USA financial news

Bit Digital, Inc. Declares First Quarter of Fiscal Yr 2022 Monetary Outcomes

  • Bitcoin mining income was $8.0 million for the primary quarter of 2022. Income from Ethereum mining was $0.5 million.
  • We had money and money equivalents of $28.1 million, and complete liquidity (outlined as money and digital property) of roughly $73.3 million, as of March 31, 2022. Whole property have been $169.6 million as of March 31, 2022.
  • Non-GAAP earnings* from operations was $0.5 million.
  • Non-GAAP internet earnings** was $2.9 million, or $0.04 earnings per share.

* Non-GAAP earnings from operations excludes the affect of depreciation of property and tools, and share-based compensation expense.

** Non-GAAP internet earnings excludes depreciation of property and tools, share-based compensation bills, impairment of digital property, achieve from disposal of property and tools, achieve from sale of funding safety and achieve from gross sales of a subsidiary.

Operational Highlights for the First Quarter 2022

  • The Firm earned 194.48 bitcoins and 189.26 ETH throughout the quarter. Components impacting manufacturing included the Firm’s ongoing miner redeployment program, development within the total bitcoin community hash charge, and the variety of days within the quarter.
  • Treasury holdings of BTC and ETH have been 832.14 and 266.71, with a good market worth of roughly $27.6 million and $0.6 million on March 31, 2022, respectively.
  • The Firm owned 27,644 bitcoin miners and 731 Ethereum miners as of March 31, 2022, with an estimated most complete hash charge of 1.6 EH/s and 0.3 TH/s, respectively. As of Could 31, 2022, the Firm owned 33,376 bitcoin miners with an estimated most complete hash charge of two.17 EH/s.
  • Subsequent to quarter-end, the Firm signed a miner swap settlement with Riot Blockchain, Inc. (Riot), which offers for Riot to ship miners rated at 0.625 EH/s to the Firm in alternate for 0.5 EH/s delivered from the Firm to Riot, a 25% enhance in favor of the Firm.
  • As of Could 31, 2022, the Firm had acquired 5,023 machines pursuant to its beforehand introduced 10,000-unit buy settlement with Bitmain Applied sciences Restricted. The ultimate installment is predicted to ship in June 2022. Professional forma for these introduced purchases and the miner swap with Riot, our most complete hash charge is predicted to be roughly 2.8 EH/s.
  • The Firm bought 706 bitcoin miners on the spot market throughout the first quarter, and took supply of those machines throughout April 2022. The Firm additionally bought 100 MicroBT Whatsminer M21S bitcoin miners throughout the quarter.
  • Subsequent to quarter finish, the Firm signed a brand new 20 MW internet hosting settlement with Coinmint LLC (“Coinmint”). Roughly half of this capability has been delivered as of the date of this report, with the rest scheduled for early July. The Coinmint facility makes use of energy that’s 90% emissions-free.
  • Roughly 67% of our fleet’s run-rate electrical energy consumption was generated from carbon-free power sources as of March 31, 2022, based mostly on knowledge supplied by our hosts, publicly obtainable sources, and inside estimates, demonstrating our dedication to sustainable practices within the digital asset mining business.

Administration Commentary

“The primary quarter of 2022 marked the primary full quarter through which 100% of our mining fleet was on North American soil. With migration full, our focus stays deploying our fleet whereas remaining a pacesetter in sustainability. We’re happy with our progress and particularly our workforce’s speedy response to latest operational challenges.

As beforehand introduced, subsequent to quarter finish, we confronted interruptions at sure internet hosting companions’ websites. We shortly signed a brand new internet hosting settlement with Coinmint for 20 MW of primarily carbon-free energy, greater than sufficient to offset the impact of the interruptions. Coinmint has already fulfilled roughly half of this capability, with the rest scheduled for early July. Additional, we signed a miner swap settlement with Riot Blockchain Inc. (“Riot”) which offers a 25% enhance to our swapped hash charge; half of the swap has already been executed. The mixed impact of our agreements with Coinmint and Riot is predicted to roughly triple our energetic hash charge over the span of about one month. Lastly, energy has already been partially restored at our accomplice Digihost’s North Tonawanda, NY web site, and remediation and restore work is underway at Blockfusion’s Niagara Falls, NY web site.

