~protocols, ~~banking~~as ~~services,~~protocol ~~process~~economics ~~transactions~~change, or ~~efficiently~~as ~~convert~~market ~~crypto~~demand ~~assets to fiat currency~~shifts. ~~If financial institutions restrict or discontinue banking services for crypto-related businesses, it could disrupt our operations and negatively impact our liquidity and financial position.~~

~~Additionally, broader financial~~DeFi ~~instability,~~protocols ~~market~~may ~~volatility,~~change ortheir changes in banking regulations that restrict financial institutions from servicing cryptocurrency-related businesses could have adverse consequences for BTCS and the broader industry. Increased scrutiny from regulatorsrules, ~~de-risking by banks~~parameters, or ~~policy~~governance ~~shifts~~decisions ~~that~~in ~~limit~~ways ~~financial~~that ~~sector~~adversely ~~engagement~~affect ~~with~~our ~~digital assets could create barriers to capital access, slow industry growth, and harm public perception of cryptocurrencies as a legitimate financial system~~revenue.

IfMany DeFi weprotocols are ~~unable~~governed toby ~~obtain~~decentralized ~~or maintain~~governance ~~adequate~~mechanisms. ~~banking~~Governance ~~relationships,~~decisions we may ~~experience~~change ~~delays~~protocol inparameters, ~~financial~~economics, ~~transactions~~collateral requirements, ~~incur~~supported ~~increased costs~~assets, or ~~face~~other ~~operational inefficiencies~~features. ~~that~~Such changes could ~~materially~~reduce ~~and~~revenue, ~~adversely~~increase ~~affect our business~~risk, ~~financial~~ ~~condition,~~or ~~and~~result ~~results~~in ofadverse ~~operations~~outcomes.

Risks Related to ETH-Backed DeFi Borrowing, Leverage, and Liquidation

Our ETH-backed borrowings through DeFi protocols subject us to liquidation risk and declines in ETH prices or adverse protocol conditions could result in forced liquidations, material losses, and potential defaults under our Senior Convertible Notes.

We have utilized decentralized finance protocols, including Aave, to borrow stablecoins collateralized by ETH. These borrowings are governed by smart contracts that require collateralization levels to be maintained above specified thresholds. Our outstanding borrowings through Aave currently exceed the limited exception provided under the terms of our Senior Secured Convertible Promissory Notes (the “Senior Convertible Notes”) for up to $750,000 of Aave borrowings. If the value of ETH declines, market volatility increases, borrowing rates rise, or protocol-level parameters change, our collateral ratios may deteriorate.

If our collateral ratios fall below required thresholds, the protocol may automatically liquidate a portion of our posted ETH collateral. Such liquidations may occur rapidly and without our consent, potentially at unfavorable prices, and may result in realized losses, reduced ETH holdings, reduced liquidity, or adverse impacts to our ability to operate and scale our business. In addition, periods of extreme market volatility or network congestion may impair our ability to add collateral, repay borrowings, or otherwise manage positions in a timely manner. Because liquidation mechanics are executed through automated smart contracts and market-based liquidators, the timing and extent of liquidation events may be difficult to predict or prevent.

A default or liquidation event related to our DeFi borrowings could constitute an “Event of Default” under the Senior Convertible Notes. This risk is compounded by ETH price volatility, as a significant decline in ETH prices could simultaneously trigger DeFi liquidations and an Event of Default under the Senior Convertible Notes, resulting in cascading adverse effects on our liquidity and financial condition. Upon an Event of Default, the holders of the Notes may exercise remedies available under the Notes and related financing documents, including acceleration of amounts owed and enforcement of security interests. Any such actions could materially and adversely affect our liquidity, financial condition, and results of operations.

Variable interest rates and protocol-level changes may increase our cost of capital.

Interest rates in DeFi lending protocols are variable and may change rapidly based on utilization and liquidity. Protocol changes or market conditions could increase borrowing costs and reduce the economic attractiveness of borrowing strategies.

Risks Related to Capital Markets, Financing Strategy, and Dilution

Our ability to raise capital may be limited, and we may need additional capital to execute our strategy.

Our growth strategy, including the expansion of our validator node operations, block-building activities, and DeFi deployments, may require additional capital beyond our current resources and cash flows from operations. We may also require additional capital to fund operating losses, respond to competitive pressures, pursue strategic acquisitions or investments, develop new products or services, or respond to unanticipated challenges or opportunities. Our ability to raise capital through equity offerings, debt financing, or other means depends on numerous factors, many of which are beyond our control, including:

	●	prevailing market conditions for equity and debt securities, including interest rates, credit spreads, and investor demand;

	●	investor sentiment toward digital asset-related companies, which may be adversely affected by regulatory developments, market volatility, or high-profile failures of other industry participants;

~~Risks Related~~● our stock price, trading volume, and market capitalization, which affect the attractiveness and feasibility of equity offerings; ● our financial condition, results of operations, and the value of our digital asset holdings; ● covenants and restrictions under our existing financing arrangements, including the Senior Convertible Notes; ● our ability to ~~Crypto~~maintain ~~Assets~~our listing on Nasdaq and comply with applicable listing standards; and ● regulatory developments affecting digital asset companies, capital markets, or our specific business activities.

~~General~~If ~~Risks~~we ~~Related~~are unable to ~~Crypto~~raise ~~Assets~~additional capital when needed, or if capital is only available on terms that are highly dilutive, restrictive, or otherwise unfavorable, we may be required to significantly reduce or delay our growth initiatives, curtail operations, sell digital assets at unfavorable prices, or pursue strategic alternatives, any of which could materially adversely affect our business, financial condition, and results of operations. In addition, our inability to raise capital could limit our ability to respond to competitive pressures or pursue strategic opportunities, which could weaken our competitive position over time.

~~Market~~Our ~~Volatility~~business depends on access to banking services and ~~Adoption~~financial ~~Risks~~infrastructure and the loss of banking relationships could materially adversely affect our business.

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~~The~~Sales ~~value~~ of ~~crypto~~our ~~assets~~common isstock ~~subject~~through to extreme volatility due to various factors, including but not limited to: (i) market demand, (ii) regulatory developments, (iii) macroeconomic trends and monetary policies, and (iv) technological advancements and security vulnerabilities, and (v) market manipulation risks. Significant price declines in crypto assets can adversely affect our ~~ability~~ATM toprogram ~~generate~~or ~~revenue from staking and~~ other ~~blockchain infrastructure~~offerings ~~operations, as these activities are directly dependent on the valuations of the underlying assets. Additionally, prolonged periods of price volatility or declines~~ may ~~reduce~~result ~~market confidence, decrease participation~~ in ~~staking~~substantial ~~and~~dilution ~~validator services,~~to ~~and~~existing ~~impact our financial condition~~shareholders. ~~If the value of the crypto assets we stake or own decreases significantly, it could materially and adversely affect our business, results of operations, and prospects.~~

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There is a lack of liquid markets, and possible manipulation of blockchain/cryptocurrency-based crypto assets.

Crypto assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets. Stock exchanges have listing requirements and vet issuers; requiring them to be subjected to rigorous listing standards and rules, and monitor investors transacting on such platform for fraud and other improprieties. These conditions may not necessarily be replicated on a distributed ledger platform, depending on the platform’s controls and other policies. The laxer a distributed ledger platform is about vetting issuers of cryptocurrency assets or users that transact on the platform, the higher the potential risk for fraud or the manipulation of the ledger due to a control event. These factors may decrease liquidity or volume or may otherwise increase volatility or other assets trading on a ledger-based system, which may adversely affect us. Such circumstances could adversely affect an investment in us.

Political or economic crises may motivate large-scale sales of crypto assets, which could result in a reduction in crypto asset values and adversely affect an investment in us.

Geopolitical or economic crises may motivate large-scale sales of crypto assets, which could rapidly decrease the price of crypto assets. Such events include recessions, rising inflation, tariffs, social, political and economic risks, conflicts, acts of war and sanctions and other restrictive actions by the United States and/or other countries. For example, market analysts have indicated that in some cases, such as during large scale adverse economic events, trading and market prices of cryptocurrencies such as Bitcoin and Ethereum have correlated to some extent with the movement of equity markets, regardless of the stock or asset class. As an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment in crypto assets as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.

As an alternative to fiat currencies that are backed by central governments, crypto assets such and Ethereum, which is relatively new, is subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of crypto assets either globally or locally. Large-scale sales of crypto assets would result in a reduction in crypto asset values and could adversely affect an investment in us.

~~Regulatory~~Our Senior Convertible Notes may result in dilution and ~~Legal~~contain ~~Risks~~provisions that may adversely affect shareholders.

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ARisks ~~particular~~Related ~~crypto asset’s status as a “security” in any relevant jurisdiction is subject~~ to ~~a high degree of uncertainty~~Cybersecurity, ~~with~~ ~~a growing number of regulators taking the position that certain crypto assets are securities and bringing enforcement actions accordingly~~Custody, ~~and~~ ~~if we are unable to properly characterize a crypto asset or comply with the applicable regulatory requirements, we may be subject to regulatory scrutiny, investigations, fines,~~ and ~~other~~Digital ~~penalties,~~Asset ~~which may adversely affect our business, operating results, and financial condition.~~Security

~~The~~If ~~SEC~~we ~~and~~experience ~~its staff have taken the position that certain crypto assets fall within the definition of~~ a ~~“security”~~cybersecurity ~~under the U.S. federal securities laws. Legal tests to determine whether a crypto asset is a security have been established by the U.S. Supreme Court case law and the SEC has issued reports~~incident, ~~orders~~theft, ~~and~~loss ~~statements that provide guidance on when a crypto asset may be a security for purposes~~ of ~~the~~private ~~U.S.~~keys, ~~federal~~or ~~securities~~compromise ~~laws. The process~~ of ~~determining~~wallet ~~whether~~controls, awe ~~specific~~could ~~crypto~~lose ~~asset~~digital ~~qualifies~~assets ~~as a security~~and ~~involves~~suffer asignificant ~~nuanced analysis open to interpretation, making the outcome uncertain and challenging to predict~~harm.

~~Despite~~Digital ~~regulatory~~assets ~~developments~~are incontrolled ~~this~~through ~~field~~cryptographic private keys and are subject to theft, loss, unauthorized access, and cybersecurity risks. If we lose access to private keys, experience a compromise of wallet infrastructure or access controls, or suffer a cybersecurity breach affecting our systems or those of our service providers, we may lose some ~~ambiguity~~or ~~persists~~all of our digital assets. Such losses could be immediate, irreversible, asand ~~the~~unrecoverable. ~~identification~~The security of ~~crypto~~digital assets asdepends ~~securities~~on the continued integrity of our private key management practices, including the use of multi-signature authorization, hardware security modules, cold storage, and access control procedures. A failure in any of these safeguards, whether due to human error, insider threat, social engineering, technical malfunction, or ~~otherwise~~external ~~can~~attack, becould aresult ~~complex~~in ~~matter~~the permanent loss of digital assets.

~~Moreover,~~In ~~based~~addition, ~~upon~~our ~~decided~~ability ~~federal~~to ~~court~~respond ~~cases,~~to itand ~~appears~~recover ~~that~~from ~~the~~a ~~federal~~cybersecurity ~~courts~~incident ofdepends ~~appeals~~on our incident response capabilities, ~~and~~business continuity ~~possibly~~planning, and the Ueffectiveness of our security monitoring and detection systems.S. ~~Supreme~~If ~~Court~~we fail to detect, ~~may~~contain, ~~ultimately~~or remediate ~~settle~~a ~~unresolved~~security ~~legal~~incident ~~issues~~in ~~with~~a ~~respect~~timely tomanner, the ~~identification~~scope and magnitude of ~~certain~~losses ~~crypto~~could ~~assets~~be assignificantly ~~securities~~greater. We may also be required to expend significant resources to investigate and remediate any security incident, implement additional protective measures, and address any resulting regulatory inquiries, litigation, or reputational harm.

InWe ~~separate~~rely ~~SEC~~on ~~complaints,~~third-party ~~the SEC has alleged several crypto assets we hold~~vendors, ~~specifically~~service ~~Cardano~~providers, ~~Tezos, Solana, Cosmos, Polygon, Axie Infinity,~~ and ~~NEAR~~infrastructure ~~Protocol are securities. Based on our current legal analysis~~providers, while the SEC’s identification of certain crypto assets held by us as securities could have a material adverse impact on our business, this conclusion is subject to significant uncertainty given the rapidly evolving regulatory landscape, financial condition, and ~~results~~disruptions ~~of operations. However, if our conclusions~~ or ~~any~~failures ~~part~~involving ~~thereof~~these ~~turn~~third ~~out to be incorrect, or new adverse regulatory developments occur, we~~ parties could bematerially adversely ~~impacted~~ ~~and/or~~affect ~~be forced to modify or cease certain aspects of~~ our ~~current and planned operations and~~ business.

We rely on third-party vendors and service providers to support certain aspects of our operations, including cloud hosting and infrastructure, digital asset wallet infrastructure, access controls, transaction signing, transaction workflows, software and security tooling, professional services, and other operational functions. These providers may have access to or control over components of our security infrastructure, and we depend on their continued performance, security practices, and operational reliability. While we seek to select reputable providers and implement safeguards, we do not control these third parties and may not be able to ensure their continued performance, reliability, security, or compliance with applicable laws. We may have limited visibility into, or control over, the security practices and internal controls of our third-party providers, and we cannot guarantee that their systems will remain secure or that they will meet their contractual obligations.

Disruptions, outages, performance degradation, cybersecurity incidents, security breaches, service interruptions, or other failures by third-party providers could impair our ability to operate validator nodes, block-building infrastructure, and DeFi activities, and could adversely affect our ability to access, safeguard, or transfer digital assets. Such failures could result in lost revenues, increased costs, reputational harm, and potential regulatory scrutiny. In addition, if a third-party provider experiences financial distress, service termination, or operational constraints, we may be required to transition services to an alternative provider, which could be costly, time-consuming, and disruptive. Certain services may also be difficult to replace in the short term, and alternative providers may not be available on favorable terms, if at all.

InWe February 2023, the SEC charged Kraken with failing to register the offer and sale of its staking-as-a-service program, whereby investors transferred crypto assets to Kraken for staking in exchange for advertised annual investment returns. Kraken settled this action by agreeing to cease its custodial staking business and to pay $30 million in disgorgement, prejudgment interest, and civil penalties. While there are material distinctions between Kraken’s staking model and ours, including the fact that we do not ~~take~~maintain ~~custody~~insurance ofcoverage orfor ~~exert~~losses control over the crypto assets that are staked using our platform, the SEC could disagree with our assessment and seek to enforce the federal securities laws and regulations against our operations. If we become subject to regulatory scrutiny or enforcement actions by securities regulators, it could result in expensive litigation and penalties and cessation of ~~the~~digital allegedly noncompliant operations, which would materially adversely harm us, including due to our recent shift of focus to our non-custodial staking-as-a-service business and the costs and efforts deployed towards its development. These or additional developments that may arise underscore the risks in our business, particularly its reliance on the use of crypto assets ~~and staking of users’ crypto asset holdings~~.

~~Further,~~We ~~certain~~do ~~crypto~~not ~~assets~~maintain ~~may~~any beinsurance ~~deemed~~policies tothat bewould acompensate ~~“security”~~us ~~under~~for the ~~laws~~loss of ~~some~~any ~~jurisdictions~~digital ~~but~~assets. ~~not~~Insurance ~~others.~~coverage ~~Various~~for ~~foreign~~digital asset ~~jurisdictions~~losses ~~may,~~is limited in ~~the future~~availability, ~~adopt~~may ~~additional~~be ~~laws,~~prohibitively ~~regulations~~expensive, orand ~~directives~~may ~~that~~not ~~affect~~cover ~~the~~all ~~characterization~~potential ofloss ~~crypto~~scenarios. ~~assets as~~Accordingly, ~~“securities.”~~if Asour digital aassets ~~result~~are oflost, ~~the~~stolen, ~~foregoing~~or ~~recent~~otherwise ~~and~~compromised ~~potential~~for ~~developments~~any reason, we ~~may~~would bebear ~~forced~~the ~~to,~~full oreconomic ~~voluntarily elect to~~loss, ~~limit,~~which ~~suspend~~could ormaterially and ~~cease~~adversely affect our ~~staking~~financial ~~services~~condition, ~~operations~~liquidity, orand ~~certain~~results ~~aspects~~of ~~thereof~~operations. inIn ~~order~~addition, toeven ~~comply~~if ~~with~~we ~~applicable~~had ~~laws~~insurance ~~and~~coverage ~~regulations~~in ~~and~~the ~~avoid~~future, ~~the~~policy ~~regulatory~~terms, ~~scrutiny~~exclusions, ~~and~~coverage ~~adverse~~limits, ~~consequences~~or ~~that~~claim disputes could ~~result~~limit our ability to recover losses.

~~While~~Risks weRelated ~~do not currently, nor do we plan~~ to, ~~offer~~Regulation, ~~sell,~~Legal ~~trade~~Uncertainty, and ~~clear~~Government crypto assets or take custody of crypto assets as part of any potential staking-as-a-service operations we may undertake, crypto assets we stake and validate transactions for could be deemed to be a “security” under applicable laws. This could be the case even if we conclude that our activities are compliant with these laws and regulations. Our blockchain infrastructure operations which entails securing blockchains by validating blockchain transactions (most analogous to Bitcoin mining) could be construed as facilitating transactions in crypto assets; as such we could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that a blockchain we secure is a “security” under applicable laws. Because our platform is not registered or licensed with the SEC or foreign authorities as a broker-dealer, national securities exchange, or ATS (or foreign equivalents), and we do not seek to register or rely on an exemption from such registration or license to secure blockchains. We recognize that the application of securities laws to the specific facts and circumstances of crypto assets is a complex and often unpredictable process and subject to change, and staking and securing a blockchain, while similar to Bitcoin mining, does not guarantee any conclusion under the U.S. federal securities laws, particularly given that each crypto asset and blockchain network is unique. Therefore, if we do conclude that a particular crypto asset is not a security on advice of our legal counsel, and the SEC or other government agencies or courts disagree with this assessment, we could be held liable for violation of securities laws. In addition, new laws may be implemented that prevent or hinder us from operating in the manner we currently conduct our business or plan to conduct our business, in which case our business may be materially harmed.Oversight

~~Further,~~The ifregulatory ~~any~~landscape ~~crypto asset is deemed to be a security under any U.S. federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences~~ for ~~such~~digital ~~crypto asset. For instance, the networks on which such crypto~~ assets ~~are utilized may be required to be regulated as securities intermediaries~~, ~~and~~blockchain ~~subject to applicable rules~~infrastructure, ~~which could effectively render the network impracticable for its existing purposes. Further~~DeFi, ~~it could draw negative publicity~~ and arelated ~~decline~~activities inis ~~the~~rapidly ~~general acceptance of the crypto asset. Also~~evolving, ~~such a development may make it difficult for such supported crypto assets to be traded, cleared,~~ and ~~custodied~~regulatory asdevelopments ~~compared to other crypto assets that are not considered to be securities. These events~~ could, ~~among~~materially ~~things,~~adversely ~~result~~affect ~~in a decline in the market prices for the crypto assets on which~~ our operations rely, and thereby reduce the demand for our solutions and the revenue generated therefrom. To the extent we hold crypto assets allegedly identified as securities by the SEC, it could have a material adverse effect on our business ~~and our stock price~~.

The legal and regulatory environment for digital assets, blockchain networks, DeFi protocols, and related activities remains uncertain and continues to evolve in the United States and internationally. Federal, state, and foreign regulators have taken and may continue to take actions that could materially affect the development, adoption, and use of digital assets and blockchain technologies.

Regulatory agencies, including the Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), the Financial Crimes Enforcement Network (“FinCEN”), the Office of Foreign Assets Control (“OFAC”), the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), state financial regulators, and foreign regulatory bodies have asserted or may assert jurisdiction over aspects of the digital asset ecosystem.

Changes in laws, regulations, enforcement priorities, or regulatory interpretations could adversely affect our ability to operate our business, access capital, deploy digital assets, participate in DeFi protocols, engage in block building, or conduct validator operations. Regulatory outcomes could also increase our compliance costs, require us to modify or terminate certain activities, or subject us to civil or criminal liability.