Unsurprisingly, our first quarter outcomes confronted tough comparisons to the prior yr, when a majority of our fleet was deployed in China, and community hash charges have been decrease. Additional, the lower in bitcoin value since late 2021 has coincided with a rise in community hash, decreasing industrywide margins and heightening competitors. Our sturdy stability sheet positions us to efficiently navigate these market headwinds. We stay debt-free, and had over $70M of money and digital property as of March 31, 2022. We’ve already paid all of our miner buy obligations and don’t have any different important capital commitments as of the date of this report. In opposition to this backdrop, we’re excited for yet one more transformational yr for Bit Digital.”

Non-GAAP Monetary Measures 

We’re offering supplemental monetary measures for (i) non-GAAP earnings from operations and (ii) non-GAAP internet earnings. These supplemental monetary measures are usually not measurements of economic efficiency below US GAAP and, consequently, these supplemental monetary measures is probably not similar to equally titled measures of different corporations. Administration makes use of these non-GAAP monetary measures internally to assist perceive, handle, and consider our enterprise efficiency and to assist make working selections. We imagine that these non-GAAP monetary measures are additionally helpful to traders and analysts in evaluating our efficiency throughout reporting intervals on a constant foundation.

The next is a reconciliation of non-GAAP earnings (loss) from operations, which excludes the affect of (i) depreciation of property and tools, and (ii) share based mostly compensation bills, to its most straight comparable GAAP measures for the intervals indicated:



For the
Three Months Ended
March 31,




2022



2021


Reconciliation of non-GAAP earnings from operations:







Revenue (Loss) from Operations


$

(3,766,828)



$

25,609,778


Depreciation and amortization bills



3,799,629




3,650,374


Share based mostly compensation bills



463,900





Non-GAAP Revenue from Operations


$

496,701



$

29,260,152


The next is a reconciliation of non-GAAP internet earnings (loss), which excludes the affect of (i) depreciation of property and tools, (ii) share based mostly compensation bills, (iii) impairment of digital property, (iv) achieve from disposal of property and tools, (v) achieve from sale of funding safety and (vi) achieve from gross sales of a subsidiary, to its most straight comparable GAAP measures for the intervals indicated:



For the
Three Months Ended
March 31,




2022



2021


Reconciliation of non-GAAP internet earnings:







Internet (loss) earnings


$

(10,179,789)



$

35,786,323


Depreciation and amortization bills



3,799,629




3,650,374


Share based mostly compensation bills



463,900





Impairment of digital property



10,045,603





Achieve from disposal of property and tools



(174,568)





Achieve from sale of funding safety



(1,039,999)





Achieve from gross sales of a subsidiary



(52,383)





Non-GAAP Internet Revenue


$

2,862,393



$

39,436,697




For the
Three Months Ended
March 31,




2022



2021


Reconciliation of non-GAAP Fundamental and Dilutive Earnings (Loss) Per Share:







Fundamental and dilutive (loss) earnings per share


$

(0.15)



$

0.74


Depreciation and amortization bills



0.05




0.08


Share based mostly compensation bills



0.01





Impairment of digital property



0.14





Achieve from disposal of property and tools



(0.00)





Achieve from sale of funding safety



(0.01)





Achieve from gross sales of a subsidiary



(0.00)





Non-GAAP fundamental and dilutive earnings per share


$

0.04



$

0.82


About Bit Digital

Bit Digital, Inc. is a digital property mining firm headquartered in New York Metropolis. Our mining operations are positioned in North America. For extra info, please contact [email protected] or go to our web site at www.bit-digital.com.  

Investor Discover

Investing in our securities includes a excessive diploma of threat. Earlier than investing resolution, it is best to fastidiously take into account the dangers, uncertainties and forward-looking statements described below “Danger Components” in Merchandise 3.D of our most up-to-date Annual Report on Type 20-F for the fiscal yr ended December 31, 2021. If any materials threat was to happen, our enterprise, monetary situation or outcomes of operations would probably endure. In that occasion, the worth of our securities may decline and you might lose half or all your funding. The dangers and uncertainties we describe are usually not the one ones dealing with us. Further dangers not presently recognized to us or that we presently deem immaterial can also impair our enterprise operations. As well as, our previous monetary efficiency is probably not a dependable indicator of future efficiency, and historic developments

shouldn’t be used to anticipate outcomes sooner or later. Future adjustments within the network-wide mining problem charge or bitcoin hash charge can also materially have an effect on the longer term efficiency of Bit Digital’s manufacturing of bitcoin. Precise working outcomes will fluctuate relying on many components together with community problem charge, complete hash charge of the community, the operations of our amenities, the standing of our miners, and different components. Moreover, all discussions of economic metrics assume mining problem charges as of June 2022. See “Secure Harbor Assertion” under.

Secure Harbor Assertion

This press launch could comprise sure “forward-looking statements” referring to the enterprise of Bit Digital, Inc., and its subsidiary corporations. All statements, apart from statements of historic reality included herein are “forward-looking statements.” These forward-looking statements are sometimes recognized by way of forward-looking terminology akin to “believes,” “expects,” or related expressions, involving recognized and unknown dangers and uncertainties. Though the corporate believes that the expectations mirrored in these forward-looking statements are cheap, they do contain assumptions, dangers and uncertainties, and these expectations could show to be incorrect. Buyers mustn’t place undue reliance on these forward-looking statements, which converse solely as of the date of this press launch. The corporate’s precise outcomes may differ materially from these anticipated in these forward-looking statements because of quite a lot of components, together with these mentioned within the firm’s periodic studies which can be filed with the Securities and Change Fee and obtainable on its web site at http://www.sec.gov. All forward-looking statements attributable to the corporate or individuals appearing on its behalf are expressly certified of their entirety by these components. Aside from as required below the securities legal guidelines, the corporate doesn’t assume an obligation to replace these forward-looking statements.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

Digital Asset Mining Enterprise  

We’re a digital asset mining firm with mining operations in the US and Canada. We commenced our bitcoin mining enterprise in February 2020, and commenced restricted Ethereum mining operations in January 2022. Our mining operations, hosted by third occasion suppliers, use specialised computer systems, often called miners, to generate digital property. The miners use software particular built-in circuit (“ASIC”) chips. These chips allow the miners to use larger computational energy, or “hash charge”, to offer transaction verification companies (often called “fixing a block”) which helps assist the blockchain. For each block added, the blockchain offers an award equal to a set variety of digital property per block. Miners with a larger hash charge have the next likelihood of fixing a block and receiving an award.

We function our mining property with the first intent of accumulating digital property which we could promote for fiat foreign money now and again relying on market situations and administration’s willpower of our money move wants. Our mining technique has been to mine bitcoins as shortly and as many as potential given the mounted provide of bitcoins. In view of the lengthy supply lead time to buy miners from producers like Bitmain Applied sciences Restricted (“Bitmain”) and MicroBT Electronics Know-how Co., Ltd (“MicroBT”), we initially selected to accumulate miners on the spot market, which might sometimes lead to supply inside just a few weeks. In parallel, we additionally get pleasure from strategic relationships with main producers, which we imagine permits our entry to ASICs on advantageous phrases.

We’ve signed companies agreements with third occasion internet hosting companions in North America. These companions function specialised mining knowledge facilities, the place they set up and function our miners and supply IT consulting, upkeep, and restore work on-site for us. Our mining amenities in Texas and Nebraska are maintained by Compute North LLC. Our mining facility in Georgia is maintained by Core Scientific, Inc. Our mining amenities in New York are maintained by Blockfusion USA, Inc. (“Blockfusion”) and Digihost Applied sciences Inc. (“Digihost”)

We’re a sustainability-focused bitcoin mining firm. On June 24, 2021, we signed the Crypto Local weather Accord, a personal sector-led initiative that goals to decarbonize the crypto and blockchain sectors.

On December 7, 2021, we turned a member of the Bitcoin Mining Council (“BMC”), becoming a member of MicroStrategy and different founding members to advertise transparency, share finest practices, and educate the general public on the advantages of bitcoin and bitcoin mining.

Miner Deployments

Through the first quarter of 2022, we continued to work with our internet hosting companions to deploy our miners in North America. As of March 31, 2022, 36.9% of our currently-owned fleet, or 9,748 bitcoin miners and 713 Ethereum miners, representing 0.544 Exahash (“EH/s”) and 0.188 Terahash (“TH/s”), respectively, was deployed in North America.