Digital assets, including ETH, are subject to evolving and uncertain regulatory classifications, and adverse regulatory developments, including classification of digital assets as securities or classification of the Company as an investment company under the Investment Company Act of 1940, could materially adversely affect our business.

Digital assets are subject to evolving and uncertain regulatory treatment under U.S. federal securities laws, commodities laws, and other regulatory frameworks. ETH, the primary digital asset we hold and use in our operations, is generally treated as a commodity for regulatory purposes, including by the CFTC and in connection with certain exchange-traded products approved by the SEC. However, the regulatory classification of digital assets remains unsettled and subject to ongoing debate among regulators, legislators, and market participants. The classification of any particular digital asset may change as a result of new legislation, regulatory rulemaking, enforcement actions, court decisions, or evolving interpretations by the SEC, CFTC, or other regulatory authorities.

If ETH or other digital assets that we hold, earn, or deploy were to be reclassified as securities, we and other ecosystem participants could become subject to significant regulatory requirements. Such requirements could include registration of digital assets as securities, registration as a broker-dealer or securities exchange, compliance with disclosure and reporting obligations, restrictions on trading and transferability, and limitations on who may purchase, hold, or transact in such assets. Any such determination could significantly reduce the liquidity, utility, and market value of ETH and other digital assets, disrupt our operations, and materially adversely affect our business and financial condition. In addition, if we were found to have violated securities laws by holding, transacting in, or facilitating transactions in unregistered securities, we could be subject to enforcement actions, penalties, disgorgement, and other remedies.

In addition, if certain digital assets or related instruments we hold or obtain through our operations were deemed “securities,” we could be deemed an “investment company” under the Investment Company Act of 1940 (the “Investment Company Act”). Under the Investment Company Act, a company may be deemed an investment company if it is engaged primarily in the business of investing, reinvesting, owning, holding, or trading in securities, or if investment securities comprise a significant portion of its assets.

~~Because~~If ~~crypto~~we ~~assets~~were ~~may~~deemed ~~be determined~~ to be ~~Digital~~an ~~Securities~~investment company, we ~~may~~would ~~inadvertently~~be ~~violate~~required to register under the ~~1940~~Investment Company Act, which would subject us to extensive and ~~incur~~burdensome ~~large~~regulatory ~~losses~~requirements, asincluding arestrictions ~~result~~on our capital structure, limitations on our ability to issue debt and ~~potentially~~equity besecurities, ~~required~~prohibitions toor ~~register~~restrictions on transactions with affiliates, requirements regarding the composition and independence of our board of directors, custody requirements, and extensive compliance, reporting, and recordkeeping obligations. Registration as an investment company could fundamentally change our business model and make it impractical to continue our current operations. ~~This~~If we ~~would~~failed ~~have~~to aregister ~~material~~when ~~adverse~~required, ~~effect~~we oncould be subject to SEC enforcement action, including injunctive relief, and could be prohibited from engaging in certain business activities. In addition, contracts entered into by an unregistered investment incompany usmay be voidable, and a court could appoint a receiver to take control of the company.

WeOur ~~hold~~validator ~~and~~node ~~plan~~operations, toblock-building ~~acquire~~activities, ~~a portfolio of crypto assets including Ethereum~~ and ~~other~~DeFi ~~crypto~~participation ~~assets, each of which~~ may be subject to ~~different and evolving regulatory treatment that could materially impact our ability to continue holding or transacting in such assets. There is an~~ increased regulatory ~~examination~~scrutiny ~~of crypto assets~~ and ~~Digital Securities. This has led to regulatory and enforcement activities. As~~could ~~described~~be ~~elsewhere~~deemed ~~in these Risk Factors, the SEC and certain state regulators have in recent years begun~~ to ~~take~~involve aregulated ~~more definitive and aggressive stance indicating that crypto assets and related~~ activities~~, including custodial staking-based services, entail the offer and sale of securities subject to applicable securities laws and regulations~~. We cannot be certain as to how future regulatory developments will impact the treatment of Ethereum and other crypto assets, or our operations as they relate to such crypto assets or in general, under the law.

~~Under~~Our ~~the~~operations ~~1940~~involve ~~Act,~~participation ain ~~company~~blockchain ~~may~~networks beand ~~deemed~~DeFi anprotocols, ~~investment~~including ~~company~~staking, ~~under~~block ifbuilding, ~~the value of its investment securities is more than 40% of its total assets (exclusive of government securities~~ and ~~cash~~digital ~~items)~~asset ~~on a consolidated basis~~deployments. Regulators ~~Crypto assets we~~ may ~~own~~view incertain ~~the~~of ~~future~~these ~~may~~activities beas ~~determined to~~involving beregulated ~~Digital~~financial ~~Securities~~services, ~~by the SEC or a court. Additionally~~including, ~~one~~without ~~or more states may conclude Ethereum~~limitation, ~~or other crypto assets held by~~securities ustransactions, incommodities ~~the~~transactions, ~~future~~investment ~~are~~contracts, ~~securities~~swaps, ~~under~~lending, ~~state~~brokerage, ~~securities~~exchange ~~laws~~activity, ~~which~~clearing ~~would~~activity, ~~require registration under state laws including merit review~~custody, ~~laws.~~money ~~For example~~transmission, ~~California~~or ~~defines~~other ~~the~~regulated ~~term “investment contract” more strictly than the SEC~~activities.

~~Future~~For ~~legislation~~example, ~~SEC~~regulatory ~~rulemaking~~authorities ~~and~~may ~~other~~assert ~~regulatory~~that ~~developments,~~certain ~~including~~DeFi ~~interpretations~~protocols ~~released~~operate byas aunregistered ~~regulatory~~exchanges, ~~authority~~broker-dealers, ~~may~~clearing ~~impact~~agencies, ~~the~~or ~~manner~~other inregulated ~~which~~entities, ~~Ethereum~~or ~~and~~that ~~other~~participants ~~crypto~~in ~~assets~~such ~~owned~~protocols, byincluding usliquidity ~~are~~providers ~~treated~~or ~~for~~borrowers, ~~classification~~may ~~and~~be ~~clearing~~subject ~~purposes~~to regulatory obligations.

IfSimilarly, aregulators ~~crypto~~may ~~asset~~scrutinize weblock-building ~~hold~~activities ~~were~~or ~~later~~transaction ~~determined~~execution tomarkets. beRegulatory aaction ~~Digital Security, we~~ could ~~inadvertently~~require ~~become~~us anto ~~investment~~modify ~~company, as defined~~or bycease ~~the~~certain ~~1940 Act~~activities, ifcould ~~the~~reduce ~~value of~~ the ~~Digital~~profitability ~~Securities we owned exceeded 40%~~ of our ~~assets~~operations, ~~excluding~~and ~~cash.~~could Weexpose ~~are~~us ~~subject~~ to ~~the~~enforcement ~~following risks:~~actions.

●Regulatory actions, ~~the~~enforcement ~~SEC or a court may conclude that Ethereum~~proceedings, or ~~other crypto assets we later acquire to be securities, notwithstanding differing conclusions we may draw on advice of counsel; ● based on~~ legal ~~advice,~~restrictions weaffecting ~~may~~third ~~acquire~~parties ~~other crypto assets which we have been advised are not securities but later are held to be securities;~~ and ●protocols we ~~may~~rely ~~knowingly~~on ~~acquire~~could ~~crypto~~materially ~~assets~~adversely ~~that~~affect our ~~are securities and acquire minority investments in businesses which investments are securities~~business.

In addition to the ~~event~~direct ~~that~~regulatory ~~the~~risks ~~crypto~~described ~~assets~~above, ~~held~~our byoperations usdepend ~~exceed~~on ~~40%~~the continued functionality, accessibility, and participation of ~~our~~third ~~total~~parties ~~assets~~and decentralized protocols across the digital asset ecosystem. These include blockchain networks, ~~exclusive~~DeFi ofprotocols, ~~cash~~stablecoin ecosystems, wecentralized ~~may~~exchanges ~~inadvertently~~and ~~become~~liquidity anvenues, ~~investment~~custody and wallet infrastructure providers, and participants in Ethereum transaction ~~company~~execution markets, including validator and block-building infrastructure.

InGovernmental ~~order~~authorities have brought, and may continue to ~~limit~~bring, ~~our~~enforcement ~~acquisition~~actions ofand ~~Digital~~pursue ~~Securities~~regulatory toinitiatives ~~stay~~involving ~~within~~digital ~~the~~assets, staking ~~40%~~and ~~threshold~~validation activities, weDeFi ~~will~~protocols, ~~examine~~stablecoin ~~the~~issuers, ~~manner~~crypto inexchanges, ~~which~~custodians, awallet ~~crypto~~providers, ~~asset~~and other ecosystem ~~was~~participants. ~~initially~~Even ~~marketed,~~if ~~the~~we ~~economic~~believe ~~reality~~our ofoperations ~~the~~are ~~instrument,~~conducted ~~and~~in ~~apply~~compliance ~~the~~with ~~Howey~~applicable ~~test~~law, ~~factors~~regulatory toactions, ~~determine~~restrictions, ifor adverse itlegal ~~may~~developments bedirected ~~deemed~~at athird ~~Digital Security~~parties ~~subject~~or toprotocols ~~federal~~we ~~and~~rely ~~state~~on ~~securities~~could ~~laws.~~materially ~~Even~~disrupt ifour weoperations, ~~conclude~~reduce ~~that~~liquidity, restrict aour ~~particular~~ability ~~crypto~~to ~~asset~~deploy isor ~~not~~redeploy adigital ~~security~~assets, ~~under~~increase ~~the 1940~~compliance ~~Act~~costs, ~~certain~~reduce ~~states~~transaction ~~take~~flow aor ~~stricter~~execution ~~view~~opportunities, or ~~which~~otherwise ~~means~~materially ~~the~~adversely ~~crypto~~affect ~~asset~~our ~~may~~business, ~~have~~financial ~~violated~~condition, ~~applicable~~and ~~state~~results ~~securities~~of ~~laws~~operations.

~~Should~~In ~~the~~addition, ~~total~~because ~~value~~portions of ~~securities~~the ~~which~~digital weasset ~~hold~~ecosystem ~~exceed~~are ~~more~~decentralized, ~~than~~open-source, ~~40%~~and ofnot ~~our~~operated ~~assets~~by ~~(exclusive~~a ofsingle ~~cash)~~identifiable ~~SEC Rule 3a-2 under the 1940 Act allows~~entity, anregulatory ~~issuer~~actions tomay ~~prevent~~result ~~itself~~in ~~from~~indirect ~~being~~impacts, ~~deemed~~including anreduced ~~investment~~protocol ~~company~~participation, ifdecreased itliquidity, ~~reduces~~market ~~its holdings of securities to less than 40% of its~~fragmentation, ~~assets~~changes ~~(exclusive~~in ofprotocol ~~cash)~~governance ~~and~~or ~~does~~access ~~not~~policies, goor ~~above~~ the ~~40%~~withdrawal ~~threshold~~of ~~more~~service ~~than~~providers. ~~once~~The ~~every~~occurrence ~~three~~of ~~years.~~any ~~Accordingly,~~of ifthese ~~changes~~events ~~in the classification~~could ofmaterially ~~crypto~~adversely ~~assets~~affect ~~causes~~our usability to ~~exceed~~operate ~~the~~and ~~40%~~scale ~~threshold,~~our wevalidator ~~may~~operations, ~~experience~~block-building ~~large~~operations, ~~losses~~and ~~when~~DeFi ~~we liquidate Digital Securities as a result of continued volatility~~activities.

Regulatory authorities may take enforcement actions or adopt rules that could materially adversely affect our operations.

U.S. and international regulators, including the SEC, the CFTC, and other governmental authorities, continue to evaluate and develop regulatory frameworks applicable to digital assets, blockchain infrastructure, and decentralized finance activities. These regulators have broad authority to investigate and bring enforcement actions relating to digital asset markets and blockchain-based activities.

~~The~~Even ~~40%~~if ~~requirement~~we ~~may~~believe ~~limit~~that ~~our~~we ~~ability~~are operating in compliance with applicable laws and regulations, we may become subject to ~~make~~investigations, ~~certain~~subpoenas, enforcement ~~investments~~actions, litigation, or ~~enter~~administrative ~~into~~proceedings ~~joint~~related ~~ventures~~to ~~that~~our ~~could~~digital ~~otherwise~~asset ~~have~~holdings, avalidator ~~positive~~operations, ~~impact~~block-building onactivities, or other aspects of our ~~earnings~~business. InRegulatory ~~any~~authorities ~~event,~~may wealso doadopt ~~not~~new ~~intend~~rules toor ~~become~~interpretations anthat ~~investment~~impose ~~company~~additional compliance ~~engaged~~requirements inor ~~the~~restrictions ~~business~~on ofparticipants ~~investing~~in ~~and~~the ~~trading~~digital ~~securities~~asset ecosystem.

ToAny ~~the~~such ~~extent that crypto assets held by us are deemed by the SEC or a state legislator to fall within the definition of a security~~investigations, ~~we may~~enforcement ~~be required to register and comply with additional regulation under the Investment Company Act~~actions, ~~including~~or ~~additional~~regulatory ~~periodic~~developments ~~reporting and~~could ~~disclosure standards and requirements and the registration of our Company as an investment company. Such additional registrations: i) would~~ result in ~~extraordinary,~~significant ~~non-recurring~~legal ~~expenses~~costs, ~~ii)~~reputational ~~would be time consuming and restrictive~~harm, ~~iii) would require a restructuring~~penalties, offines, ~~our operations~~injunctions, ~~and~~operational ~~iv)~~restrictions, ~~would~~or ~~result~~other inadverse ~~significant~~outcomes ~~constraints~~that ~~in the kind of business we~~ could ~~do as a registered investment company, thereby~~ materially and adversely ~~impacting~~affect ~~an investment in us. Further, if~~ our ~~examination of a crypto asset is incorrect~~business, ~~we may incur~~financial ~~regulatory~~condition, ~~penalties~~ and ~~private~~results ~~investor liabilities since Section 5~~ of ~~the Securities Act imposes strict liability for unregistered securities offerings, regardless of intent, and state securities laws generally impose liability for negligent misrepresentations~~operations.

InRegulatory ~~order~~requirements torelated ~~comply with the 1940 Act, we anticipate having increased management time and legal expenses in order~~ to ~~analyze~~anti-money ~~which~~laundering ~~crypto assets are securities and periodically analyze our total holdings to ensure that we do not maintain more than 40% of our total assets~~ (~~exclusive of cash~~“AML”), ~~as securities. If our view that the crypto assets we hold are not securities is challenged by the SEC and courts uphold the challenge~~sanctions, ~~we may inadvertently violate the 1940 Act~~ and ~~incur~~financial ~~substantial~~crime ~~legal fees in defending our position. The cost of such~~ compliance ~~would~~could ~~result~~adversely inaffect ~~the Company incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact to conduct~~ our ~~operations~~ business.

IfRegulators ~~the~~may ~~SEC~~impose ~~concludes~~or ~~that~~expand ~~NodeOps~~AML, ~~our non~~know-~~custodial~~your-customer ~~staking~~(“KYC”), ~~business~~sanctions, ~~involves the offer~~ and ~~sale~~other offinancial acrime ~~security~~compliance inrequirements ~~violation~~on ~~of Section 5~~digital ofasset ~~the~~activities. ~~Securities~~OFAC ~~Act~~has ofissued ~~1933~~sanctions-related ~~and~~guidance ~~the~~applicable ~~courts~~to ~~conclude~~certain ~~the~~blockchain ~~SEC is correct~~activities, weand ~~will~~additional besanctions ~~required to cease our staking as a service business~~designations ~~and~~could ~~seek~~impact ~~another~~DeFi ~~business~~protocols, ~~opportunity~~relays, ~~and~~validators, ~~may~~or ~~be subject to monetary and~~ other ~~penalties~~ecosystem participants.

~~The~~Although ~~SEC~~our ~~has~~operations ~~been~~are ~~successful~~primarily in litigating against certain companies and individuals who have offered and sold various cryptocurrencies in violation of the registration provisions of the Securities Act of 1933 (the “Securities Act”) and the anti-fraud provisions of the Securities Act and the Securities Exchange Act of 1934 (the “Exchange Act”). While we believe that our non-custodial ~~staking business does not involve the offer or sale of a security~~, weregulators domay ~~not~~nonetheless ~~know~~assert ifthat ~~the~~certain ~~SEC~~activities ~~will~~require ~~agree~~compliance ~~or whether if we seek relief from the courts, we will be successful~~obligations. If we are ~~also~~required ~~found~~ to ~~have~~implement ~~offered~~additional ~~and~~compliance ~~sold securities in violation of the Securities Act and the Exchange Act~~measures, ~~the~~our ~~SEC~~costs ~~could~~may ~~sue us for acting as an unregistered dealer. Further~~increase, asand ~~discussed~~we inmay ~~the~~be ~~risk~~required ~~factor~~to ~~noted~~restrict ~~above,~~or ~~we may~~cease ~~inadvertently violate the 1940 Act~~certain activities.

~~Whether~~We wemay ~~voluntarily cease our current business or litigate and lose, we would~~ be ~~required~~subject to ~~find~~state ~~another~~money ~~business~~transmission ~~opportunity~~laws ~~whether through an acquisition~~ or ~~otherwise.~~other Welicensing ~~may also have to pay a civil monetary penalty if the SEC sues us and is successful or as a condition of any settlement~~requirements.

~~Current~~Certain ~~interpretations~~state ~~require~~laws ~~the~~regulate ~~regulation~~money oftransmission ~~Bitcoin,~~and ~~Ethereum,~~similar ~~and~~activities. ~~other~~State ~~crypto~~regulators ~~assets~~have ~~under~~actively ~~the~~pursued ~~CEA~~enforcement byactions ~~the~~against ~~CFTC,~~digital asset webusinesses and may beinterpret ~~required~~money ~~to register~~transmission and ~~comply~~similar ~~with~~laws ~~such~~broadly ~~regulations.~~in To the ~~extent~~context ~~that~~of wedigital ~~decide~~assets. If our activities were deemed to ~~continue~~involve ~~operations~~money transmission or similar regulated activity, ~~the~~we could be required ~~registrations~~to ~~and~~obtain ~~regulatory compliance~~licenses ~~steps~~in ~~may~~multiple ~~result~~jurisdictions, comply inwith ~~extraordinary~~bonding requirements, ~~non-recurring~~maintain ~~expenses~~minimum tonet ~~us.~~capital, Weimplement ~~may~~compliance ~~also~~programs, ~~decide~~submit to examinations, or restrict or cease certain operations. ~~Any~~The ~~disruption~~ cost of ~~our~~obtaining ~~operations~~and inmaintaining ~~response~~state licenses, if required, could be substantial, and failure to ~~the~~comply with ~~changed~~applicable ~~regulatory~~state ~~circumstances~~laws ~~may~~could beresult atin acivil ~~time~~or ~~that~~criminal ispenalties, ~~disadvantageous~~enforcement toactions, ~~investors~~or reputational harm.

~~Current~~Regulation and future legislation, CFTC and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Ethereum, and other crypto assets we own are treated for classification and clearing purposes. In particular, derivatives on these assets are not excluded from the definition of ~~“commodity~~stablecoins ~~future”~~could bymaterially ~~the~~adversely ~~CFTC.~~affect Weour ~~cannot~~DeFi ~~be certain as to how future regulatory developments will impact the treatment of Bitcoin, Ethereum, and other crypto assets under the law~~activities.

Stablecoins play a significant role in DeFi ecosystems, including as collateral, as a medium of exchange, and as a source of liquidity for lending and borrowing protocols. Our DeFi operations, including our ETH-backed borrowings through Aave, involve stablecoins such as USDC and USDT. Stablecoins are designed to maintain a stable value relative to a reference asset, typically the U.S. dollar, but there is no guarantee that any stablecoin will maintain its peg. Stablecoins have experienced depegging events in the past, including significant disruptions affecting major stablecoins, and such events could recur. A depegging event affecting stablecoins we hold or use could result in immediate losses, impair our ability to manage collateral or repay borrowings, and adversely affect our liquidity and financial condition.