As of December 31, 2021, 27.8% of our currently-owned fleet, or 7,710 bitcoin miners representing 0.457 EH/s was deployed in North America.

Energy and Internet hosting Overview 

Through the first quarter of 2022, our internet hosting companions continued to arrange websites to ship our contracted internet hosting capability, bringing further energy on-line for our miners.

As of March 31, 2022, Compute North supplied roughly 20 MW of capability for our miners. Our total anticipated future internet hosting capability with Compute North is roughly 48 MW. We anticipate the remaining roughly 28 MW of anticipated internet hosting deployments to start following our supply of associated tools within the second half of 2022. As beforehand introduced, throughout the quarter we signed a renewal internet hosting settlement extending the time period of a previous settlement for an extra 5 years for roughly 6.5 MW of our complete internet hosting capability with Compute North. In April 2022, we amended and restated an extra current internet hosting settlement for roughly 30 MW of our complete internet hosting capability with Compute North, to offer for deployment of our miners at a brand new web site in Texas. The modification didn’t materially change the overall internet hosting capability to be supplied by Compute North.

As of March 31, 2022, our facility with Blockfusion in Niagara Falls, New York supplied roughly 9.4 MW to energy our miners. Upon completion, this facility is predicted to ship an mixture of 35 MW to energy our miners.

As of March 31, 2022, our amenities with Digihost in North Tonawanda and Buffalo, New York supplied roughly 7 MW to energy our miners. Upon completion, these mixed amenities are anticipated to ship an mixture of 20 MW to energy our miners. Moreover, Digihost has knowledgeable us that they proceed to work to determine a location to satisfy the remaining 100 MW of contracted internet hosting capability pursuant to our agreements.

As of March 31, 2022, our facility with Core Scientific in Georgia supplied roughly 0.3 MW to energy our miners.

Miner Fleet Overview

As of December 31, 2021, we had 27,744 miners for bitcoin mining, with a complete most hash charge of 1.60 EH/S. As of March 31, 2022, we had 27,644 miners for bitcoin mining and 731 miners for Ethereum mining, with a complete most hash charge of 1.6 EH/S and 0.3 TH/s, respectively. As of Could 31, 2022, we had 33,373 miners for bitcoin mining and 731 miners for Ethereum mining, with a complete most hash charge of two.17 EH/S and 0.3 TH/s, respectively. 

Our fleet of owned miners comprised the next fashions as of March 31, 2022: 

Mannequin


Owned as
of
March 31,
2022


MicroBT Whatsminer M21S



16,196


MicroBT Whatsminer M20S



3,690


Bitmain Antminer S17



3,641


MicroBT Whatsminer M10



1,938


Bitmain Antminer T3



769


Bitmain Antminer S19 Professional



605


Bitmain Antminer T17+



500


MicroBT Whatsminer M30S



261


Bitmain Antminer T17+



44


Whole quantity for bitcoin miners



27,644


Innosilicon A10 sequence ETH miners



731


Whole miners



28,375


On October 7, 2021, we contracted to buy an extra 10,000 Antminers from Bitmain below a Gross sales and Buy Settlement (the “SPA”) at an estimated value of $65 million. As of the date of this report, the Firm has acquired 5,023 miners. The ultimate installment is predicted to ship in June 2022. Professional forma for these introduced purchases, our most complete hash charge is predicted to be roughly 2.67 EH/s for bitcoin mining.

On March 27, 2022, we entered into Asset Buy Agreements with every of 4 unaffiliated sellers of bitcoin mining computer systems, from whom we acquired an mixture of 706 bitcoin miners on the spot market, together with 184 S19 J Professional miners; 197 S19 miners; 197 S19 miners; and 128 S19/S19 Professional miners, respectively. The acquired miners have been delivered throughout April 2022.

The Firm bought 100 MicroBT Whatsminer M21S miners throughout the quarter ended March 31, 2022.

Bitcoin Manufacturing

From the inception of our bitcoin mining enterprise in February 2020 to March 31, 2022, we earned an mixture of three,769.95 bitcoins. The next desk presents the variety of bitcoins mined on a quarterly foundation:

The next desk presents our bitcoin mining actions for the three-month ended March 31, 2022.