If stablecoin regulation results in reduced availability, liquidity disruptions, restrictions on stablecoin usage, or prohibitions on certain stablecoins, our DeFi operations and borrowing activities could be materially adversely affected. For example, if stablecoins we use were prohibited, restricted, or deemed non-compliant with regulatory requirements, we may be required to transition to alternative stablecoins, which may have different risk profiles, liquidity characteristics, or protocol support. In addition, regulatory actions against stablecoin issuers, exchanges, or DeFi protocols that support stablecoins could disrupt the broader stablecoin ecosystem and adversely affect our ability to conduct DeFi operations. The occurrence of any of these events could materially and adversely affect our business, financial condition, and results of operations.

~~Bitcoin~~Tax ~~and~~laws ~~Ethereum have been deemed to fall within the definition of a commodity~~ and, wereporting ~~may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and~~ requirements. ~~Moreover,~~related ~~we may be required~~ to ~~register~~digital asassets aare ~~commodity~~evolving ~~pool operator~~ and tocould ~~register us 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~~affect ~~an investment in us. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of~~ our ~~operations.~~ ~~Any such action may adversely affect an investment in us~~business.

~~Our~~Tax ~~interactions~~treatment ~~with~~of adigital ~~blockchain~~assets ~~may~~is ~~expose~~complex usand toevolving. ~~SDN~~Changes orin ~~blocked~~tax ~~persons~~laws, IRS guidance, reporting requirements, or ~~cause~~interpretations uscould increase toour ~~violate~~tax ~~provisions~~liabilities, ofimpose ~~law~~additional ~~that~~reporting ~~did~~burdens, ~~not~~or ~~contemplate distributed~~affect ~~ledger~~the ~~technology~~economics of our operations.

~~The~~Accounting Office of Financial Assets Control of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its specially designated nationals (“SDN”) list. Howeverstandards, ~~because~~SEC ofdisclosure ~~the pseudonymous nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions~~expectations, to the extent validation constitutes a transaction, with persons named on OFAC’s SDN list. While we do not believe validation constitutes a transaction, we can provide no assurances that regulators will agree with our interpretation. By way of example our Ethereum validator nodes only use block builders which remove wallet addresses found on the SDN list and ~~Builder+~~audit ~~also~~practices ~~screens~~for ~~out~~digital ~~these~~assets ~~SDN wallet addresses. Our Company’s policy prohibits any transactions with such SDN individuals, but we~~ may ~~not~~evolve beand ~~adequately~~could ~~capable~~materially ofadversely ~~determining~~affect ~~the ultimate identity of the individual who delegate to~~ our ~~nodes. Additionally, the U.S Department of Treasury recently has added sanctions that prevent U.S. persons~~reporting ~~from using cryptocurrencies to circumnavigate financial sanctions placed on Russia~~obligations.

~~Because~~Accounting ~~our business requires us to download~~ and ~~retain~~disclosure ~~one~~requirements orfor ~~more~~digital ~~blockchains~~assets, toDeFi ~~effectuate our ongoing business~~activities, itand isblockchain ~~possible~~infrastructure ~~that~~operations ~~such digital~~continue ~~ledgers~~to ~~contain prohibited depictions without our knowledge or consent~~evolve. ToThe ~~the extent government enforcement authorities literally~~SEC ~~enforce~~has ~~these~~issued and ~~other~~may ~~laws~~continue ~~and~~to ~~regulations~~issue ~~that~~guidance ~~are~~or ~~impacted~~comment byletters ~~decentralized~~related ~~distributed~~to ~~ledger~~digital ~~technology~~asset disclosures, wecustody ~~may~~practices, berisk ~~subject to investigation~~factors, ~~administrative~~revenue ~~or court proceedings~~recognition, and ~~civil~~other ~~or criminal monetary fines and penalties, all of which could harm our reputation and affect the value of our Common Stock~~matters.

IfChanges ~~federal~~in oraccounting ~~state~~standards, ~~legislatures~~audit orpractices, ~~agencies initiate~~ or ~~release~~SEC ~~tax~~expectations ~~determinations~~could ~~that~~increase ~~change~~our ~~the~~compliance ~~classification of Bitcoin~~costs, ~~Ethereum or~~require ~~other~~additional ~~crypto assets as property for tax purposes (in the context of when such crypto assets are held as an investment)~~disclosures, ~~such determination~~or ~~could~~affect ~~have a negative tax consequence on~~ our ~~Company~~reported orfinancial ~~our shareholders~~results.

~~Current~~International ~~IRS~~regulatory ~~guidance~~developments ~~indicates~~could that crypto assets such as Ethereum should be treated and taxed as property, and that transactions involving the payment of Ethereum for goods and services should be treated as barter transactions. While this treatment creates a potential tax reporting requirement for any circumstance where the ownership of an Ethereum passes from one person to another, usually by means of Ethereum transactions (including off-blockchain transactions), it preserves the right to apply capital gains treatment to those transactions which may have adversely affect ~~an investment in~~ our ~~Company~~business.

We Tomay ~~the~~be ~~extent~~affected ~~that~~by aregulatory ~~foreign~~developments ~~jurisdiction~~outside ~~with~~the aUnited ~~significant~~States. ~~share~~Foreign ofjurisdictions ~~the~~have ~~market~~adopted ofand ~~crypto~~may ~~asset~~continue ~~users~~to ~~imposes~~adopt ~~onerous~~regulations restricting ~~tax~~digital ~~burdens~~asset ~~crypto users~~activities, orimposing ~~imposes~~licensing ~~sales~~requirements, or ~~value~~limiting ~~added~~access ~~tax~~to onDeFi ~~purchases~~protocols. ~~and~~Jurisdictions, ~~sales~~including but ofnot ~~crypto~~limited ~~assets~~to ~~for~~the ~~fiat~~United ~~currency~~Kingdom, ~~such~~Singapore, ~~actions~~Hong ~~could~~Kong, ~~result~~and invarious ~~decreased~~other countries, have adopted or are developing their own regulatory ~~demand~~frameworks for ~~crypto~~digital assets. inIf ~~such~~we ~~jurisdiction~~seek to expand operations internationally or if our activities are deemed subject to foreign regulatory requirements, ~~which~~we ~~could~~may ~~impact~~face ~~the~~significant ~~price~~compliance ofcosts, ~~crypto~~licensing ~~assets~~requirements, ~~and~~operational ~~negatively~~restrictions, ~~impact~~or anprohibitions ~~investment~~that incould materially limit our ability to operate or expand. In addition, international regulatory fragmentation could affect global market conditions, ~~Company~~liquidity, and the value of digital assets.

Risks Related to Our Public Company Status, Internal Controls, and Reporting

We face increased financial reporting and internal control risks due to the complexity of our operations, and any failure to maintain effective internal control over financial reporting could adversely affect our business.

Our financial reporting requires significant judgment and estimation, particularly with respect to accounting for digital assets, DeFi borrowings, fair value measurements, revenue recognition related to blockchain infrastructure activity, non-cash validator payments, and equity-linked financing instruments such as convertible notes and warrants. These areas involve evolving accounting interpretations and may require complex valuation methodologies.

As our operations scale and become more complex, including through expanded DeFi activity and capital markets transactions, we may face increased risk of accounting errors, control deficiencies, or delays in financial reporting. In addition, because we operate with a relatively small management and finance team, our ability to maintain appropriate segregation of duties and control coverage may be constrained. If we are unable to maintain effective internal control over financial reporting, we may be unable to accurately report our financial results, comply with SEC reporting requirements, or prevent fraud. Any such failure could result in material misstatements, restatements, regulatory actions, loss of investor confidence, and could materially adversely affect the market price of our securities.

Our stock price may be volatile, and investors may lose all or part of their investment.

The market price of our common stock has experienced significant volatility and may continue to be volatile. The trading price of our common stock may be influenced by a number of factors, many of which are beyond our control, including:

	●	fluctuations in the market price of ETH, Bitcoin, and other digital assets, which may affect investor perception of our company regardless of our actual exposure to such assets;

	●	changes in market sentiment toward digital asset-related companies, blockchain technology, or the cryptocurrency industry generally, including as a result of negative publicity, regulatory developments, or high-profile failures of other industry participants;

~~Technology~~ ● our actual or anticipated operating results, financial condition, and ~~Ecosystem~~liquidity, ~~Risks~~including any failure to meet revenue, earnings, or other guidance or expectations; ● announcements regarding our business, strategy, digital asset holdings, DeFi activities, or capital allocation decisions, including any announcements regarding purchases, sales, or impairments of digital assets; ● the timing, size, and perceived dilutive effect of capital markets transactions, including sales under our at-the-market offering program or conversion of our Senior Convertible Notes; ● short selling activity, trading volume fluctuations, and the availability of shares for borrowing, which may increase volatility and create downward pressure on our stock price; ● activity on social media platforms, online forums, and other channels that may cause significant volatility in our stock price unrelated to our operating performance or financial condition; ● the initiation, modification, or cessation of research coverage by securities analysts, or changes in analysts’ estimates or recommendations regarding our company or the digital asset industry; ● the inclusion or exclusion of our common stock from market indices, exchange-traded funds, or other investment products that track digital asset-related companies; ● regulatory developments, enforcement actions, or litigation affecting us, other digital asset companies, or the industry generally; ● cybersecurity incidents, digital asset thefts, or operational failures, whether affecting us or other industry participants; ● macroeconomic conditions, including inflation, interest rates, recession concerns, and geopolitical events, which may affect risk appetite for digital asset-related investments; and ● general market conditions and overall fluctuations in U.S. equity markets.

~~The~~Because ~~further~~our ~~development~~business and ~~acceptance~~strategy ofinvolve ~~cryptographic~~digital assets and ~~algorithmic~~blockchain-based ~~protocols~~operations, ~~governing~~our stock price may be disproportionately affected by market developments in the ~~issuance~~digital ofasset industry relative to companies in other sectors. In addition, our relatively small public float and ~~transactions~~market capitalization may contribute to increased volatility and reduced liquidity in ~~cryptocurrencies~~our common stock, making it more susceptible ~~which~~to ~~represent~~significant aprice ~~rapidly~~swings ~~changing~~from ~~industry~~relatively small changes in trading volume or investor sentiment. Securities class action litigation has often been instituted against companies following periods of volatility in the market price of their securities. If we were to become involved in securities litigation, ~~are~~it could subject us to asubstantial ~~variety~~costs, divert resources and attention of ~~factors~~management, ~~that~~and ~~are~~adversely affect ~~difficult~~our business. Volatility in our stock price could cause investors to ~~evaluate~~lose all or part of their investment.

~~The~~Risks ~~use~~Related ~~of crypto assets~~ to, ~~among~~Intellectual ~~other things~~Property, ~~buy and sell goods and services and complete transactions~~Personnel, ~~is part of a new~~ and rapidly evolving industry that employs cryptocurrency assets based upon a computer-generated mathematical and/or cryptographic protocol. Large-scale acceptance of cryptocurrencies as a means of payment has not, and may never, occur. The growth of the cryptocurrency industry in general, and the use of crypto assets in particular, is subject to a high degree of uncertainty. The factors affecting the further development of the cryptocurrency industry include but are not limited to:Operations

●We depend ~~continued worldwide growth in the adoption and use of crypto assets as a medium of exchange; ● government and quasi-government regulation of crypto assets and their use, or restrictions~~ on orkey regulation of access to and operation of the crypto assets systems; ● the maintenance and development of the open-source software protocol of cryptocurrency networks; ● changes in consumer demographics and public tastes and preferences; ● the availability and popularity of other forms or methods of buying and selling goods and servicespersonnel, ~~including new means of using fiat currencies~~ and ~~digital forms of fiat currencies; ● general economic conditions and~~ the ~~regulatory~~loss ~~environment relating to crypto assets; and ● the impact~~ of ~~regulators~~key ~~focusing~~personnel oncould ~~crypto~~harm ~~assets~~our ~~and Digital Securities and the costs associated with such regulatory oversight~~business.

AOur ~~decline~~success depends in ~~the~~significant ~~popularity~~part oron ~~acceptance~~the continued services of ~~the~~our ~~Ethereum~~key ~~network~~management, orengineering, and operational personnel, including our Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, and other ~~blockchains~~members ~~networks~~of senior management and technical leadership. Our business requires specialized expertise in blockchain infrastructure, validator operations, block building, DeFi protocol participation, and digital asset custody and security. Competition for qualified personnel with these skillsets is intense, and we ~~have~~may not ~~exposure~~be able to ~~could~~attract, ~~adversely~~retain, ~~affect an~~and ~~investment~~motivate inkey uspersonnel on commercially reasonable terms.

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The decentralized nature of the governance of crypto asset systems may lead to ineffective decision making that slows development or prevents a network from overcoming emergent obstacles. Governance of many crypto asset systems is by voluntary consensus and open competition with no clear leadership structure or authority. To the extent lack of clarity in corporate governance of cryptocurrency systems leads to ineffective decision making that slows development and growth of such crypto assets, the value of our Common Stock may be adversely affected.

Crypto exchanges are relatively new and therefore may be more exposed to fraud and failure than established, regulated exchanges for other products. To the extent that large crypto exchanges representing a substantial portion of the crypto asset volume are involved in fraud or experience security failures or other operational issues, such exchanges’ failures may result in a reduction in the price of crypto assets and adversely affect an investment in us.

A number of crypto exchanges have been closed due to fraud, failure or security breaches. In many of these instances, the customers of such exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that make larger exchanges more stable, larger exchanges are more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information or gain access to private computer systems). A lack of stability in an exchange market and the closure or temporary shutdown of larger crypto exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in crypto assets overall and result in greater volatility in crypto asset values. These potential consequences of an exchange’s failure could adversely affect an investment in us.

~~Operational~~ Risks Related ~~Specific~~ to ~~BTCS’s Crypto Asset Activities~~Litigation

~~Business~~We ~~Model~~may ~~Dependence~~be subject to litigation, regulatory proceedings, and ~~Revenue~~other ~~Risks~~legal actions, which could result in significant costs and adversely affect our business.

~~Because~~We ~~our~~are ~~blockchain~~subject ~~infrastructure~~to ~~business~~the isrisk ~~dependent~~of onlitigation and regulatory proceedings in the ~~value~~ordinary course of ~~the~~business. ~~crypto~~These ~~assets~~matters wemay ~~stake~~include, toamong others, ~~obtain~~securities ~~blockchain~~litigation, ~~rewards~~shareholder derivative actions, ~~and~~employment-related ~~because those~~claims, ~~rewards~~intellectual ~~are~~property ~~paid~~disputes, ~~out~~contractual disputes, inand ~~the~~claims ~~form~~related ofto ~~the~~our ~~blockchain’s~~digital ~~native~~asset ~~crypto~~activities. ~~assets,~~We ~~low~~may ~~market~~also ~~values~~be ~~and/or~~subject ~~continued~~to investigations, inquiries, or ~~long-term~~enforcement actions ~~declines~~by inregulatory ~~crypto~~authorities ~~asset~~relating ~~prices~~to ~~will~~digital ~~materially~~assets, ~~and~~blockchain ~~adversely~~infrastructure, ~~affect~~DeFi ~~our~~participation, ~~results~~disclosures, ofor ~~operations~~other matters.

~~Our~~Litigation ~~reliance~~and onregulatory ~~staking,~~proceedings ~~which~~can ~~continues~~be tocostly, ~~increase~~time-consuming, asand wedisruptive ~~continue~~ to ~~expand~~management ~~our~~and ~~non-custodial staking-as-a-service business~~operations, ~~means~~regardless ~~that if the market values~~ of ~~the crypto assets we stake declines, the revenue we generate from staking will diminish~~outcome. ~~This is because the~~Adverse ~~rewards~~judgments, ~~for~~settlements, ~~staking~~fines, apenalties, ~~given~~or ~~crypto~~other ~~asset~~outcomes ~~are~~could ~~paid~~result ~~out~~ in ~~more~~significant ofmonetary ~~that~~damages, ~~same~~injunctive ~~crypto asset. Therefore~~relief, ~~if the market price for the crypto~~reputational ~~asset declines while staking is ongoing~~harm, ~~unless~~restrictions ~~the~~on ~~price~~our ~~later recovers~~operations, ~~the~~or ~~rewards~~other weconsequences ~~receive~~that ~~may~~could ~~not~~materially ~~cover~~adversely ~~the~~affect ~~decline in value of the assets, potentially resulting in significant losses to~~ our ~~staking operations. If this trend continues~~business, ~~our operating results and~~ financial condition, and ~~will~~results beof ~~materially adversely affected~~operations.

~~Builder+,~~In ~~ChainQ~~ addition, ~~and~~the ~~our~~evolving ~~blockchain~~regulatory ~~infrastructure~~environment ~~operations~~for ~~including~~digital ~~Company~~assets ~~owned~~increases ~~and~~the ~~run~~risk ~~validator~~of ~~nodes~~regulatory oninquiries ~~PoS~~and ~~blockchains~~enforcement actions, ~~are~~including ~~subject~~in tocircumstances ~~concentration~~where ~~risks~~regulatory ~~due~~expectations toor ~~reliance~~interpretations onchange aover ~~limited number of infrastructure providers~~time.

The development and operation of the Company’s validator nodes for non-custodial staking, as well as the Builder+ block-builders and the development of ChainQ, are hosted on a combination of cloud computing infrastructure provided by Amazon Web Services (“AWS”) and bare metal servers operated by a separate service provider, Latitude. While this diversification mitigates some concentration risks, significant portions of our proprietary technology and operations remain reliant on AWS and Latitude, which subjects us to cyber security and operational risks specific to these providers.

We have limited control over the services provided by AWS and Latitude, including their safety and security measures. If either provider fails to maintain the continuous functionality or security of their networks and related hardware, our ability to operate could be compromised. For example, some PoS networks impose slashing penalties if a validator node is offline for an extended period, resulting in the loss of crypto assets staked for validation purposes. If validator nodes hosted on either AWS or bare metal servers experience outages or other disruptions, we may face significant losses, including slashing penalties, claims from Delegators, reputational harm, and loss of customer relationships.

Any adverse developments affecting AWS or our bare metal server provider, including service outages, cyberattacks, or operational failures, could materially and adversely affect our ability to generate revenue, harm our reputation, and negatively impact our business, financial condition, and results of operations.

Crypto assets staked on proof-of-stake blockchains are locked in smart contracts and may not be accessible and liquid.

Crypto assets that utilize PoS consensus mechanisms are locked in smart contracts while staked, which limits the liquidity of the underlying crypto asset. This is because under PoS network protocols, in order to participate in the staking process validators such as us are required to enter into smart contracts which, among other things, require the validator to continue to keep a specified number of the crypto assets owned by the validator “locked-up” in the network for a specified period of time before they can again be transferred by such validator. This lock-up period often extends beyond the time at which the transaction is validated. We currently stake certain of our crypto assets and operate nodes on blockchain networks through our blockchain infrastructure services business. During times of high volatility or downturns, we may be unable to liquidate certain crypto assets to the extent desired. As such we may experience large losses when and if we are able to liquidate our crypto assets as a result of continued volatility. Further if we are unable to liquidate our crypto assets we could suffer material financial losses, which would adversely impact our business.

Our staking-as-a-service business is dependent on consumer investment in crypto assets, and economic downturns or excessive removal of delegated crypto assets could materially and adversely impact our business.

Our non-custodial staking-as-a-service business strategy depends on consumers purchasing crypto assets, holding them long-term, and staking them to our validator nodes. Economic downturns or a recession could significantly reduce delegation traffic to our nodes as consumers may reduce spending on investments or non-essential items such as crypto assets. Similarly, a decline in the popularity or public perception of crypto assets could yield a similar result. Crypto markets and stock prices have experienced substantial volatility in recent years, and in adverse market conditions, consumers may elect to sell their crypto assets or decline to increase their holdings, rather than hold and stake them to our nodes.

Additionally, we may experience loss of revenue from the excessive removal of delegated crypto assets from our validator nodes, whether due to economic factors, declining market confidence, or changes in consumer preferences. Such removal would result in a loss of associated revenue, which could materially and adversely impact our financial condition. Prolonged or recurring recessionary conditions, turbulent market conditions, or a significant loss of delegated assets could harm our business, results of operations, and prospects.

Technology and Performance Risks

We may suffer losses due to staking, delegating, and other related services.

Crypto assets which utilize PoS consensus mechanisms enable holders to earn rewards by operating nodes and participating in decentralized governance, bookkeeping and transaction confirmation activities on their underlying blockchain networks. We stake certain of our crypto assets and operate nodes on blockchain networks through our blockchain infrastructure operations. Most PoS networks require crypto assets to be transferred into smart contracts on the underlying blockchain networks not under our or anyone’s control. If our validators, any third-party service providers, or smart contracts fail to behave as expected, suffer cybersecurity attacks, experience security issues, or encounter other problems, our crypto assets may be irretrievably lost. In addition, most PoS blockchain networks dictate requirements for participation in the relevant decentralized governance activity, and may impose penalties, or “slashing,” if the relevant activities are not performed correctly, such as if the node operator acts maliciously on the network, “double signs” any transactions, or experience extended downtimes. Slashing penalties can apply due to prolonged inactivity on a blockchain network and inadvertent errors such as computing or hardware issues, as well as more serious behavior such as intentional malfeasance. If we are slashed by an underlying blockchain network, our crypto assets may be confiscated, withdrawn, or burnt by the network, resulting in permanent and irrecoverable losses that could materially impact our financial position. Any penalties or slashing events could damage our brand and reputation, cause us to suffer financial losses, and adversely impact our business.

Our business faces significant scaling obstacles due to its dependence on crypto assets and related infrastructure.

Crypto assets on which our current and planned operations depend face significant scaling obstacles that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective. Scaling of crypto assets is essential to the widespread acceptance of crypto assets as a means of payment or other uses that stakeholders have in the past cited in demonstrating interest in crypto assets. Many crypto asset networks, including those with which we are or may become involved in our operations, face significant scaling challenges. For example, crypto assets are limited with respect to how many transactions can occur per second. Participants in the crypto asset ecosystem debate potential approaches to increasing the average number of transactions per second that a network can handle and have implemented mechanisms or are researching ways to increase scale, such as increasing the allowable sizes of blocks, and therefore the number of transactions per block, and sharding (a horizontal partition of data in a database or search engine), which would not require every single transaction to be included in every single validator’s block. However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of crypto asset transactions will be effective.

If adoption of crypto assets as a means of payment or other uses does not occur on the schedule or scale anticipated or at all, the demand for crypto assets may stagnate or decrease, which could adversely affect future prices of crypto assets we hold or otherwise rely upon in our operations, and our results of operations and financial condition, which could have a material adverse effect on our business or the market price for our securities.

Our business operations involve running validator nodes for blockchain networks, including those associated with third-party staking ecosystems. This presents several risks that could materially affect our financial condition, results of operations, and business prospects.

Operating validator nodes for third-party staking ecosystems presents significant risks, particularly around the security of staked tokens and governance uncertainties. Staked tokens are locked in smart contracts, and vulnerabilities in the blockchain protocol or smart contract code could result in loss or slashing of tokens. Additionally, many staking ecosystems operate under decentralized autonomous organizations (DAOs), where governance decisions—such as fee changes, validator selection criteria, or protocol upgrades—can be unpredictable and influenced by participants with concentrated voting power. Adverse governance outcomes or misalignment with DAO strategies could negatively impact the economic viability of our validator operations. Furthermore, any controversy or operational failures associated with third-party providers could harm our reputation, even if we are not directly involved. Finally, protocol updates or changes may require rapid technical adaptations, and failure to do so could result in penalties, operational disruptions, or removal from the validator set. Despite our efforts to mitigate these risks through security measures and governance monitoring, these challenges could materially affect our operations, the security of our crypto assets, our financial results, and the price of our stock. The inherent vulnerabilities in blockchain protocols or smart contract codes could lead to potential loss of staked tokens, while unpredictable governance decisions by decentralized autonomous organizations could impact our strategic alignment and economic viability. Consequently, any adverse outcomes or operational failures could have a material adverse effect on our company.

Shifts in the Ethereum block-building landscape and market could increase the difficulty of remaining competitive and increase costs.

Our Ethereum block builder, Builder+, faces competition from existing and potential entrants in the expanding market. New and existing competitors may emerge with superior algorithms or strategies, potentially eroding our current market share, potential growth, and revenue generation potential. Moreover, changes in the Ethereum ecosystem, including network upgrades or shifts to alternative networks, may impact the demand for our services. Staying competitive requires continuous innovation and adaptation to market dynamics, which may necessitate additional investments and resources.

Our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions is uncertain and untested, and we are subject to uncertainty with respect to our Ethereum block building and non-custodial staking-as-a-service businesses and we may be subject to investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities.

In addition to the securities laws and regulations discussed elsewhere in these Risk Factors, laws regulating financial services, the internet, mobile technologies, digital, and related technologies inside and outside of the U.S. may impose obligations on us, as well as broader liability. For example, we are required to comply with laws and regulations related to sanctions and export controls enforced by U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC, and U.S. anti-money laundering and counter-terrorist financing laws and regulations, enforced by FinCEN and certain state financial services regulators. U.S. sanctions laws and regulations generally restrict dealings by persons subject to U.S. jurisdiction with certain governments, countries, or territories that are the target of comprehensive sanctions, currently the Crimea Region of Ukraine, Russian Federation, Cuba, Iran, North Korea, Syria, and Venezuela as well as with persons identified on certain prohibited lists. In May 2019, FinCEN issued guidance on the application of FinCEN regulations to certain business models. While the guidance directly addressed Bitcoin mining, it did not address securing PoS blockchains, which, while similar to Bitcoin mining, has technical nuanced differences that could potentially alter the analysis. As such, there can be no guarantee that securing (staking) on PoS blockchain networks will be viewed as compliant, notwithstanding the May 2019 FinCEN guidance. In particular, the nature of blockchains make it technically impossible in all circumstances to prevent or identify transactions with particular persons or addresses. Our Builder+ block builder software is equipped with a filtering mechanism that screens transactions initiated by wallet addresses listed on OFAC’s Specially Designated Nationals And Blocked Persons (SDN) list, ensuring transactions from identified wallets are not included in the blocks we propose to validators. We actively monitor sanctioned jurisdictions to ensure that appropriate restrictions are maintained. If, notwithstanding these efforts, our current or planned activities are found to constitute “facilitating” or assisting the actions of non-U.S. persons that would be prohibited for U.S. persons to perform directly due to U.S. sanctions, despite the fact we don’t take custody of staked crypto assets nor pay delegator crypto rewards, it could result in material negative consequences for us, including costs related to government investigations, harsh financial penalties, and harm to our reputation. The impact on us related to these matters could be substantial. We’ve sought and are seeking additional legal guidance on what, if any, controls and procedures need to be put in place and whether our activities could constitute facilitation of any illicit activities under the current regulatory framework.

Regulators worldwide frequently study each other’s approaches to the regulation of the digital economy. Consequently, developments in any jurisdiction may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other jurisdictions. In addition, digital economies themselves are subject to rapid and unpredictable change so that regulators could decide warrants updates or additions to existing regulatory regimes. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place. Conversely, if regulations diverge worldwide, we may face difficulty adjusting aspects of our business.

The complexity of U.S. federal and state and international regulatory and enforcement regimes, coupled with the evolving global regulatory environment, could result in a single event prompting a large number of overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions. Any of the foregoing could, individually or in the aggregate, harm our reputation, damage our brands and business, and adversely affect our operating results and financial condition. Due to the uncertain application of existing laws and regulations, it may be that, despite our planned regulatory and legal analysis that certain products and services are currently unregulated, such products or services may indeed be subject to financial regulation, licensing, or authorization obligations that we have not obtained or with which we have not complied. As a result, we are at a heightened risk of litigation, regulatory, and legal scrutiny which could lead to sanctions, cease, and desist orders, or other penalties and censures which could significantly and adversely affect our continued operations and financial condition.

We may experience losses resulting from technical failures, bugs, or vulnerabilities in our block builder software.

Our Ethereum block-building process heavily relies on advanced algorithms and technology. Technical failures, bugs, or vulnerabilities in our block builder software could lead to significant operational disruptions and potential financial losses that may be substantial and could materially impact our business. While we implement extensive testing and security measures, we cannot guarantee that all technical vulnerabilities will be detected and remediated before causing harm. Furthermore, the security of our operation is paramount, as vulnerabilities in smart contracts, blockchain infrastructure, or the Ethereum network could result in security breaches, data breaches, and financial harm to our clients and us. Ensuring the ongoing scalability and efficiency of our algorithms requires continuous investment in research and development.

Malicious actors gaining 50% or greater control of a cryptocurrency network could manipulate the blockchain, leading to significant adverse effects on the network and indirectly on our business.

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power or staked assets dedicated to either mining or staking a cryptocurrency, it may be able to alter blockchains on which transactions of cryptocurrency reside and rely 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 depending on blockchain may not generate new units or transactions using such control. The malicious actor could “double-spend” its own cryptocurrency (i.e., spend the same crypto 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 does not yield its control of the processing power or staked assets on the network, or the cryptocurrency community does 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 cryptocurrencies may be compromised but is only an example and may differ from blockchain to blockchain.

The possible crossing of the 50% threshold indicates a greater risk that a single validator could exert authority over the validation of network transactions. To the extent that a blockchain ecosystem including other validators do not act to ensure greater decentralization of validator voting power, the feasibility of a malicious actor obtaining control will increase because the botnet or malicious actor could compromise more than 50% voting power and thereby gain control of blockchain, whereas if the blockchain remains decentralized it is inherently more difficult for the botnet of malicious actor to aggregate enough voting power to gain control of the blockchain, may adversely affect an investment in our Common Stock. Such lack of controls and responses to such circumstances 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 potentially the value of any Ethereum or other crypto assets we acquire or hold, and harm investors.

Security Risks Related to Our Crypto Asset Holdings

Our crypto assets may be subject to loss, damage, theft or restriction on access.

There is a risk that part or all of our crypto assets could be lost, stolen, destroyed or become inaccessible. Our crypto assets are an appealing target to hackers or malware distributors seeking to destroy, damage, or steal our crypto assets, and we have experienced attempts to breach our security measures in the past. To minimize the risk of loss, damage and theft, security breaches, and unauthorized access we primarily hold our crypto assets in various cryptocurrency digital wallets utilizing industry-standard multi-signature security protocols and cold storage solutions, and hold minimal amounts (less than 1% of total holdings) at regulated exchanges. Nevertheless, the digital wallets and exchanges we utilize may not be impenetrable and may not be free from defect or immune to acts of God, and any loss due to a security breach, software defect or act of God will be borne by us. Any of these events may adversely affect our operations and, consequently, an investment in us.

To the extent that any of our crypto assets are held by crypto exchanges, we may face heightened risks from cybersecurity attacks and the financial stability of the exchanges.

All crypto assets not held in a Company’s controlled digital wallet are held at crypto exchanges and subject to the risks encountered by those exchanges including DdoS Attacks, other malicious hacking, a sale of the exchange, loss of the crypto assets by the exchange, security breaches, and unauthorized access of our account by hackers. The Company may not maintain a custodian agreement with the exchanges with which it holds its crypto assets, and such exchanges do not provide insurance and may lack the resources to protect against hacking and theft. Less than 0.1% of the Company’s crypto assets are typically stored at exchanges; however, this may increase at or around the sales or purchase of crypto assets. We may be materially and adversely affected if the exchanges suffer cyberattacks or incur financial problems.

The loss or destruction of a private key required to access a crypto asset may be irreversible. Our loss of access to our private keys could adversely affect an investment in our Company.

Crypto assets are controllable only by the possessor of both the unique public key and private key relating to the local or online digital wallet in which the crypto assets are held. We are required by the operation of the crypto asset network to publish the public key relating to a digital wallet in use by us when it first verifies a spending transaction from that digital wallet and disseminates such information into the network. We safeguard and keep private the private keys relating to our crypto assets not held at exchanges by utilizing key sharing and multi-signature storage techniques; to the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, we will be unable to access the crypto assets held by it and the private key will not be capable of being restored by the network. Any loss of private keys relating to digital wallets used to store our crypto assets could adversely affect an investment in us.

Security threats to us could result in a loss of Company’s crypto assets.

Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm our business operations or result in loss of our Ethereum and other crypto assets. Any breach of our infrastructure could result in damage to our reputation which could adversely affect an investment in us. Furthermore, we believe that, as our assets continue to grow, it may become a more appealing target for security threats such as hackers and malware.

The security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, or otherwise, and, as a result, an unauthorized party may obtain access to our, private keys, data, or Ethereum. Additionally, outside parties may attempt to fraudulently induce employees of ours to disclose sensitive information in order to gain access to our infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security system occurs, the market perception of the effectiveness of our security system could be harmed, which could adversely affect an investment in us. In the event of a security breach, we may be forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in us.

Incorrect or fraudulent crypto asset transactions may be irreversible.

Crypto asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to a blockchain, an incorrect transfer of crypto assets or a theft of crypto assets generally will not be reversible, and we may not be capable of seeking compensation for any such transfer or theft. It is possible that, through computer or human error, or through theft or criminal action, our crypto assets could be transferred from us in incorrect amounts or to unauthorized third parties. To the extent that we are unable to seek a corrective transaction with such third party or are incapable of identifying the third party which has received our crypto assets through error or theft, we will be unable to revert or otherwise recover incorrectly transferred crypto assets. To the extent that we are unable to seek redress for such error or theft, such loss could adversely affect an investment in us.

The limited rights of legal recourse against us, and our lack of insurance protection expose us and our shareholders to the risk of loss of our crypto assets for which no person is liable.

The crypto assets held by us are not insured through any government program or private insurance policy. Any loss of our crypto assets, whether through security breaches, technical failures, or other causes, would not be covered by insurance and could result in permanent and unrecoverable losses that could adversely affect our operations and, consequently, an investment in us.

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

We do not and will not hold our Ethereum and other crypto assets with a banking institution or a member of the FDIC or the Securities Investor Protection Corporation (“SIPC”) and, therefore, our crypto assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions.

Risks Related to Our Development Efforts

There is substantial doubt that we will be able to fully develop or commercialize our ChainQ platform as intended.

We are continuing to develop our ChainQ platform with the ultimate goal of creating an advanced blockchain infrastructure tool to enhance user accessibility and operational efficiency. We may not successfully fully develop this platform as planned, in a cost-efficient manner, to the extent sought or at all. If we fail to develop a comprehensive platform for ChainQ as intended, it could have a material adverse effect on our business, especially to the extent that we allocate significant capital, labor, and other resources to this endeavor rather than focusing on other business opportunities which may prove to have been more lucrative in hindsight.

Even if we do successfully develop our platform and bring it to the marketplace, there is no guarantee that we will attract enough users to generate revenue or become profitable. Our competitors, most of whom have greater capital and human resources than we do, may develop technologies that are superior to our platform or commercialize comparable technologies before us, in which case our ability to attract users and generate revenue therefrom could be rendered unlikely or even impossible. If we fail to obtain users for our platform or find an alternative means of commercializing our platform to recoup our investment therein, it will have a material adverse effect on our financial condition. Finally, even if we do fully develop the platform and attract users, events outside of our control such as regulatory actions against us or crypto assets on which our platform depend, or economic downturns, could force us to cease operating our platform or render it obsolete. If we fail to fully develop and commercialize our platform in a timely and effective manner, your investment in us could lose some or all of its value.

Even if we develop and commercialize our ChainQ platform, we may not be able to generate material revenues.

The continued development of ChainQ will require significant time and capital. Even if we do develop this platform and acquire a sufficient number of users to generate revenue, we cannot guarantee the revenue would be material or sufficient to justify the costs we anticipate incurring to develop the platform. While we are pursuing the development of additional features to make our platform more useful and attractive to consumers involved in blockchain technology, we may fail to develop these features effectively in an efficient manner, or within a timeframe that enables us to be or remain competitive. Our ability to capitalize on any platform we do develop will depend on a variety of factors and uncertainties beyond our control, including the competition we face and similar or superior services that may already exist by the time we begin marketing our platform, the volatile nature of the blockchain industry generally and the unknown demand for the services we plan to offer through our platform as it is currently envisioned, regulatory developments that have arisen or may arise in the future, and the advancement of new technologies which could arise in the future and render our platform partially or completely obsolete. If any of these or other risks come to fruition to prevent our platform from generating material revenue to justify its costs of production, it would have a material adverse effect on our business.

The development of our ChainQ platform will depend on the successful efforts of our employees.

Our platform development efforts are completely dependent on our infrastructure. We use internally developed systems for the platforms. Any future difficulties in developing aspects of our platforms may cause delays in bringing our platforms to market. If our data stored on AWS as well as bare metal servers, and the backups thereof, are compromised, our platform and prospects could be harmed. Despite our implementation of network security measures, our servers are vulnerable to computer viruses, physical or electronic break-ins, and similar disruptions, the occurrence of any of which could lead to interruptions, delays, loss of critical data, or the inability to launch our platform. The occurrence of any of the foregoing risks could materially harm our business.

We are subject to cyber security risks and may incur delays in platform development in an effort to minimize those risks and to respond to cyber incidents.

ChainQ is and will continue to be dependent on the secure operation of our website and systems as well as the operation of the Internet generally. The platform involves processing and storage of sensitive data, and security breaches could expose us to a risk of loss or misuse of this information, litigation, and potential liability. A number of large Internet companies have suffered security breaches, some of which have involved intentional attacks. From time to time, we and many other internet businesses also may be subject to a denial-of-service attacks wherein attackers attempt to block customers’ access to our website. If we are unable to avert a denial-of-service attack for any significant period, we could sustain delays in the development of the platform and when launched risk losing future users and have user dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks may target us, our users, or exchanges we read data from in general or the communication infrastructure on which we depend. If an actual or perceived attack or breach of our security occurs, user perception of the effectiveness of our security measures could be harmed and we could lose our future user. Actual or anticipated attacks and risks may cause us to incur increasing costs, and delay development. A person who is able to circumvent our security measures might be able to misappropriate our or our users’ proprietary information, cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and platform. Any compromise of our security could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of confidence in our security measures, which could harm our business.

We may become subject to data privacy and data security laws and regulations by virtue of our ChainQ platform, which could force us to incur significant compliance costs and expose us to liabilities.

By virtue of our platform, including planned additional functions, we may become subject to the various local, state, federal, and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer, and processing of personal data. These data protection and privacy laws and regulations and their applicability to our current and future operations and offerings are subject to uncertainty and continue to evolve in ways that could adversely impact our business. These laws could have a substantial impact on our operations, depending in large part on the location of our operations, users, employees and other stakeholders with which we are or become involved.

In the United States, state and federal lawmakers and regulatory authorities have increased their attention on the collection and use of user data. For example, California enacted the California Rights Privacy Act, or CPRA, which augmented the California Privacy Rights Act, became effective in 2020. The CPRA requires covered companies to, among other things, provide new disclosures to California users, and affords such users new privacy rights such as the ability to opt-out of certain sales of personal information and expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared. The CPRA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase security breach litigation. Potential uncertainty surrounding the CPRA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use personal information, our financial condition, the results of our operations or prospects. Since the CPRA was enacted, a growing number of states have enacted similar legislation designed to protect the personal information of consumers and penalize companies that fail to comply, and other states have also proposed similar legislation. The costs of compliance with, and other burdens imposed by, the CPRA, and similar laws may limit our prospective customer base or the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business. Additionally, many foreign countries and governmental bodies in which our users may reside, have laws and regulations concerning the collection, use, processing, storage, and deletion of personal information obtained from their residents or by businesses operating within their jurisdiction. These laws and regulations are often more restrictive than those in the United States. Such laws and regulations may require companies to implement new privacy and security policies, permit individuals to access, correct, and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, require that certain types of data be retained on local servers within these jurisdictions, and, in some cases, obtain individuals’ affirmative opt-in consent to collect and use personal information for certain purposes.