Quantity
of
bitcoins (1)



Quantity (2)









Steadiness at December 31, 2021



808.23



$

35,025,158


Receipt of BTC from mining companies



194.48




8,031,627


Gross sales of and funds made in BTC



(170.57)




(7,231,067)


Realized achieve on sale of BTC






1,614,539


Impairment of BTC






(9,887,087)


Steadiness at March 31, 2022



832.14



$

27,553,170


(1)

Contains bitcoins and bitcoin equivalents.

(2)

Receipt of digital property from mining companies are the product of the variety of bitcoins acquired multiplied by the bitcoin value obtained from CryptoCompare, calculated each day. Gross sales of digital property are the precise quantity acquired from gross sales.

Environmental, Social and Governance 

Sustainability is a serious strategic focus for us. A number of of our main mining areas within the US and Canada present inexpensive entry to partially carbon-free power and different sustainability-related options, in various quantities relying on location, together with parts of hydroelectric, photo voltaic, wind, nuclear and different carbon-free era sources, based mostly on info supplied by our hosts and publicly obtainable knowledge, which we imagine helps mitigate the environmental affect of our operations. We work with an impartial ESG (Environmental, Social and Governance) advisor to self-monitor and undertake an environmental coverage to assist us to enhance our proportion of inexperienced electrical energy and different sustainability initiatives. As we proceed to align ourselves with the way forward for know-how and enterprise, we’re devoted to repeatedly enhancing sustainability, which we imagine future-proofs our operations and the bigger bitcoin community.

We imagine that the bitcoin community and the mining that powers it are necessary innovations in human progress. The method of problem-solving and verifying bitcoin transactions utilizing superior computer systems is power intensive, and scrutiny has been utilized to the business because of this. It follows that the environmental prices of mining bitcoin must be surveyed and mitigated by each firm in our fast-growing sector. We intention to contribute to the acceleration of bitcoin’s decarbonization and act as a job mannequin in our business, responsibly stewarding digital property.

We’re presently working with Apex Group Ltd, an impartial ESG consultancy, to develop into one the primary publicly-listed bitcoin miners to obtain an impartial ESG ranking on our operations, which we anticipate will present transparency on the environmental sustainability of our operations, in addition to different metrics. Apex’s ESG Rankings & Advisory instruments enable us to benchmark our ESG efficiency in opposition to worldwide requirements and our friends to determine alternatives for enchancment and progress over time. We imagine that is an integral strategy to bettering our sustainable practices and mitigating our environmental affect. By measuring the sustainability and footprint of Bit Digital’s mining, we’re in a position to develop targets to repeatedly enhance as we shift in the direction of our purpose of 100% clear power utilization.

On December 7, 2021, the Firm turned a member of the Bitcoin Mining Council (“BMC”), becoming a member of MicroStrategy and different founding members to advertise transparency, share finest practices, and educate the general public on the advantages of bitcoin and bitcoin mining.

COVID-19 

In March 2020, the World Well being Group declared the COVID-19 outbreak (“COVID-19”) a worldwide pandemic. We function in areas which were impacted by COVID-19, and the pandemic has impacted and will additional affect our operations and the operations of our prospects because of quarantines, numerous native, state and federal authorities public well being orders, facility and enterprise closures, and journey and logistics restrictions. Circumstances could enhance or worsen as governments and companies proceed to take actions to answer the dangers of the COVID-19 pandemic. Whereas the COVID-19 pandemic continues to trigger uncertainty within the world financial system and restrictive measures by governments and companies stay in place, we anticipate our enterprise and outcomes of operations could also be materially and adversely affected. The Firm is actively monitoring this example and the potential results on its monetary situation, liquidity, operations, suppliers, and business.

Moreover, we now have evaluated the potential affect of the COVID-19 outbreak on our monetary statements, together with, however not restricted to, the impairment of long-lived property and valuation of cryptocurrencies. The place relevant, we now have integrated judgments and estimates of the anticipated affect of COVID-19 within the preparation of the monetary statements based mostly on info presently obtainable. These judgments and estimates could change, as new occasions develop and extra info is obtained, and are acknowledged within the consolidated monetary statements as quickly as they develop into recognized. Primarily based on our present evaluation, we don’t anticipate any materials affect on our long-term strategic plans, operations and liquidity.

We proceed to actively monitor the state of affairs and will take additional actions that alter our operations and enterprise practices as could also be required by federal, state or native authorities or that we decide are in the very best pursuits of our companions, prospects, suppliers, distributors, workers and shareholders. The extent to which the COVID-19 outbreak will additional affect the Firm’s monetary outcomes will depend upon future developments, that are unknown and can’t be predicted, together with the length and supreme scope of the pandemic, advances in testing, remedy and prevention, in addition to actions taken by governments and companies.

Outcomes of operations 

Outcomes of Operations for the Three Months Ended March 31, 2022 and 2021

The next desk summarizes the outcomes of our operations throughout the three months ended March 31, 2022 and 2021, respectively, and offers info concerning the greenback improve or (lower) throughout interval.



For the
Three Months Ended
March 31,



Variance




2022



2021



in Quantity


Income from digital asset mining


$

8,573,747



$

43,953,050




(35,379,303)















Working prices and bills













Value of income (unique of depreciation and amortization proven
under)



(4,268,251)




(12,467,728)




8,199,477


Depreciation and amortization bills



(3,799,629)




(3,650,374)




(149,255)


Basic and administrative bills



(4,272,695)




(2,225,170)




(2,047,525)


Whole working bills



(12,340,575)




(18,343,272)




6,002,697















(Loss) Revenue from Operations



(3,766,828)




25,609,778




(29,376,606)















Realized achieve on alternate of digital property



1,637,023




10,456,497




(8,819,474)


Impairment of digital property



(10,045,603)







(10,045,603)


Achieve from disposal of property and tools



174,568







174,568


Achieve from sale of funding safety



1,039,999







1,039,999


Different (bills) earnings, internet



(570,890)




2,190




(573,080)


Whole different (bills) earnings, internet



(7,764,903)




10,458,687




(18,223,590)















(Loss) Revenue earlier than earnings taxes



(11,531,731)




36,068,465




(47,600,196)















Revenue tax advantages (bills)



1,351,942




(282,142)




1,634,084


Internet (loss) earnings


$

(10,179,789)



$

35,786,323




(45,966,112)


Revenues

We generate revenues from provision of computing energy to digital asset mining swimming pools, and obtain consideration within the type of digital property, the worth of which is decided utilizing the market value of the associated digital asset on the time of receipt. By offering computing energy to efficiently add a block to the blockchain, the Firm is entitled to a fractional share of the mounted digital property award from the mining pool operator, which is predicated on the proportion of computing energy the Firm contributed to the mining pool to the overall computing energy contributed by all mining pool members in fixing the present algorithm.

For the three months ended March 31, 2022, we acquired 194.48 bitcoins and 189.26 ETHs from one mining pool operator. As of March 31, 2022, our most hash charge was at an mixture of 1.60 EH/s and 0.3 TH/s for our bitcoin miners and ETH miners, respectively. For the three months ended March 31, 2022, we acknowledged income of $8,031,627 and $542,120 from bitcoin mining companies and ETH mining companies, respectively.

For the three months ended March 31, 2021, we acquired 1,013.40 bitcoins from two mining pool operators. As of March 31, 2021, our most hash charge was 2,264.5 Ph/s. For the three months ended March 31, 2021, we acknowledged income of $43,953,050 from bitcoin mining companies.

Our revenues from bitcoin mining companies decreased by $35,921,423, or 82%, to $8,031,627 for the three months ended March 31, 2022 from $43,953,050 for the three months ended March 31, 2021. The lower was primarily attributable to our migrated miners awaiting set up as a part of our ongoing miner redeployment program.

We anticipate to proceed to put money into miners to extend the hash charge capability of each bitcoin miners and ETH miners. Because of this, we anticipate a rise in income throughout fiscal yr 2022, topic to the worth of bitcoin and ETH, community problem and different components.

Value of revenues

Value of revenues was primarily comprised of direct manufacturing value of the mining operations, together with utilities and different service fees, however excluding depreciation and amortization bills that are individually offered.

For the three months ended March 31, 2022, our value of revenues was $4,268,251, representing a lower of $8,199,477 from $12,467,728 for the three months ended March 31, 2021. The lower was primarily attributable to decreased utility prices because of our fleet being partially offline awaiting redeployment.

We anticipate a rise in value of revenues as we proceed to concentrate on enlargement and improve of our miner fleet.