There is a risk that as we develop and offer our platform and other services, we may become subject to one or more of these data privacy and security laws. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection, and information security, including by deploying geo-blocking features to limit the jurisdictions from which our platform can be accessed, it is possible that our practices, offerings, or platform, or third parties on which we rely, could fail. For instance, the overall regulatory framework governing the application of privacy laws to blockchain technology is still highly undeveloped and likely to evolve. Further, given the pseudonymous nature of activities involving crypto assets, we face unique and substantial challenges in our compliance efforts that are not present in traditional financial services, including difficulties in identifying and verifying the identity of transaction participants, monitoring suspicious activities, and maintaining effective know-your-customer (KYC) procedures. Our failure, or the failure by our third-party providers or partners, to comply with applicable laws or regulations and to prevent unauthorized access to, or use or release of personal data, or the perception that any of the foregoing types of failure has occurred, even if unfounded, could subject us to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, potential severe criminal or civil sanctions, fines or damages, reputational harm, or expensive and time-consuming proceedings by governmental agencies and private claims and litigation, any of which could materially adversely affect our business, operating results, and financial condition.

We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing the ChainQ platform.

Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third-parties, however, we may not always be able to determine that we are using or accessing protected information or software. For example, there could be issued patents of which we are not aware that our products infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our products infringe.

Because of the foregoing, we may be subject to legal claims of alleged infringement of the intellectual property rights of third parties. We expect this risk to increase as we continue to develop and roll-out additional functions for the ChainQ platform in the future. The ready availability of damages, royalties and the potential for injunctive relief has increased the defense litigation costs of patent infringement claims, especially those asserted by third parties whose sole or primary business is to assert such claims. Such claims, even if not meritorious, may result in significant expenditure of financial and managerial resources, and the payment of damages or settlement amounts.

Accordingly, we could expend significant resources defending against patent infringement and other intellectual property right claims, which could require us to divert resources away from operations. Any damages we are required to pay or injunctions against our continued use of such intellectual property in resolution of such claims may cause a material adverse effect to our business and operations, which could adversely affect the trading price of our securities and harm our investors. Additionally, we may become subject to injunctions prohibiting us from using software or business processes we currently use or may need to use in the future or requiring us to obtain licenses from third parties when such licenses may not be available on financially feasible terms or terms acceptable to us or at all. In addition, we may not be able to obtain on favorable terms, or at all, licenses or other rights with respect to intellectual property we do not own in providing ecommerce services to other businesses and individuals under commercial agreements.

Risks Related to Our Public Company Reporting Requirements and Accounting Matters

We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements.

We are required to comply with a variety of reporting, accounting, and other rules and regulations. Compliance with existing requirements is expensive. We may need to implement additional finance and accounting systems, procedures, and controls to satisfy our reporting requirements and such further requirements may increase our costs and require additional management time and resources. For example, many crypto assets, including those on PoS blockchain networks with which we are or may become involved, demonstrate novel and unique accounting challenges, including due to smart contracts affecting the underlying crypto assets. Any deficiencies in our internal control over financial reporting, should they arise, could cause investors to lose confidence in our reported financial information, negatively affect the market price of our Common Stock, subject us to regulatory investigations and penalties, and adversely impact our business and financial condition.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including but not limited to revenue recognition, estimating valuation allowances and accrued liabilities (including allowances for returns, credit card chargebacks, doubtful accounts and obsolete and damaged inventory), internal use software and website development (acquired and developed internally), accounting for income taxes, valuation of long-lived and intangible assets and goodwill, stock-based compensation and loss contingencies, are highly complex and involve many subjective assumptions, estimates and judgments by our management. Additional complexities can arise with respect to crypto asset operations. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.

The preparation of financial statements in conformity with generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in Part II, Item 7 of this Annual Report on Form 10-K. The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition, evaluation of tax positions, and the valuation of stock-based awards and crypto assets we hold, among others. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of analysts and investors, resulting in a decline in the trading price of our Common Stock.

We are subject to the information and reporting requirements of the Exchange Act, and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

The costs of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited reports to shareholders will cause our expenses to be higher than they would have been if we were privately held. It may be time-consuming, difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.

Risks Related to our Common Stock

Our stock price may be volatile.

The market price of our Common Stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

● changes in our industry including changes which adversely affect crypto assets; ● adverse regulatory developments such as the recent actions brought by securities regulators on crypto assets activities; ● public announcements and corporate events; ● continued volatility in the price of crypto assets; ● our ability to obtain working capital financing; ● sales of our securities or those of other companies, or of crypto assets, due to external forces such as geopolitical turmoil, inflation, federal interest rate adjustments or other events; ● additions or departures of key personnel including our executive officers; ● sales of our Common Stock; ● exercise of our warrants and the subsequent sale of the underlying Common Stock; ● conversion of our convertible notes and the subsequent sale of the underlying Common Stock; ● our ability to execute our business plan; ● operating results that fall below expectations; ● loss of any strategic relationship; and ● economic and other external factors.

In addition, the securities markets have, from time-to-time, experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our Common Stock. As a result, you may be unable to resell your shares at a desired price.

While we paid a cash dividend in 2022, and declared a Series V Preferred stock (“Series V”) dividend in 2023, we do not expect to pay regular or recurring dividends in the future. Any return on investment may be limited to the value of our Common Stock.

While we declared and paid a cash dividend (which came with the option to be paid in Bitcoin if elected by the shareholder) payable to holders of our Common Stock as of March 17, 2022, and distributed Series V dividend to shareholders of our Common Stock of record as of May 12, 2023, we do not anticipate paying dividends on a regular or recurring basis for the foreseeable future.

Any future payment of dividends on our Common Stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

Our articles of incorporation allow for our Board to create new series of preferred stock without further approval by our shareholders, which could adversely affect the rights of the holders of our Common Stock.

Pursuant to our articles of incorporation, our Board has the authority to fix and determine the relative rights and preferences of preferred stock without further shareholder approval. Our Board also has the authority to issue preferred stock without further shareholder approval. As a result, our Board could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, provide holders of the preferred anti-dilution protection, the right to receive dividend payments before dividends are distributed to the holders of Common Stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our Common Stock. For example, we issued a total of 15,033,231 shares of Series V Preferred Stock, which has a 20% liquidation preference over our Common Stock and also has certain rights to dividend and distributions at the discretion of the Board. In addition, our Board could authorize the issuance of a series of preferred stock that has greater voting power than our Common Stock or that is convertible into our Common Stock, which could decrease the relative voting power of our Common Stock or result in dilution to our existing shareholders.

The Conversion of Series V Preferred Stock to Common Stock Could Result in Substantial Dilution and Cause Market Volatility

At the 2024 annual meeting, BTCS shareholders approved a proposal authorizing the Board of Directors, at its discretion, to convert each share of Series V Preferred Stock into one share of Common Stock. While the Board now has the authority to implement this conversion, it has not yet taken such action. If the Board decides to proceed with the conversion, the issuance of a substantial number of additional shares of Common Stock could result in significant dilution to existing common shareholders. As of December 31, 2024, there were 15,033,231 shares of Series V Preferred Stock outstanding. If all Series V shares are converted into Common Stock, the number of outstanding shares of our Common Stock would materially increase. Such an increase in our outstanding Common Stock could materially affect the market price of our shares and impact investor confidence. Additionally, the increase in the number of freely tradeable shares could create downward pressure on the stock price if investors decide to sell shares in response to the dilution or due to other market-related factors. Current and prospective investors may also perceive the conversion negatively, leading to increased volatility and reduced demand for our Common Stock. Furthermore, our ability to raise capital in the future through equity offerings may be affected by the potential overhang of additional shares.

Substantial future sales of our Common Stock by us or by our existing shareholders could cause our stock price to fall.

We have primarily financed our strategic growth through our ATM Agreement. Additional equity financings (in addition to the shares issued under the ATM Agreement) or other share issuances by us, including shares issued in connection with strategic alliances and corporate partnering transactions, could adversely affect the market price of our Common Stock. Sales by existing shareholders of a large number of shares of our Common Stock in the public market or the perception that additional sales could occur could cause the market price of our Common Stock to drop.

Additionally, if we were not eligible to sell shares under our existing Registration Statement on Form S-3, we would be prohibited from selling under the ATM Agreement and may need to raise capital under terms less friendly to the Company and cause more dilution to existing and future shareholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 15(a)(1)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, ~~2024~~2025. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of December 31, ~~2024~~2025.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined effective could provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 Internal Control-Integrated Framework”). Based on our evaluation under the 2013 Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.39

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 Internal Control-Integrated Framework”). Based on our evaluation under the 2013 Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

On ~~November~~December 178, ~~2024~~2025, Charles Allen, our Chief Executive Officer, ~~adopted~~and aChairman ~~trading~~of ~~plan pursuant to Rule 10b5-1 under~~ the ~~Exchange~~Board, ~~Act (~~adopted a “Rule 10b5-1 trading plan~~”),~~ in accordance with the Company’s insider trading policies and procedures. The plan ~~was effective as of February 18, 2025 and~~ is scheduled to terminate on ~~October~~November 1518, 2027, unless terminated earlier in accordance with its terms. Under the plan, up to ~~1.75~~2,225,000 ~~million~~ shares of the Company’s ~~common~~Common ~~stock~~Stock may be sold, subject to the terms and conditions of the plan, including price thresholds, volume limitations, and blackout periods.

On October 22, 2024, Michal Handerhan, our Chief Operating Officer, adopted a Rule 10b5-1 trading plan in accordance with the company’s insider trading policies and procedures. The plan was effective as of March 5, 2025 and is scheduled to terminate on October 15, 2025, unless terminated earlier in accordance with its terms. Under the plan, up to 750,000 shares of the Company’s common stock may be sold, subject to the terms and conditions of the plan.

No other officers, as defined in Rule 16a-1(f), or directors adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to our Definitive Proxy Statement for the ~~2025~~2026 Annual Meeting of Stockholders to, which will be filed with the SEC pursuant to Regulation 14A within 120 days ofafter the year ended December 31, ~~2024~~2025.

Our Board has adopted a Code of Ethics applicable to all officers, directors, and employees, which is available on our website (http://www.btcs.com) under “Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Ethics and by posting such information on our website at the address and location specified above.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS

(a) Documents filed as part of the report.

(1) ~~Consolidated~~ Financial Statements. See Index to ~~Consolidated~~ Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Financial Statements are filed herewith in response to this Item.

(2) ~~Consolidated~~ Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the ~~consolidation~~ financial statements or notes included in this report.

(3) Exhibits. See the Exhibit Index.

EXHIBIT INDEX

		Filed/	Incorporated by Reference
Exhibit No.	Description	Furnished Herewith	Form	Exhibit No.	Filing Date
1.1	At-The-Market Offering Agreement, dated September 14, 2021, by and between BTCS Inc. and H.C. Wainwright & Co., LLC		8-K	1.1	9/14/21
2.1	Articles of Merger		8-K/A	3.1	7/31/15
2.2	Agreement and Plan of Merger		8-K/A	3.2	7/31/15
3.1	Amended and Restated Articles of Incorporation, as of May 2010		10-K	3.1	3/31/11
3.1(a)	~~Amendment~~Certificate ~~No.~~of 1Amendment Toto Articles of Incorporation – Increase Authorized Capital		8-K	3.1	3/25/13
3.1(b)	~~Amendment~~Certificate ~~No.~~of 2Amendment Toto Articles of Incorporation – Name Change and Reverse Stock Split		8-K	3.1	2/5/14
3.1(c)	Certificate of Amendment ~~filed~~to ~~February~~Articles ~~13,~~of ~~2017~~Incorporation – Increased Authorized Capital		8-K	3.1	2/165/1714
3.1(d)	~~Amendment~~Certificate ~~No.~~of 3Amendment Toto Articles of Incorporation – Reverse Stock Split		8-K	3.1	42/916/1917
3.1(e)	Certificate of ~~Change~~Amendment to Articles of Incorporation – Reverse Stock Split		8-K	3.1	84/179/2119
3.1(f)	Certificate of ~~Designation~~Change – ~~Series~~Reverse VSplit		8-K	3.1	18/3117/2321
3.1(g)	Certificate of ~~Amendment~~Designation to– ~~the~~ Series V ~~Certificate of Designation~~		8-K	3.1	41/1931/23
3.1(h)	~~Amendment~~Certificate ~~No.~~of 4Amendment to ~~Articles~~the ofSeries ~~Incorporation~~V –Certificate ~~Increase~~of ~~Authorized Capital~~Designation		8-K	3.1	74/1319/23
3.1(i)	Certificate of Amendment to Articles of Incorporation – Increase Authorized Capital		8-K	3.1	7/13/23
3.2	Amended and Restated Bylaws of BTCS Inc.		8-K	3.1	7/5/24
4.1	BTCS Inc. 2021 Equity Incentive Plan, as amended	(2)	10-Q	4.1	8/11/23
4.2	Description of Securities		10-K	4.2	3/21/24

5041

10.1	Employment Agreement - Charles Allen	(2)	10-K	10.8	6/23/17
10.1(a)	Amendment to Employment Agreement - Charles Allen	(2)	10-K	10.15(a)	3/23/20
10.2	Employment Agreement - Michal Handerhan	(2)	10-K	10.9	6/23/17
10.1(b)	Amended and Restated Employment Agreement - Charles Allen	(1)	10-K	10.1(b)	3/25/26
10.2(a)	Amendment to Employment Agreement – Michal Handerhan	(2)	10-K	10.16(a)	3/23/20
10.2	Offer Letter – Michael Prevoznik	(2)	10-K	10.4	3/11/22
10.3	~~Offer~~Form ~~Letter~~of Securities Purchase Agreement – ~~Michael~~May ~~Prevoznik~~2025 ATW	~~(2)~~	108-K	10.41	35/1114/2225
10.4	~~Offer~~Form ~~Letter~~of Original Issue Discount Senior Secured Convertible Note – ~~Manish~~May ~~Paranjape~~2025 ATW	~~(2)~~	108-K	10.42	35/3114/2325
10.5	Form of Warrant – May 2025 ATW		8-K	10.3	5/14/25
10.6	Form of Securities Purchase Agreement – July 2025 ATW		8-K	10.1	7/21/25
10.7	Form of Original Issue Discount Secured Convertible Note – July 2025 ATW		8-K	10.2	7/21/25
10.8	Form of Warrant – July 2025 ATW		8-K	10.3	7/21/25
19.1	Insider Trading Policy		10-K	19.1	3/21/24
21.1	List of Subsidiaries	(1)
23.1	Consent of RBSM LLP	(1)
31.1	Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(1)
31.2	Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(1)
32	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(3)
97.1	Clawback Policy		10-K	97.1	3/21/24
101.INS	Inline XBRL Instance Document	(1)
101.SCH	Inline XBRL Taxonomy Extension Schema	(1)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase	(1)
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase	(1)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase	(1)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase	(1)
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).	(1)

*	Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the SEC upon request any omitted information.

(1)	Filed herein
(2)	Indicates a management contract or compensatory plan.
(3)	Furnished herein

ITEM 16. FORM 10-K SUMMARY.

Not applicable.

5142

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 2026, ~~2025~~2026.

		BTCS INC.
Date:	March 2026, ~~2025~~2026	/s/ Charles Allen
		Charles W. Allen
		Charles Allen
		Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of BTCS Inc. and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Charles Allen	Chief Executive Officer	March 2026, ~~2025~~2026
Charles W. Allen	(Principal Executive Officer) and Chairman of the Board of Directors
Charles Allen	(Principal Executive Officer) and Chairman of the Board of Directors
/s/ Michael Prevoznik	Chief Financial Officer	March 2026, ~~2025~~2026
Michael Prevoznik	(Principal Financial Officer and Principal Accounting Officer)
/s/ Michal Handerhan	Director	March 20, 2025
/s/ Melanie Pump	Director	March 26, 2026
Michal Handerhan
/s/ Melanie Pump	Director	March 20, 2025
Melanie Pump
/s/ Charlie Lee	Director	March 2026, ~~2025~~2026
Charlie Lee
/s/ Ashley DeSimone	Director	March 2026, ~~2025~~2026
Ashley DeSimone

5243

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

BTCS Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of BTCS Inc. (The “Company”) as of December 31, ~~2024~~2025 and ~~2023~~2024 and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-~~year~~years period ended December 31, 2025 and 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for each of the years in the two-~~year~~ years period ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 3 to the financial statements, the Company ~~has~~ changed its method of accounting for ~~digital~~the ~~assets~~cost ~~(crypto~~basis ~~currencies)~~of toits ~~fair~~crypto ~~value,~~assets ~~with~~received ~~changes~~and indetermining ~~fair~~realized ~~value~~gains ~~recognized~~and ~~in net income, effective~~losses asfrom ofsale ~~January 1, 2023 due to the adoption~~ of ~~Accounting~~crypto ~~Standards Update (“ASU”) No~~assets. ~~2023-08,~~Our ~~Intangibles-Goodwill~~opinion ~~and~~is ~~Other-Crypto Assets~~not ~~(Subtopic~~modified ~~350-60):~~with ~~Accounting~~respect ~~for~~to ~~and~~the ~~Disclosure~~two ofmatters ~~Crypto~~noted ~~Assets (“ASU 2023-08”).~~below:

Cost Basis:

Effective January 1, 2025, the Company updated its accounting policy for determining the cost basis of crypto assets received. The cost basis is now measured at fair value based on the hourly spot price at the time of receipt, consistent with the applicable guidance under ASC 350-60. Prior to January 1, 2025, the cost basis of crypto assets was measured using the last close price of the day in the UTC (Coordinated Universal Time) time zone on the date of receipt. The change has been applied prospectively.

Cost Relief in Determining Realized Gains and Losses:

In conjunction with ongoing system and process enhancements, the Company updated its method for determining the cost basis of crypto assets used in computing realized gains and losses. Effective January 1, 2025, the Company adopted the Last-In, First-Out (“LIFO”) method for determining the cost basis of crypto assets sold. This method assumes that the most recently acquired assets are sold or used first and replaces the Company’s previous use of the specific identification method, which tracked the actual cost of each individual asset sold. The change has been applied prospectively beginning January 1, 2025.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-1

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of Liquidity and the Company’s Ability to Continue as a Going Concern

Critical Audit Matter Description

As described in Note 13 to the financial statements, management evaluated whether conditions or events raised substantial doubt about the Company’s ability to continue as a going concern, which contemplates the continuity of operations, realization of assets, and settlement of liabilities in the normal course of business. The Company has incurred recurring net losses of $33.3 million and $1.3 million for the years ended December 31, 2025 and 2024, respectively, and has an accumulated deficit of $173.3 million as of December 31, 2025. As of December 31, 2025, the Company had approximately $1.5 million of cash and cash equivalents and working capital of approximately $150.6 million, which is comprised primarily of its liquid digital asset holdings.

Management’s plans to alleviate the substantial doubt include (i) completing an equity offering under the At-the-Market program, and (ii) the potential sale of the Company’s liquid digital assets to meet its obligations. Management has concluded that these plans, if successfully executed, are probable of alleviating the substantial doubt.

The going concern assessment was identified as a critical audit matter because of the significant judgment required by management in developing the underlying cash flow projections and the assumptions supporting the probability of executing the plans to alleviate substantial doubt. Auditing these assumptions required a high degree of auditor judgment.

F-1

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the going concern assessment included the following, among others:

	●	Evaluated management’s cash flow projections for the twelve-month period following the issuance date by comparing projected revenue growth rates and operating expenditure assumptions to historical trends, industry benchmarks, and available third-party market data.
	●	Assessed the feasibility and probability of management’s plan to complete the proposed equity offering by reviewing the engagement letter with the underwriter, correspondence with the SEC. and the Company has historically been able to raise capital via At-the-Market equity offering. t evidence of investor interest, including a term sheet received subsequent to year-end.
	●	Evaluated the existence of digital assets by ascertaining the fair value of such assets from observable market prices.
	●	Evaluated the adequacy of the going concern disclosures in the financial statements and footnotes in accordance with ASC 205-40, including the nature of the conditions, management’s plans, and the conclusion regarding whether substantial doubt has been alleviated.
	●	Assessed management’s conclusion that substantial doubt is alleviated based on the totality of evidence gathered and the probability of the outcome of the plans described above.