Depreciation and amortization bills

For the three months ended March 31, 2022 and 2021, depreciation and amortization bills have been $3,799,629 and $3,650,374, respectively, based mostly on an estimated helpful miner life of three years.

Basic and administrative bills 

For the three months ended March 31, 2022, our normal and administrative bills, totaling $4,272,695, have been primarily comprised {of professional} and consulting bills of $1,919,894, wage and bonus bills of $601,021, shared-based compensation bills of $463,900 associated to RSUs and share choices issued to our workers, transportation bills of $396,693 incurred to ship miners to our internet hosting companions, and worker journey bills of $130,532.

For the three months ended March 31, 2021, our normal and administrative bills have been primarily comprised {of professional} and consulting bills of $1,025,785, transportation bills of $667,231 to relocate sure miners from China to the US, payroll bills of $351,362 and workplace bills of $77,362.

Realized achieve on alternate of digital property

Digital property are recorded at value much less impairment. Any beneficial properties or losses from gross sales of digital property are recorded as “Realized achieve (loss) on alternate of digital property” within the consolidated statements of operations. For the three months ended March 31, 2022, we recorded a achieve of $1,637,023 from the alternate of 170.57 bitcoins   and 29.38 ETH. For the three months ended March 31, 2021, we recorded a achieve of $10,456,497 from the alternate of 656.58 bitcoins.

Impairment of digital property

Impairment of digital property was $10,045,603 and $nil for the three months ended March 31, 2022 and 2021, respectively, which was recorded to replicate our digital property on the decrease of carrying worth or honest worth as of March 31, 2022 and 2021.

Achieve from sale of funding safety

Through the three months ended March 31, 2022, we bought a portion of our funding in a single privately held firm with value of $666,666 for consideration of $1,706,665. We acknowledged a achieve of $1,039,999 from the sale which was recorded within the account of “achieve from sale of funding safety”.

Achieve from disposal of property and tools

For the three months ended March 31, 2022, we bought 100 bitcoin miners to at least one third occasion purchaser for complete consideration of $212,800. On the date of the transaction, the unique value and collected depreciation of those miners have been $51,384 and $13,152, respectively. The Firm acknowledged a achieve of $174,568 from the sale of miners which was recorded within the account of “achieve from disposal of property and tools”.

Revenue tax advantages (bills) 

Revenue tax advantages have been $1,351,942 for the three months ended March 31, 2022, which was comprised of earnings tax advantages of $1,345,143 from our US operations, unrecognized tax advantage of $(69,182) from our Hong Kong operations, a tax advantage of $12,138 from our Hong Kong operations, and a tax advantage of $63,843 from different jurisdictions. The unrecognized tax profit is expounded to unsure Hong Kong income tax positions attributable to offshore non-taxable declare lodged on the enterprise income and tax deduction declare on share-based compensation which is nevertheless topic to evaluation and approval by the Hong Kong tax authority.

Revenue tax expense was $(282,142) for the three months ended March 31, 2021, which was comprised of earnings tax bills of $(282,142) from our US operations. We didn’t have assessable income in Hong Kong that is because of an offshore non-taxable declare lodged on the enterprise income, which is nevertheless topic to evaluation and approval by the Hong Kong tax authority. In case the offshore non-taxable declare is disallowed, Bit Digital Hong Kong Restricted (“BT HK”) is perhaps in a tax loss place supplied that the quantity of expenditure on the pc tools can be absolutely allowed by the Hong Kong tax authority as tax deduction.

Internet (loss) earnings and (loss) earnings per share

For the three months ended March 31, 2022, our internet loss was $10,179,789, representing a change of $45,966,112 from a internet earnings of $35,786,323 for a similar interval ended March 31, 2021.

Fundamental and diluted loss per share was $0.15 for the three months ended March 31, 2022. Fundamental and diluted earnings per share was $0.74 for the three months ended March 31, 2021. Weighted common variety of shares was 69,627,314 and 48,291,310 for the three months ended March 31, 2022 and 2021, respectively.

Non-GAAP Monetary Measures 

We’re offering supplemental monetary measures for (i) non-GAAP earnings from operations and (ii) non-GAAP internet earnings. These supplemental monetary measures are usually not measurements of economic efficiency below US GAAP and, consequently, these supplemental monetary measures is probably not similar to equally titled measures of different corporations. Administration makes use of these non-GAAP monetary measures internally to assist perceive, handle, and consider our enterprise efficiency and to assist make working selections. We imagine that these non-GAAP monetary measures are additionally helpful to traders and analysts in evaluating our efficiency throughout reporting intervals on a constant foundation.