Corporate Crypto Assets Held

Critical Audit Matter Description

Crypto assets are generally accessible only by the possessor of the unique private key relating to the digital wallet or node in which the crypto assets are held. Accordingly, private keys must be safeguarded and secured in order to prevent an unauthorized party from accessing the crypto assets within a digital wallet. The Company primarily holds crypto assets for its own use in wallets. The loss, theft, or otherwise compromise of access to the private keys required to access the crypto assets could adversely affect the Company’s ability to access the crypto assets within its environment. This could result in loss of corporate crypto assets held.

We identified crypto assets held as a critical audit matter due to the nature and extent of audit effort required to obtain sufficient appropriate audit evidence to address the risks of material misstatement related to the existence and rights & obligations of crypto assets in cold storage. The nature and extent of audit effort required to address the matter includes significant involvement of more experienced engagement team members and discussions and consultations with subject matter experts related to the matter. 

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to crypto assets in ~~storage~~cold storage included the following, among others:

a.● We consulted with subject matter experts regarding our planned audit response to address certain risks of material misstatement of crypto assets in cold storage. b.● We noted the controls within the Company’s private key management process including controls related to physical access, key generation, and segregation of duties across the processes. c.● We tested the effectiveness of management’s reconciliation control of internal books and records to external blockchains. d.● We independently obtained evidence from public blockchains to test the existence of crypto asset balances. e.● We obtained evidence that management has control of the private keys required to access crypto assets held through observing the wallets signed in using selected private keys or through observing the movement of selected crypto asset transactions. f.● We evaluated the reliability of audit evidence obtained from public blockchains.

We applied auditor judgment in determining the nature and extent of audit evidence required, especially related to assessing the existence of the digital assets and whether the Company controls the digital assets. We evaluated the sufficiency and appropriateness of audit evidence obtained by assessing the results of procedures performed over the digital assets.

/s/ RBSM LLP PCAOB ID 587 We have served as the Company’s auditor since 2016. ~~Las~~New ~~Vegas~~York, ~~Nevada~~NY March 2026, ~~2025~~2026

F-2

BTCS Inc.

~~Consolidated~~ Balance Sheets

	December 31,			December 31,
	2024			2023
	2025			2024
Assets:
Current assets:
Cash and cash equivalents	$	1,~~977~~526,~~778~~395		$	1,~~458~~977,~~327~~778
Stablecoins		391,~~545~~539,064			2139,~~044~~545
Crypto assets		646,539			302,783
Digital assets - treasury		2,388,607			646,539
Staked crypto assets		35,410,144			24,900,146
Digital assets - DeFi		177,718,244			-
Prepaid expenses		63,934			62,461
Digital assets - staked		30,657,401			35,410,144
Receivable for capital shares sold		-			291,440
Non-fungible tokens		41,690			-
Total current assets		38,137,940			27,036,201
Prepaid expenses		146,031			63,934
Total current assets		214,017,432			38,137,940
Other assets:
Investments, at value (Cost $100,000)		100,000			100,000
Investments, at value (Cost $600,000)		600,000			100,000
Property and equipment, net		714,~~449~~390			107,~~490~~449
Total other assets		~~107~~614,~~449~~390			~~110~~107,~~490~~449
Total Assets	$	38214,~~245~~631,~~389~~822		$	2738,~~146~~245,~~691~~389
Liabilities and Stockholders’ Equity:
Accounts payable and accrued expenses	$	70,444		$	55,058
Current liabilities:
Accrued compensation		3,907,091			712,092
Accounts payable and accrued expenses	$	38,525		$	70,444
Warrant liabilities		267,900			213,750
Accrued compensation		1,609,208			3,907,091
Total current liabilities		4,245,435			980,900
Accrued interest		225,115			-
Loans payable - DeFi protocol		61,500,000			-
Warrant liabilities		-			267,900
Total current liabilities		63,372,848			4,245,435
Non-current liabilities:
Convertible notes payable, net	$	11,842,195		$	-
Total non-current liabilities		11,842,195			-
Total liabilities		75,215,043			4,245,435
Commitments and contingencies (Note 11)		-			-
Stockholders’ equity:
Preferred stock: 20,000,000 shares authorized at $0.001 par value:
Preferred Stock, $0.001 par value per share; 20,000,000 shares authorized, of which:
Series V preferred stock: 15,033,231 and 14,567,829 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively		2,646,314			2,563,938
Series V Preferred Stock; 15,671,405 and 15,033,231 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively	$	1,975,701		$	2,646,314
Preferred stock value		2,646,314			2,563,938
Preferred Stock value	$	1,975,701		$	2,646,314
Common stock, 975,000,000 shares authorized at $0.001 par value, 18,717,743 and 15,320,281 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively		18,718			15,322
Common Stock, $0.001 par value per share; 975,000,000 shares authorized; 46,852,737 and 18,717,743 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively		46,853			18,718
Additional paid-in capital		~~171~~310,~~283~~695,~~199~~935			~~162~~171,~~263~~283,~~634~~199
Accumulated deficit		(~~139~~173,~~948~~301,~~277~~710	)		(~~138~~139,~~677~~948,~~103~~277	)
Total stockholders’ equity		33139,~~999~~416,~~954~~779			2633,~~165~~999,~~791~~954
Total Liabilities and Stockholders’ Equity	$	38214,~~245~~631,~~389~~822		$	2738,~~146~~245,~~691~~389

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

F-3

BTCS Inc.

~~Consolidated~~ Statements of Operations

	2024			2023
	2025			2024
	For the Year Ended
	December 31,
	2024			2023
	2025			2024
Revenues
Blockchain infrastructure revenues (net of fees)	$	4,073,518		$	1,339,628
Blockchain infrastructure revenues	$	15,177,667		$	4,073,518
Total revenues		4,073,518			1,339,628
DeFi revenues		1,313,917			-
Total revenues		16,491,584			4,073,518
Cost of revenues
Blockchain infrastructure costs		314,~~127~~469,~~509~~354			~~359~~3,~~778~~127,509
Gross profit		946,009			979,850
DeFi costs		12,300			-
Total cost of revenues		14,481,654			3,127,509
Gross profit		2,009,930			946,009
Operating expenses:
General and administrative		1,672,276			1,450,724
Professional fees		1,657,024			645,143
Research and development		755,813			687,288
General and administrative		1,562,940			1,027,133
Compensation and related expenses		6,598,348			2,542,336
Research and development		679,434			755,813
Marketing		80,993			12,153
Compensation and related expenses		3,502,872			6,598,348
Realized losses on crypto asset transactions		767,375			604,269
Marketing		602,456			80,993
Total operating expenses		9,874,805			5,296,770
Realized losses on digital asset transactions		8,184,469			767,375
Unrealized loss (gain) on digital assets		15,713,307			(7,683,772	)
Total operating expenses		31,902,502			2,191,033
Other income (expenses):
Change in unrealized appreciation on crypto assets		7,683,772			12,135,648
Interest expense		(3,517,671	)		-
Change in fair value of warrant liabilities		~~(54~~267,~~150~~900	)		-(54,150	)
Other income		28,000			-
Impairment loss on non-fungible tokens		(149,566	)		-
Total other income (expenses)		7,657,622			12,135,648
Loss on settlement of dividend payable		(52,793	)		-
Net income (loss)	$	(1,271,174	)	$	7,818,728
Loss on extinguishment of debt		(8,731	)		-
Basic net income (loss) per share attributable to common stockholders	$	(0.08	)	$	0.55
Other income		-			28,000
Diluted net income (loss) per share attributable to common stockholders	$	(0.08	)	$	0.45
Total other income (expenses)		(3,460,861	)		(26,150	)
Basic weighted average number of common shares outstanding		16,263,702			14,092,233
Net loss	$	(33,353,433	)	$	(1,271,174	)
Diluted weighted average number of common shares outstanding, basic and diluted		16,263,702			17,546,339
Basic net loss per share attributable to common stockholders	$	(1.00	)	$	(0.08	)
Diluted net loss per share attributable to common stockholders	$	(1.00	)	$	(0.08	)
Basic weighted average number of common shares outstanding		33,190,938			16,263,702
Diluted weighted average number of common shares outstanding, basic and diluted		33,190,938			16,263,702

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

F-4

BTCS Inc.

~~Consolidated~~ Statements of Stockholders’ Equity

For the Years Ended December 31, ~~2024~~2025 and ~~2023~~2024

	Shares			Amount			Shares			Amount			Capital			Deficit			Equity
	Series V												Additional						Total
	Preferred Stock						Common Stock						Paid-in			Accumulated			Stockholders’
	Shares			Amount			Shares			Amount			Capital			Deficit			Equity
Balance December 31, 2023		14,567,829		$	2,563,938			15,320,281		$	15,322		$	162,263,634		$	(138,677,103	)	$	26,165,791
Balance at December 31, 2024		15,033,231	(1)	$	2,646,314			18,717,743		$	18,718		$	171,283,199		$	(139,948,277	)	$	33,999,954
Issuance of common stock, net of offering cost / At-the-market offering		-			-			226,~~021~~394,~~361~~414			226,~~021~~395			6135,~~679~~134,~~756~~447			-			6135,~~681~~160,~~777~~842
Stock-based compensation		465,402			82,376			1,376,101			1,375			2,339,809			-			2,423,560
Issuance of warrants in connection with convertible note		-			-			-			-			6,367,316			-			6,367,316
Net income (loss)		-			-			-			-			-			(1,271,174	)		(1,271,174	)
Issuance of common stock upon exercise of warrants		-			-			815,324			815			(815	)		-			-
Balance December 31, 2024		15,033,231	(1)	$	2,646,314			18,717,743	(2)	$	18,718		$	171,283,199		$	(139,948,277	)	$	33,999,954
Issuance of common stock upon exercise of options		-			-			746,363			746			(746	)		-			-
Stock-based compensation		1,020,834			180,688			1,530,230			1,530			4,902,450			-			5,084,668
Shares repurchased								(888,677	)		(888	)		(3,999,112	)					(4,000,000	)
Forfeiture of stock-based awards		(382,660	)		(67,731	)		(462,660	)		(463	)		(743,705	)		-			(811,899	)
Dividends paid		-			(783,570	)		-			-			(2,392,351	)		-			(3,175,921	)
Proceeds from disgorgement of stockholder short-swing profits		-			-			-			-			145,252			-			145,252
Net loss		-			-			-			-			-			(33,353,433	)		(33,353,433	)
Balance at December 31, 2025		15,671,405	(1)	$	1,975,701			46,852,737	(2)	$	46,853		$	310,695,935		$	(173,301,710	)	$	139,416,779

	(1)	Includes 98,294 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting conditions. See Note 6 – Stockholders’ Equity (Deficit) for further details.
	(2)	Includes 270,794 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based vesting conditions. See Note 6 – Stockholders’ Equity (Deficit) for further details.

(1)

Includes 278,375 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting conditions. See Note 9 – Stockholders’ Equity (Deficit) for further details.

	Series V								Additional						Total
	Preferred Stock				Common Stock				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance December 31, 2022, as adjusted		-	$	-		13,107,149	$	13,108	$	160,800,263		$	(146,495,831(1)	)(1)	$	14,317,540(1)	(1)
Balance		-	$	-		13,107,149	$	13,108	$	160,800,263		$	(146,495,831	)(1)	$	14,317,540	(1)
Issuance of common stock, net of offering cost / At-the-market offering		-		-		1,707,621		1,708		2,686,086			-			2,687,794
Issuance of Series V preferred stock		14,542,803		2,559,533		-		-		(2,559,533	)		-			-
Stock-based compensation		25,026		4,405		505,511		506		1,336,818			-			1,341,729
Net income (loss)		-		-		-		-		-			7,818,728			7,818,728
Balance December 31, 2023		14,567,829	$	2,563,938		15,320,281	$	15,322	$	162,263,634		$	(138,677,103	)	$	26,165,791
Balance		14,567,829	$	2,563,938		15,320,281	$	15,322	$	162,263,634		$	(138,677,103	)	$	26,165,791

(2)

Includes 478,375 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based vesting conditions. See Note 9 – Stockholders’ Equity (Deficit) for further details.

(1) Includes an adjustment to the opening balance of $4,986,377 resulting from a change in accounting principle. See Note 3 – Changes in Accounting Principle for further details.

	Series V										Additional					Total
	Preferred Stock					Common Stock					Paid-in		Accumulated			Stockholders’
	Shares			Amount		Shares			Amount		Capital		Deficit			Equity
Balance December 31, 2023		14,567,829		$	2,563,938		15,320,281		$	15,322	$	162,263,634	$	(138,677,103	)	$	26,165,791
Issuance of common stock, net of offering cost / At-the-market offering		-			-		2,021,361			2,021		6,679,756		-			6,681,777
Stock-based compensation		465,402			82,376		1,376,101			1,375		2,339,809		-			2,423,560
Net income (loss)		-			-		-			-		-		(1,271,174	)		(1,271,174	)
Balance December 31, 2024		15,033,231	(1)	$	2,646,314		18,717,743	(2)	$	18,718	$	171,283,199	$	(139,948,277	)	$	33,999,954

~~The accompanying~~(1) ~~notes~~Includes ~~are~~98,294 anrestricted ~~integral~~shares ~~part~~ of ~~these~~Series ~~consolidated~~V ~~financial~~Preferred ~~statements~~Stock held by employees that remain subject to forfeiture based on time-based vesting conditions. See Note 9 – Stockholders’ Equity (Deficit) for further details.

(2)

Includes 270,794 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based vesting conditions. See Note 9 – Stockholders’ Equity (Deficit) for further details.

The accompanying notes are an integral part of these financial statements.

F-5

BTCS Inc.

~~Consolidated~~ Statements of Cash Flows

	2024			2023
	2025			2024
	For the Year Ended
	December 31,
	2024			2023
	2025			2024
Net cash flows used from operating activities:
Cash flows from operating activities:
Net income (loss)	$	(1,271,174	)	$	7,818,728
Net loss	$	(33,353,433	)	$	(1,271,174	)
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		54,~~689~~067			5,~~033~~689
Stock-based compensation		2657,~~423,560~~076			12,~~341~~423,~~729~~560
Blockchain infrastructure revenue		(415,~~073~~177,~~518~~667	)		(14,~~339~~073,~~628~~518	)
Builder payments (non-cash)		2,765,731			-
DeFi revenue		(1,301,976	)		-
Change in fair value of warrant liabilities		54,150			-
Builder payments (non-cash)		14,299,606			2,765,731
Realized losses on crypto assets transactions		767,375			604,269
Blockchain network fees (non-cash)		12,284			-
Change in unrealized appreciation on crypto assets		(7,683,772	)		(12,135,648	)
Change in fair value of warrant liabilities		(267,900	)		54,150
Purchase of non-productive digital assets		(191,256	)		-
Amortization on debt discount and issuance costs		1,497,000			-
Realized losses on digital asset transactions		8,184,469			767,375
Unrealized loss (gain) on digital assets		15,713,307			(7,683,772	)
Impairment loss on non-fungible tokens		149,566			-
Loss on settlement of dividend payable		52,793			-
Loss on extinguishment of debt		8,731			-
Changes in operating assets and liabilities:
Stablecoins		(181,~~501~~499,519	)		(2118,~~044~~501	)
Prepaid expenses and other current assets		(182,~~473~~097	)		61(1,~~266~~473	)
Receivable for capital shares sold		~~291,440~~-			(291,440	)
Accounts payable and accrued expenses		15(31,~~386~~919	)		~~(21~~15,~~669~~386	)
Accrued compensation		31,~~194~~317,~~999~~810			~~416~~3,~~157~~194,999
Net cash used in operating activities		(3,530,108	)		(3,562,247	)
Accrued interest		225,115			-
Net cash used in operating activities		(9,783,943	)		(3,530,108	)
Cash flows from investing activities:
Purchase of productive crypto assets for validating		(3,531,550	)		(1,804,482	)
Purchase of productive digital assets for validating		(201,348,417	)		(3,531,550	)
Sale of productive crypto assets		901,980			1,994,851
Sale of productive digital assets		4,362,106			901,980
Purchase of property and equipment		(2,648	)		(5,276	)
Purchase of investments		(500,000	)		-
Sale of property and equipment		-			904
Purchase of property and equipment		(12,759	)		(2,648	)
Net cash provided by (used in) investing activities		(2,632,218	)		185,997
Sale of property and equipment		1,750			-
Net cash used in investing activities		(197,497,320	)		(2,632,218	)
Cash flow from financing activities:
Net proceeds from issuance common stock/ At-the-market offering		6135,~~681~~160,~~777~~842			26,~~687~~681,~~794~~777
Net cash provided by financing activities		6,681,777			2,687,794
Dividend distributions		(2,679,994	)		-
Net (decrease)/increase in cash		519,451			(688,456	)
Payments for shares repurchased		(4,000,000	)		-
Cash, beginning of period		1,458,327			2,146,783
Proceeds from issuance of convertible notes, net		16,843,500			-
Cash, end of period	$	1,977,778		$	1,458,327
Proceeds from Defi borrowing		122,947,000			-
Supplemental disclosure of non-cash financing and investing activities:
Payments to Defi borrowing		(61,455,731	)		-
Series V Preferred Stock Distribution	$	82,376		$	2,559,533
Payments of debt issuance costs		(130,989	)		-
Proceeds from disgorgement of stockholders short-swing profits		145,252			-
Net cash provided by financing activities		206,829,880			6,681,777
Net (decrease)/increase in cash		(451,383	)		519,451
Cash, beginning of period		1,977,778			1,458,327
Cash, end of period	$	1,526,395		$	1,977,778
Supplemental disclosure of cash flow information:
Cash and stablecoins paid for interest	$	1,795,557		$	-
Supplemental disclosure of non-cash investing and financing activities:
Series V Preferred Stock Distribution	$	180,688		$	82,376
Non-cash discount on convertible notes	$	1,017,026		$	-
Extinguishment of USDT-denominated debt via on-chain protocol	$	1,500,000		$	-
Issuance of GHO-denominated debt via on-chain protocol	$	(1,500,000	)	$	-
Issuance of common stock upon non-cash exercise of warrants and stock options	$	8,134,516		$	-
Dividends distributions paid in ETH	$	495,927		$	-

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

F-6

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

Note 1 -– Business Organization and ~~Description~~Nature of ~~Business and Recent Developments~~Operations

BTCS Inc. (“BTCS” or the “Company”), short for Blockchain Technology Consensus Solutions, is a Nevada corporation listed on the Nasdaq, isStock aMarket Uand headquartered in the United States.~~S.-based~~ The Company is a blockchain technology ~~company~~ ~~focused~~business onthat operates revenue-generating blockchain infrastructure. ~~The~~and ~~Company’s~~decentralized ~~primary~~finance ~~operations~~(“DeFi”) ~~center~~activities, primarily on the Ethereum network,. BTCS ~~reflecting~~is ~~its~~an ~~strategic emphasis~~Ethereum-first operator focused on ~~Ethereum~~generating ~~block~~on-~~building~~chain ~~(“Builder+”)~~revenues ~~and~~while ~~validator~~strategically ~~node~~deploying ~~operations (~~“~~NodeOps~~ETH”) ~~across~~(the ~~various proof-of-stake~~Ethereum ~~(“PoS”~~network’s native token) and ~~delegated~~other ~~proof-of-stake~~digital ~~(“dPoS”)~~assets ~~networks~~through its operations.

~~BTCS~~The Company operates ~~non-custodial~~as ~~validator~~an ~~nodes~~active ~~(or “nodes”) that participate in~~ blockchain ~~network~~infrastructure ~~consensus by performing transaction validation (“attestation”)~~ and ~~block~~DeFi ~~proposal~~participant ~~services.~~rather ~~The~~than ~~Company~~as ~~earns~~a ~~native~~passive ~~token~~holder ~~rewards~~of ~~by staking its PoS crypto assets (also referred to “cryptocurrencies”, “crypto”, “crypto assets”, “~~digital assets~~”, or~~. ~~“tokens”) to validator nodes operated by both~~ While BTCS ~~and~~maintains ~~third-parties.~~significant ~~Additionally,~~Ethereum ~~on certain dPoS networks~~holdings, ~~BTCS~~those ~~enables third-party~~assets ~~crypto~~are ~~asset~~actively ~~holders~~deployed toacross ~~delegate~~its ~~their~~operations ~~assets~~ to ~~its~~support ~~validator~~revenue ~~nodes~~generation, ~~earning validator node fees as a percentage of staking~~ ~~rewards~~operational ~~generated~~scalability, ~~from~~and ~~delegated~~capital ~~crypto assets~~efficiency.

InBusiness 2024, BTCS launched its Builder+ operations, a core component of its blockchain infrastructure strategy. Builder+ leverages advanced algorithms to optimize the construction of Ethereum blocks for on-chain validation, focusing on maximizing gas fee revenue. Builder+ has become a central revenue driver for BTCS, positioning the Company as an integral participant in Ethereum’s transaction cycle.Lines

InBTCS ~~addition~~conducts to its ~~blockchain infrastructure~~ operations, ~~BTCS~~through ~~has developed ChainQ, an AI-powered blockchain data and analytics platform designed to enhance transparency and accessibility within~~ the ~~blockchain~~following ~~ecosystem.~~primary ~~Currently~~business ~~in beta, ChainQ provides intuitive tools for exploring and analyzing on-chain data, leveraging insights from BTCS’s blockchain infrastructure activities.~~lines:

~~As part~~1. ofValidator ~~its~~Node ~~strategic~~Operations ~~focus~~(“NodeOps”) – BTCS operates validator nodes (“nodes”) on the Ethereum network as a validator (“Validator”). Validator nodes perform validation and consensus-related activities that contribute to network security and block finalization. In exchange, the Company earns ETH-denominated staking revenue, which include protocol-defined rewards and execution layer transaction fees. 2. Block Building (“Builder+”) ~~and~~– ~~Validator~~Through ~~Node~~its Builder+ operations, the Company participates in the blockspace value chain on the Ethereum and other supported networks by operating block builders (“Builders”) that construct and submit optimized transaction blocks to Validators. Builder+ revenues are derived from the fees earned when BTCS-constructed ~~discontinued~~blocks ~~support~~are ~~for~~successfully proposed on-chain. 3. DeFi Operations (“Imperium”) – Beginning in 2025, BTCS expanded its ~~StakeSeeker~~blockchain ~~platform~~operations onto ~~December 27~~include DeFi activities under its Imperium business line. Through Imperium, ~~2024~~the Company deploys digital assets, including ETH and stablecoins, into smart contract-based protocols that facilitate decentralized lending, borrowing, liquidity provision, and other on-chain services. The Company earns variable digital asset rewards based on its participation and the utilization of its deployed assets within these protocols and prevailing market conditions.

~~The~~ Together, ~~Company’s~~these ~~operations~~business ~~are~~lines ~~subject~~represent tocomplementary ~~regulatory~~components ~~uncertainties,~~of ~~technological~~the ~~risks and market volatility inherent to blockchain technology and crypto assets. BTCS~~Company’s ~~future success depends on the continued adoption of~~ blockchain technology asstrategy, ~~well~~designed asto ~~the~~generate ~~Company’s~~recurring ~~ability~~on-chain torevenues, ~~scale~~enhance ~~its~~operational ~~Ethereum~~scalability, ~~block-building operations~~ and ~~expand~~increase ~~its~~long-term ~~broader blockchain infrastructure operations~~value.

While each operation has distinct economic drivers and technology components, revenues generated from NodeOps and Builder+ are aggregated and presented as Blockchain infrastructure revenues, while revenues from Imperium are presented separately as DeFi revenues in the statements of operations. The Company’s operating segments and the reconciliation of segment results to the financial statements are disclosed in Note 8 – Segment Reporting.

Capital Strategy and Operations

BTCS’s operations are supported by an integrated capital formation and deployment framework that combines decentralized finance mechanisms with traditional capital markets activities (the “DeFi/TradFi Flywheel”). This framework includes the use of tools such as at-the-market equity (“ATM”) offerings, structured convertible notes, and ETH-backed DeFi borrowing to fund operations, scale infrastructure, and deploy digital assets while managing liquidity and dilution.

The Company actively allocates digital assets across staking, block-building support, and DeFi deployments based on expected returns, risk considerations, and market conditions.

Strategic Realignment

During the year ended December 31, 2025, the Company completed a strategic realignment of its operations and capital allocation toward Ethereum-focused activities. As part of this process, BTCS discontinued validator node operations on non-Ethereum blockchains, including Avalanche (AVAX), Cosmos (ATOM), Akash (AKT), and Kava (KAVA), and liquidated the majority of its non-Ethereum digital asset holdings.

The Company also discontinued the development and operation of legacy technology service platforms, including StakeSeeker in 2024 and ChainQ in 2025, in order to focus resources on scalable, revenue-generating blockchain infrastructure and DeFi activities.

Risks and Dependence on the Ethereum Ecosystem

The Company’s operations are subject to various risks, including technological complexity, cybersecurity risks, regulatory uncertainty, digital asset price volatility, and competition within the blockchain infrastructure and DeFi markets. The Company’s future performance depends in part on the continued adoption and development of the Ethereum network, the evolution of decentralized infrastructure markets, and BTCS’s ability to operate blockchain infrastructure and DeFi activities efficiently at scale.

F-7

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

Note 2 - ~~Summary~~Basis of ~~Significant Accounting Policies~~Presentation

Basis of Presentation

The accompanying ~~consolidated~~ financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”),. ~~and~~The ~~include~~financial statements reflect the accounts of the Company ~~and its subsidiaries~~. The Company’s ~~subsidiaries~~does ~~are~~not ~~entities~~have ~~in which~~any ~~the~~subsidiaries ~~Company holds, directly~~ or ~~indirectly,~~variable interest ~~more~~entities ~~than~~requiring ~~50%~~consolidation as of ~~the~~December ~~voting rights~~31, ~~or where it exercises control~~2025. ~~All intercompany accounts and transactions have been eliminated in consolidation.~~

Reclassifications

Certain amounts in prior period financial statements have been reclassified to conform to the current period’s presentation. These reclassifications did not affect previously reported net income (loss), total assets, total liabilities, or equity, nor did they impact previously disclosed information.

BTCS Labs

BTCS Labs Inc. (“BTCS Labs”) was formed on December 24, 2024. At the time of its formation, the Company paid approximately $2,000 of formation costs on behalf of BTCS Labs in exchange for 100 shares of BTCS Labs common stock. In September 2025, BTCS Labs reimbursed the Company for the original payment of formation costs, and the 100 shares originally issued to the Company were repurchased and retired. As a result, BTCS Labs is no longer presented as a subsidiary in the accompanying financial statements.

Note 3 - Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of ~~six~~three months or less when purchased to be cash and cash equivalents. The Company maintains cash and cash equivalent balances at financial institutions that are insured by the FDIC. As of December 31, ~~2024~~2025 and ~~2023~~2024, the Company had approximately $1,~~978~~526,000 and $1,~~458~~978,000 in cash. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, ~~2024~~2025 and ~~2023~~2024, the Company had approximately $1,~~474~~122,000 and $~~933~~1,474,000 in excess of the FDIC insured limit, respectively.

Stablecoins

The Company holds stablecoins, ~~such~~including, asbut not limited to USDT (Tether), ~~and~~ USDC (USD Coin), ~~which~~and ~~are~~GHO ~~crypto~~(Aave ~~assets~~Protocol’s ~~that~~native stablecoin), which are ~~pegged~~digital assets designed to ~~the~~maintain a value ofsubstantially equivalent to one U.S. dollar. ~~Our~~Stablecoins ~~stablecoins~~ are generally ~~typically~~ held in ~~secure~~Company-controlled digital wallets, or on ~~crypto~~centralized ~~asset~~digital assets exchanges., ~~The~~or ~~Company~~deployed ~~acquires~~into ~~and~~DeFi ~~holds~~protocols ~~stablecoins~~for ~~primarily~~liquidity todeployment ~~facilitate~~or ~~crypto asset transactions, including, but not limited to, payments to third~~revenue-~~party~~generating ~~vendors~~activities.

The Company accounts for its stablecoins as indefinite-lived intangible assets in accordance with ~~ASC~~Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other. While stablecoins are not accounted for as cash or cash equivalents, ~~these~~management ~~stablecoins~~considers them ~~are considered~~ a liquidity resource due to their intended price stability and high on-chain and off-chain liquidity.

~~Crypto~~Stablecoins ~~Assets~~deployed into DeFi protocols are evaluated for continued control and restrictions on accessibility. As of December 31, 2025, approximately $501,000 of USDC was deployed in DeFi vaults and remained readily withdrawable.

Digital assets

The Company’s digital assets primarily consist of Ethereum and other digital assets held in non-custodial wallets. These assets are maintained under the Company’s control through secure private keys and are not held by any third-party custodian. The Company’s digital assets are used to support its blockchain infrastructure operations, including NodeOps, Builder+ and Imperium.

Fair Value Measurement

The Company’s accounts for ~~the~~its ~~fair~~digital ~~value~~assets ~~measurement~~under ~~for~~ASC ~~its~~350-60, ~~crypto~~Intangibles—Goodwill ~~assets~~and inOther—Digital ~~accordance~~assets, ~~with~~and ~~Financial~~measures such ~~Accounting~~assets ~~Standards~~at ~~Board (“FASB”)~~fair ~~Accounting~~value ~~Standards~~in ~~Codification~~accordance (“with ASC”) 820, Fair Value Measurement. ~~ASC~~Fair ~~820 defines fair~~ value as represents the price that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement date. Market participants are considered to be independent, knowledgeable, and willing and able to transact. It requires the Company to assume that its ~~crypto~~ digital assets are sold in their principal market or, in the absence of a principal market, the most advantageous market to which it has access.

Kraken serves as the principal market for the Company’s ~~crypto~~digital assets, being the Company’s primary cryptocurrency exchange for ~~both~~ both purchases and sales. Coinbase is designated as the secondary principal market. This determination results from a comprehensive evaluation considering various factors, including compliance, trading activity, and price stability.

The fair value of ~~crypto~~digital assets is primarily determined based on pricing data obtained from Kraken, the Company’s principal market. In the absence of Kraken data, pricing from Coinbase serves as a secondary source.

While Kraken is designated as the primary exchange, the Company retains flexibility to conduct cryptocurrency transactions on other exchanges where it maintains accounts. This flexibility allows the Company to adapt to changing market conditions and explore alternative platforms when necessary to ensure cost-effective execution and fair value measurement using the most advantageous market.

The selection of Kraken as the principal market reflects the Company’s commitment to informed decision-making and achieving the most accurate representation of fair value for its ~~crypto~~digital assets. Regular reviews ensure alignment with the Company’s objectives and cryptocurrency market dynamics.

F-8

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

Accounting for ~~Crypto~~Digital Assets

~~The~~Fair ~~cost~~Market ~~basis of the Company’s crypto assets is initially recorded at their fair value using the last close price of the day in the UTC (Coordinated Universal Time) time zone on the date of receipt.~~Value

~~Crypto~~The ~~assets~~Company ~~are~~measures ~~measured~~its atdigital ~~their~~assets ~~fair~~at ~~respective~~ fair ~~market~~value values at each reporting period end on the balance sheets and classified as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances. Staked crypto assets are presented as current assets if their lock-up periods are less than 12 months, and as long-term other assets if the lock-up extends beyond one year. The majority of our crypto assets are staked, typically with lock-up periods of less than 21 days, and are considered current assets in accordance with ASC ~~210-10-20~~820, ~~Balance~~Fair ~~Sheet~~Value Measurement, ~~due~~using to the ~~Company’s~~last ~~ability~~closing toprice ~~sell~~of ~~them~~the inday ~~a liquid marketplace, as we have a reasonable expectation that they will be realized~~ in ~~cash or sold or consumed during~~ the ~~normal~~UTC ~~operating~~time ~~cycle of our business to support operations when needed~~zone.

~~The~~Digital ~~classification of purchases and sales in the consolidated statements of cash flows is determined based on the nature of the crypto~~ assets~~, which~~ ~~can~~are be categorized asbased ‘productive’ (i.e. acquired for purposes of staking) or ‘non-productive’ (e.g. bitcoin). Acquisitions of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto assets are classified as investing activities in accordance with ASC 230-10-20, Investing activities. Productive crypto assets staked with lock-up periods of less than 12 months are listed as current assets in the ‘Staked Crypto Assets’ line item on ~~the~~their ~~balance sheet.~~operational ~~Staked~~use ~~crypto assets with lock-up periods exceeding 12 months are categorized~~ as ~~long-term other assets. Non-productive crypto assets are included in the ‘Crypto Assets’ line item on the balance sheet.~~follows:

~~Effective January~~● 1,Digital ~~2023,~~assets ~~the~~– ~~Company~~treasury ~~elected~~represent tounencumbered ~~early~~holdings ~~adopt~~maintained ~~ASU~~for Noliquidity and investment purposes. ~~2023-08,~~● ~~resulting~~Digital inassets a– ~~material~~DeFi ~~change~~represent assets deployed in ~~accounting~~decentralized ~~principle~~finance ~~related~~protocols ~~to the~~for ~~Company’s~~lending ~~accounting~~and ~~treatment~~liquidity ofprovision. ~~crypto~~● Digital assets. ~~The~~– ~~impacts~~staked ofrepresent ~~the~~assets ~~change~~actively instaked ~~accounting~~to ~~principle~~validator ~~are~~nodes ~~discussed~~and ~~further~~deployed in ~~Note~~ 3blockchain –validation ~~Changes~~activities into ~~Accounting~~earn ~~Principle~~staking rewards.

~~The~~All ~~Company~~digital ~~employs the specific identification method to determine the cost basis of our~~ assets ~~for~~measured ~~the~~at ~~computation~~fair ofvalue ~~gains~~under ~~and losses, in accordance with~~ ASC 350-60~~-50-2a.~~ ~~This method involves identifying~~ and ~~using~~are ~~the~~presented ~~actual~~as ~~cost~~current ofassets ~~each~~unless ~~individual~~they ~~asset~~are ~~sold~~subject orto ~~disposed~~protocol-imposed ofrestrictions toexceeding ~~calculate~~twelve ~~the gain or loss on its sale~~months. ~~Realized~~Staked ~~gains~~digital ~~(losses) on sale of crypto~~ assets are ~~included~~classified inas ~~other~~non-current ~~income~~if ~~(expenses) in~~their ~~the~~lock-up ~~consolidated~~periods ~~statements~~extend ofbeyond ~~operations. The Company recorded realized losses on crypto assets of approximately $767,000 and $604,000~~one ~~during the years ended December 31, 2024 and 2023, respectively~~year.

The majority of the Company’s digital assets are deployed either in staking arrangements with average lock-up periods of less than seven days or in DeFi arrangements that permit redemption on a near-immediate basis. Accordingly, these assets are classified as current under ASC 210-10-20, Balance Sheet, due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that they will be realized in cash or sold or consumed during the normal operating cycle of our business to support operations when needed.

Cost Basis

Effective January 1, 2025, the Company enhanced its accounting systems and processes related to the receipt and valuation of digital assets. As a result of these enhancements, the Company updated its accounting policy for determining the cost basis of digital assets received. The cost basis is now measured at fair value based on the hourly spot price at the time of receipt, consistent with the applicable guidance under ASC 350-60.

Prior to January 1, 2025, the cost basis of digital assets was measured using the last close price of the day in the UTC (Coordinated Universal Time) time zone on the date of receipt.

The change has been applied prospectively and did not have a material impact on the Company’s financial statements.

Cost Relief in Determining Realized Gains and Losses

In conjunction with ongoing system and process enhancements, the Company updated its method for determining the cost basis of digital assets used in computing realized gains and losses. Effective January 1, 2025, the Company adopted the Last-In, First-Out (“LIFO”) method for determining the cost basis of digital assets disposed of. This method assumes that the most recently acquired assets are sold or used first and replaces the Company’s previous use of the specific identification method, which tracked the actual cost of each individual asset sold.

The Company determined that the change in accounting principle is preferable as it better aligns with the Company’s operational systems and financial reporting objectives. The change has been applied prospectively beginning January 1, 2025, as retrospective application was deemed impracticable due to the nature of prior lot-level selection processes under the specific identification method.

Realized gains (losses) on sale of digital assets are included in operating expenses in the statements of operations. The Company recorded realized losses on digital assets of approximately $8,184,000 and $767,000 for the years ended December 31, 2025 and 2024, respectively.

The Company does not believe the change materially impacts comparability of results. While the realized loss for the year ended December 31, 2025, reflects application of the new LIFO method, it is not practicable to quantify the exact impact of the change as compared to the prior method, given the subjective lot selection involved in specific identification. Based on this assessment, the Company does not believe the change has a material effect on the financial statements.

F-9

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

Presentation of Digital Assets in the Statements of Cash Flows

The classification of purchases and sales in the statements of cash flows is determined based on the nature of the digital assets, which can be categorized as ‘productive’ (i.e. acquired for purposes of staking or liquidity provision) or ‘non-productive’ (e.g. NFTs). Acquisitions of non-productive digital assets are treated as operating activities, while acquisitions of productive digital assets are classified as investing activities in accordance with ASC 230-10-20, Investing activities.

ETH Deployed in DeFi Arrangements

In DeFi arrangements, such as those transacted on the Aave protocol, the Company participates as a Liquidity Provider, depositing ETH into Aave’s decentralized lending pools. When ETH is supplied, it becomes part of the protocol’s available liquidity that borrowers may draw upon. The deposited ETH earns variable rewards based on market supply and demand for borrowing within the protocol.

The ETH supplied by the Company is also eligible to serve as collateral supporting on-chain borrowing activities. The collateral value of the deposited ETH contributes to the overall “health factor” of the Company’s Aave wallet. The health factor is a protocol metric that measures the ratio of collateral value to outstanding borrowings and automatically updates with changes in ETH market prices. The health factor determines the safety buffer against liquidation; maintaining a value greater than 1.0 ensures sufficient collateralization, while a decline below 1.0 could trigger partial liquidation of the collateral by the protocol’s smart contracts.

Upon deposit, ETH is automatically wrapped into Aave Wrapped ETH (“WAETH” or “aEthWETH”) to enable ERC-20 interoperability and facilitate reward accrual within the lending pool. The Company has concluded that this conversion does not constitute a derecognition event under ASC 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, as no other counterparty obtains control or economic benefits of the deposited ETH. Rather, WAETH serves as a receipt or claim token evidencing the Company’s continuing interest in the underlying ETH.

Accordingly:

	●	ETH deployed into DeFi protocols remains recognized at its fair value under ASC 350-60.
	●	WAETH is not recognized as a separate intangible asset since it is economically equivalent to the underlying ETH.
	●	ETH deployed within DeFi protocols is disclosed as encumbered when serving as collateral for borrowing arrangements or liquidity provision activities.
	●	No gain or loss is recognized upon wrapping or unwrapping ETH within DeFi protocols.

Any reward earned from such DeFi deployments is recognized as DeFi revenues on the statements of operations in accordance with ASC 606, as discussed in Revenue Recognition section of Note 3 as well as Note 7 – Revenues and Cost of Revenues.

As of December 31, 2025, the Company had approximately 59,737 ETH deployed within DeFi protocols, which remains reflected as ETH within Digital assets - DeFi on the balance sheet and disclosed separately in Note 4 – Digital Assets, including disclosure of their restricted status. Deployed ETH is subject to protocol-specific risks, including smart-contract vulnerabilities, liquidity constraints, collateral liquidation risk, and potential protocol governance changes.

Digital Assets (Non-Fungible and Other Intangible Digital Assets)

The Company holds certain digital assets that do not represent ownership interests in an entity or contractual rights to cash flows and, therefore, do not meet the definition of financial instruments or equity securities under ASC 320 or ASC 321. These assets are primarily composed of non-fungible tokens (“NFTs”) and may include other digital assets associated with blockchain-based protocols.

The Company accounts for NFTs and similar digital assets as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other.

These assets are initially recorded at cost and are not amortized. The Company evaluates these assets for impairment each reporting period to determine if any events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If the carrying value of an asset exceeds its estimated fair value, an impairment loss is recognized equal to the difference. Subsequent increases in the fair value of these assets or reversals of impairment losses are not permitted.

Fair value is determined in accordance with ASC 820, Fair Value Measurement. based on observable market transactions, where available. Due to the nature of these assets, quoted prices in active markets are not always available, and management may be required to apply judgment in estimating fair value. For NFTs, the Company considers observable transactions on active NFT marketplaces, where available.

Realized gains or losses on the sale of NFTs are included in other income (expense) in the statements of operations.

See Note 5 – Digital Assets (Non-Fungible and Other Intangible Digital Assets) for additional information.

F-10

BTCS Inc.

NOTES TO FINANCIAL STATEMENTS

Operating Segments

The Company’s blockchain ~~infrastructure~~ operations include ~~two~~three primary revenue-generating activities: ~~Ethereum~~validator ~~block~~node operations (NodeOps), block building (“Builder+”) , and ~~validator~~DeFi ~~node~~ operations (~~“NodeOps”~~Imperium).

The Company’s Chief Operating Decision ~~Maker~~Makers (“~~CODM~~CODMs”) isare comprised of several members of its executive management team, including the Chief Executive Officer (“CEO”), ~~Chief Operating Officer (“COO”)~~ and Chief Financial Officer (“CFO”), who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources.

The ~~CODM~~CODMs regularly ~~reviews~~review discrete financial information ~~related~~for to Builder+, NodeOps, and ~~NodeOps~~Imperium, assessing financial performance ~~based~~against on gross profit (loss), direct operating expenses, and key financial metrics. These financial reviews direct operational decisions and shape capital deployment strategies for each activity.

While the ~~CODM~~CODMs ~~evaluates~~evaluate NodeOps, Builder+, and ~~NodeOps~~Imperium ~~separately~~individually for internal management purposes, ~~these~~NodeOps ~~activities~~and Builder+ share common economic characteristics, technological infrastructure, and operational oversight and are therefore aggregated into a single operating segment, Blockchain infrastructure operations, under ASC 280, Segment Reporting. Imperium, which generates revenue through participation in DeFi protocols, is presented as a separate reportable segment, DeFi operations, due to its distinct economic drivers and underlying market characteristics.

Consistent with ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, the Company discloses significant segment expenses and other measures that are regularly provided to the ~~CODM~~CODMs for decision-making purposes. ~~See~~ Refer to Note 128 – Segment Reporting ~~Information~~ for more information.

Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The ~~core~~Company’s ~~principle~~revenues ofare ~~the~~generated ~~new~~from blockchain-based ~~revenue~~operations ~~standard is~~and ~~that~~comprise astaking ~~company~~rewards ~~should~~earned ~~recognize~~from ~~revenue~~validator tonode ~~depict~~operations ~~the~~(NodeOps), ~~transfer~~execution-layer oftransaction fees, ~~promised~~priority ~~goods~~fees orand ~~services~~maximal toextractable ~~customers~~value in(“MEV”) anrewards ~~amount~~earned ~~that~~from ~~reflects~~block-building activities (Builder+), and protocol-driven ~~the~~rewards ~~consideration~~earned tofrom ~~which~~participation ~~the~~in ~~Company~~DeFi ~~expects~~protocols to(Imperium). beSubstantially ~~entitled~~all revenues are earned and settled in ~~exchange~~native ~~for~~digital ~~those~~assets and ~~goods~~are ormeasured ~~services~~at fair value on the date earned. ~~The~~See ~~following~~Note ~~five~~7– ~~steps~~Revenues ~~are~~and ~~applied to~~Cost ~~achieve~~of ~~that~~Revenues ~~core~~for ~~principle:~~further information.

●Cost of Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligationRevenues

~~Revenue~~Cost isof ~~recognized~~revenues ~~when~~consists ~~control~~primarily of ~~the~~direct ~~promised~~expenses ~~goods~~incurred ~~or services is transferred to the customers,~~ in anconnection ~~amount~~with ~~that reflects~~ the ~~consideration the~~ Company’s ~~expects~~blockchain tooperations, beincluding ~~entitled to in exchange for those goods or services. The Company generates revenue through 1) staking rewards~~hosting, ~~generated from its blockchain~~ infrastructure ~~operations~~costs, ~~(NodeOps)~~validator payments, and 2)other ~~gas~~direct ~~fees earned from successful Ethereum block~~on-~~building~~chain ~~through Builder+~~costs. ~~These~~See ~~revenues~~Note ~~are~~7 ~~collectively~~– ~~termed~~Revenues ~~‘Blockchain~~and ~~infrastructure~~Cost ~~revenues’~~of inRevenues ~~the~~for further ~~consolidated statements of operations~~information.

The transaction consideration the Company receives - the crypto asset awards and gas fees - are a non-cash consideration, which the Company measures at fair value on the date received.

Blockchain Infrastructure

The Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”) crypto assets directly to both its own validator nodes and nodes run by third-party operators. Through these contracts, the Company provides crypto assets to stake to a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and typically last from a few days to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during the duration of the smart contract.

In exchange for staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset award earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the fixed crypto asset award a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain. The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time.

F-10

Ethereum Block Building (Builder+)

As part of the block construction and proposal process, the Company’s Builder purchases block space through a fixed non-negotiable fee paid to a Validator (a “Validator Payment”) embedded in each proposed block. The Validator Payment, predetermined by the Builder, is paid to Validators as compensation for selecting and proposing the Company’s block to the network for validation. The Validator Payment is intrinsically linked to the Company’s performance obligations and is disbursed in the block constructed by the Builder if our Builder’s block is both selected by a Validator and successfully proposed to, and finalized on, the Ethereum network; otherwise, our Validator Payment may be included in a subsequent block. The Validator Payment represents a direct and fixed pre-determined cost.

The Company recognizes revenue, reflecting the fair value of the total gas fees earned from the constructed block.

F-11

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

~~The~~Research ~~following table summarizes the revenues earned from the Company’s operations for the years ended December 31, 2024~~ and ~~2023:~~Development

~~Schedule~~Research and development (“R&D”) costs are accounted for in accordance with ASC 730, Research and Development. R&D costs consist primarily of ~~Revenues~~employee ~~Earned~~compensation, ~~from~~fees paid to third-party contractors and consultants, data and software costs, and other expenses incurred in connection with the development and evaluation of the Company’s ~~Operations~~blockchain infrastructure capabilities. These activities include block-building systems and decentralized finance strategies where technological, operational, or economic feasibility has not yet been established.

	2024		2023
	For the Year Ended December 31,
	2024		2023
Revenues from blockchain infrastructure operations
NodeOps	$	1,620,305	$	1,339,628
Builder+		2,453,213		-
Total revenues	$	4,073,518	$	1,339,628

R&D costs are expensed as incurred. The Company allocates employee compensation to R&D based on management’s estimate of the time devoted to research and development activities during the period.

The following table details the native token rewards and their respective fair market value recognized as revenue during the years ended December 31, 2024 and 2023. Revenues earned from blockchain infrastructure staking activities through NodeOps include token rewards earned from the delegation of cryptocurrency assets to third-party validator nodes as well as token rewards derived from BTCS-operated validator nodes, which include staking of the Company’s crypto assets to BTCS nodes and Validator Fees earned from third parties asset delegations to our nodes. Revenues earned from Ethereum block-building through Builder+ includes block rewards generated by BTCS Builders.

Crypto assets earned from blockchain infrastructure staking activities through NodeOps

Schedule of Crypto Assets Earned from Blockchain Infrastructure Staking Activities

	For the Year Ended December 31,
	2024				2023
Asset	Token Rewards		Revenue ($USD)		Token Rewards		Revenue ($USD)
Ethereum (ETH)		261	$	792,442		358	$	639,357
Cosmos (ATOM)		52,509	$	390,740		43,268	$	408,964
Axie Infinity (AXS) *		22,997	$	151,648		18,522	$	127,691
Akash (AKT)		22,742	$	81,292		11,666	$	9,808
Solana (SOL) *		419	$	62,210		474	$	11,592
Avalanche (AVAX)		1,237	$	39,255		664	$	9,117
NEAR Protocol (NEAR) *		6,441	$	36,457		5,494	$	8,836
Kava (KAVA)		27,143	$	15,263		53,435	$	43,642
Kusama (KSM)		652	$	15,746		820	$	21,981
Polygon (POL fka MATIC) *		20,970	$	12,728		24,878	$	20,613
Polkadot (DOT) *		1,244	$	8,021		1,371	$	7,358
Rocket Pool (RPL) *		14	$	170		-	$	-
Tezos (XTZ) *		1,353	$	1,182		2,413	$	2,326
Mina (MINA)		6,480	$	6,404		15,840	$	10,959
Oasis Network (ROSE)		26,567	$	3,254		98,001	$	5,802
Cardano (ADA) *		5,010	$	2,218		2,394	$	775
Evmos (EVMOS) *		21,581	$	1,275		89,591	$	10,807
Total earned from blockchain infrastructure staking activities through NodeOps			$	1,620,305			$	1,339,628

* All or a portion of revenue earned from staking to third-party validator nodes

Crypto assets earned from Ethereum block-building through Builder+

Schedule of Crypto Assets Earned From Ethereum

	For the Year Ended December 31,
	2024				2023
Asset	Token Rewards		Revenue ($USD)		Token Rewards		Revenue ($USD)
Ethereum (ETH)		886	$	2,453,213		-	$	-
Total earned from Ethereum block building through Builder+		886	$	2,453,213		-	$	-

Cost of Revenues

The following table further details the costs of revenues for the years ended December 31, 2024 and 2023:

Schedule of Costs of Revenues

	2024		2023
	For the Year Ended December 31,
	2024		2023
Cost of staking revenues	$	186,669	$	359,778
Cost of Builder+ revenues		2,940,840		-
Total cost of revenues	$	3,127,509	$	359,778

F-12

BTCS Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Internally Developed Software

Internally developed software consists of the core technology of the Company’s StakeSeeker and ChainQ platforms. For internally developed software, the Company uses both its own employees as well as the services of external vendors and independent contractors. The Company accounts for computer software used in the business in accordance with ASC 985-20 and ASC 350.

ASC 985-20, Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. Some companies use a “tested working model” approach to establishing technological feasibility (i.e., beta version). Under this approach, software under development will pass the technological feasibility milestone when the Company has completed a version that contains essentially all the functionality and features of the final version and has tested the version to ensure that it works as expected.

ASC 350, Intangibles-Goodwill and Other, requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended.

Property and Equipment

Property and equipment ~~consist~~consists of ~~computer~~computers, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and ~~amortization~~ amortization are recorded using the straight-line method over the respective useful lives of the assets ranging from ~~three~~three3 to five years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.

Use of Estimates

The accompanying ~~consolidated~~ financial statements have been prepared in conformity with U.S. GAAP., ~~This~~which requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, ~~and~~the ~~disclosures~~disclosure of contingent assets and liabilities at the date of the ~~consolidated~~ financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions.

The Company’s significant estimates and assumptions include, but are not limited to the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, the valuation allowance related to deferred tax assets, allocations of compensation and other shared costs among functional expense categories, accruals for employee bonuses and incentives, and the fair value of certain financial instruments, when applicable.

Actual results could differ from those estimates due to changes in external conditions or other factors, and such differences may be material to the financial statements.

Income Taxes

The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s ~~consolidated~~ financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more ~~than~~ likely than not be realized. Should they occur, the Company’s ~~policy~~ policy is to classify interest and penalties related to tax positions as income tax expense. Since the Company’s inception, no such interest or penalties have been incurred.

F-1312

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

Accounting for Warrants

The Company accounts for the issuance of Common Stock purchase warrants issued in ~~connection with the equity offerings in~~ accordance with ~~the~~ ~~provisions of~~ ASC 815, Derivatives and Hedging. ~~The Company classifies as equity any contracts that (i) require physical settlement~~ orWarrants ~~net-share~~are ~~settlement~~evaluated orfor ~~(ii)~~liability ~~gives the Company a choice of net-cash settlement~~ or ~~settlement~~equity inclassification ~~its~~at ~~own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle~~ the ~~contract~~time ~~if an event occurs and if that event is outside the control~~ of ~~the~~issuance ~~Company)~~based oron ~~(ii) gives~~ the ~~counterparty~~specific aterms ~~choice~~ of ~~net-cash settlement or settlement in shares (physical settlement or net-share settlement). In addition, Under ASC 815, registered Common Stock warrants that require~~ the ~~issuance of registered shares upon exercise~~ arrangement and ~~do not expressly preclude an implied right to cash~~ settlement ~~are accounted for as derivative liabilities~~features. ~~The Company classifies these derivative warrant liabilities on the balance sheets as a current liability.~~

The Company assessed the classification of Common Stock purchase warrants as of the date of each offering and determined that such instruments originally met the criteria for equity classification; however, as a result of the Company no longer being in control of whether the warrants may be cash settled, the instruments no longer qualify for equity classification. Accordingly, the Company classified the warrants as a liability at their fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to reLiability-~~measurement~~Classified at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in the fair value of warrant liabilities” in the consolidated statements of operations. The fair value of the warrants has been estimated using a Black-Scholes valuation model (see Note 5- Fair Value of Financial Assets and Liabilities).Warrants

~~Stock-based~~Warrants ~~Compensation~~are classified as liabilities when they: (i) require net cash settlement (including upon occurrence of an event outside the Company’s control), or (ii) provide the counterparty with a choice of cash or share settlement, or (iii) require the issuance of registered shares and do not explicitly preclude a right to cash settlement.

~~The~~In ~~Company~~accordance ~~accounts~~with ~~for~~ASC ~~stock~~815-~~based~~40, ~~compensation~~these ininstruments ~~accordance~~are ~~with~~measured ~~ASC~~at ~~718,~~fair ~~Compensation~~value -upon ~~Stock~~issuance ~~Compensation.~~and ~~ASC~~at ~~718~~each ~~addresses~~subsequent reporting period, with ~~all~~changes ~~forms~~in offair ~~share-based~~value ~~payment~~recognized ~~awards~~in ~~including~~the ~~shares~~statements ~~issued~~of ~~under~~operations ~~employee~~as ~~stock~~“Change ~~purchase~~in ~~plans~~fair ~~and~~value ~~stock~~of ~~incentive~~warrant ~~shares~~liabilities.” ~~Under~~These ~~ASC~~warrants ~~718,~~are ~~awards~~classified ~~result~~as inLevel a3 ~~cost~~liabilities ~~that~~within isthe ~~measured at~~ fair value onhierarchy due to the ~~awards’~~use ~~grant~~of ~~date,~~unobservable ~~based~~inputs onin the ~~estimated number of awards~~valuation ~~that~~model ~~are~~(see ~~expected~~Note to6 ~~vest~~- ~~and~~Fair ~~will~~Value ~~result~~of inFinancial aAssets ~~charge~~and ~~to operations~~Liabilities).

~~Share~~The Company estimates the fair value of these warrants using a Black-~~based~~Scholes option pricing model, with key inputs including the Company’s ~~payment~~stock ~~awards~~price, ~~exchanged~~the ~~for~~warrant ~~services~~exercise ~~are~~price, ~~accounted~~expected ~~for~~term, atexpected stock price volatility, risk-free interest rate, and expected dividend yield. The warrant liability is presented as a current liability on the ~~fair~~Company’s ~~value~~balance sheet. As of ~~the~~December ~~award~~31, on2025, the estimated fair ~~grant~~value ~~date~~of these liability-classified warrants was approximately $0.

Equity-Classified Warrants

The Company also issues warrants that qualify for equity classification under ASC 815-40. Warrants are classified in equity when they: (i) require physical or net-share settlement, and (ii) do not include terms that could require cash settlement outside the control of the Company, and (iii) do not include contingent provisions or other features that would cause the instruments to be classified as liabilities.

For equity-classified warrants, the Company estimates the grant-date fair value using a Black-Scholes option pricing model. The fair value is recognized in additional paid-in capital (APIC) at the time of issuance and is not subsequently remeasured. If the warrants are issued in connection with a financing transaction (e.g., convertible notes), the fair value is allocated to APIC and, when applicable, also recorded as a debt discount in accordance with ASC 470-20, Debt with Conversion and Other Option, and amortized over the term of the related debt instrument using the effective interest method.

Once classified in equity, these warrants remain in equity unless modified in a way that results in liability classification. These instruments are not included in the fair value measurements disclosure under ASC 820, as they are not remeasured on a recurring basis.

Stock-based compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 addresses all forms of share-based payment awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718, awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. Compensation cost is recognized only for those awards that are expected to vest, and previously recognized compensation cost is reversed in the period in which an award is forfeited due to failure to satisfy the applicable vesting conditions.

Share-based payments

Share-based payment arrangements include equity instruments issued in exchange for employee and nonemployee services, including arrangements used to satisfy compensation obligations such as performance-based compensation and director compensation. Awards are measured at the fair value on the estimated grant date and recognized as compensation cost over the requisite service period, unless the award is fully vested at grant, in which case compensation cost is recognized on the grant date.

Options

Stock options issued under the Company’s ~~equity~~long-term incentive plans are granted with an exercise price equal to no less than the fair market ~~price~~ value of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options generally vest over a 1one-year period.

Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. For options granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent to the expected term of the option. For ~~the most recent~~ options granted on January 1, 2025, historical volatility ~~was~~is determined using a two-year lookback period. Management selected this approach to better reflect the Company’s current market conditions and exclude periods of non-representative volatility associated with significant changes in the Company’s business, market conditions, and capital structure. The two-year lookback period balances capturing industry and market cycles with avoiding outdated and non-representative data.

Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option.

Expected Term – The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.

Expected Dividend – The Company has not historically declared or paid any cash dividends on its common shares and does not plan to pay any recurring cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

F-1413

BTCS Inc.

NOTES TO ~~CONSOLIDATED~~ FINANCIAL STATEMENTS

Restricted Stock and Restricted Stock Units (“RSUs”)

The Company grants restricted stock and restricted stock units as part of its stock-based compensation arrangements. Restricted stock represents issued common shares that are subject to forfeiture until vesting conditions are satisfied, whereas restricted stock units represent the right to receive common shares upon satisfaction of vesting conditions. Restricted stock and restricted stock units may include service conditions, performance conditions, or market conditions.

The Company estimates the fair value of market-based Restricted Stock and RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period.

Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the RSUs.

Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the RSUs.

Expected Term – The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected to be outstanding. The expected term is based on the stipulated 5-year period from the grant date until the market-based criteria are achieved. If the market-based criteria are not achieved within the five-year period from the grant date, the RSUs will not vest and shall expire.

Vesting Hurdle Price – The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding as of the valuation dates.1

Convertible Notes Payable

Convertible notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options. Upon issuance, the Company evaluates embedded features and freestanding instruments for separate accounting. If applicable, proceeds are allocated between the debt host and any freestanding equity-classified instruments, such as warrants, using a relative fair value method. Issuance costs and any original issue discount are recorded as a reduction to the carrying amount of the debt and amortized over the term of the notes using the effective interest method. Interest expense includes both cash interest and amortization of debt discounts.

Defi Lending Arrangements

The Company accounts for DeFi lending and borrowing arrangements, such as those executed through the Aave protocol, in accordance with ASC 470, Debt.

Borrowings

When the Company borrows digital assets under a DeFi protocol, the arrangement is recognized as a financial liability measured at the principal amount of the borrowed tokens, net of repayments, in accordance with ASC 470. Such borrowings are presented on the balance sheet as Loans payable – DeFi protocol.

Borrowings are collateralized by the Company’s digital assets, such as ETH, which are deposited into protocol-specific smart contracts as collateral. The deposited collateral remains recorded on the balance sheet within Digital assets, as the Company retains both custody and beneficial ownership. Collateralized assets are considered restricted while serving as security for DeFi borrowings and are disclosed as such in the notes to the financial statements.

Fair value measurement of the collateralized ETH follows the guidance in ASC 820, Fair Value Measurement. Although the ETH is restricted and subject to liquidation risk, the Company continues to account for the underlying asset at fair value under ASC 350-60, Intangibles – Digital assets.

Debt modifications and extinguishments

The Company accounts for debt modifications and extinguishments in accordance with ASC 470-50, Debt – Modifications and Extinguishments. When existing DeFi debt is repaid or substantially modified, the previous liability is derecognized and replaced with a new liability at fair value. Any resulting gain or loss is recognized in the statement of operations under Loss on extinguishment of debt.

Filing Compare · BTCS Inc.