The next is a reconciliation of non-GAAP earnings (loss) from operations, which excludes the affect of (i) depreciation of property and tools, and (ii) share based mostly compensation bills, to its most straight comparable GAAP measures for the intervals indicated:



For the
Three Months Ended
March 31,




2022



2021


Reconciliation of non-GAAP earnings from operations:







Revenue (Loss) from Operations


$

(3,766,828)



$

25,609,778


Depreciation and amortization bills



3,799,629




3,650,374


Share based mostly compensation bills



463,900





Non-GAAP Revenue from Operations


$

496,701



$

29,260,152


The next is a reconciliation of non-GAAP internet earnings (loss), which excludes the affect of (i) depreciation of property and tools, (ii) share based mostly compensation bills, (iii) impairment of digital property, (iv) achieve from disposal of property and tools, (v) achieve from sale of funding safety and (vi) achieve from gross sales of a subsidiary, to its most straight comparable GAAP measures for the intervals indicated:



For the
Three Months Ended
March 31,




2022



2021


Reconciliation of non-GAAP internet earnings:







Internet (loss) earnings


$

(10,179,789)



$

35,786,323


Depreciation and amortization bills



3,799,629




3,650,374


Share based mostly compensation bills



463,900





Impairment of digital property



10,045,603





Achieve from disposal of property and tools



(174,568)





Achieve from sale of funding safety



(1,039,999)





Achieve from gross sales of a subsidiary



(52,383)





Non-GAAP Internet Revenue


$

2,862,393



$

39,436,697




For the
Three Months Ended
March 31,




2022



2021


Reconciliation of non-GAAP Fundamental and Dilutive Earnings (Loss) Per Share:







Fundamental and dilutive (loss) earnings per share


$

(0.15)



$

0.74


Depreciation and amortization bills



0.05




0.08


Share based mostly compensation bills



0.01





Impairment of digital property



0.14





Achieve from disposal of property and tools



(0.00)





Achieve from sale of funding safety



(0.01)





Achieve from gross sales of a subsidiary



(0.00)





Non-GAAP fundamental and dilutive earnings per share


$

0.04



$

0.82


Liquidity and capital assets

So far, we now have financed our operations primarily by means of money flows from operations, and fairness financing by means of private and non-private choices of our securities. We plan to assist our future operations primarily from money generated from our operations and fairness financings. We can also take into account debt, most well-liked and convertible financing as properly. As of March 31, 2022, we had working capital of $73,400,296. Working capital included digital property of $43,899,644 as of March 31, 2022.

Income from Mining Operations

Funding our operations on a going-forward foundation will rely considerably on our capability to proceed to mine digital property and the spot or market value of the digital property we mine. We anticipate to generate ongoing revenues from the manufacturing of digital property, primarily bitcoin, in our mining amenities. Our capability to liquidate digital property at future values shall be evaluated now and again to generate money for operations. Producing bitcoin, for instance, with spot market values which exceed our manufacturing and different prices, will decide our capability to report revenue margins associated to such mining operations. Moreover, no matter our capability to generate income from our digital property, we may have to boost further capital within the type of fairness or debt to fund our operations and pursue our enterprise technique.

The power to boost funds as fairness, debt or conversion of digital property to take care of our operations is topic to many dangers and uncertainties and, even when we’re profitable, future fairness issuances would lead to dilution to our current stockholders and any future debt or debt securities could comprise covenants that restrict our operations or capability to enter into sure transactions. Our capability to comprehend income by means of bitcoin manufacturing and efficiently convert bitcoin into money or fund overhead with bitcoin is topic to quite a lot of dangers, together with regulatory, monetary and enterprise dangers, lots of that are past our management. Moreover, the worth of bitcoin rewards has been extraordinarily unstable traditionally, and future costs can’t be predicted.

If we’re unable to generate enough income from our bitcoin manufacturing when wanted or safe further sources of funding, it might develop into essential to considerably scale back our present charge of enlargement or to discover different strategic alternate options.

Money flows



For the
Three Months Ended
March 31,




2022



2021


Internet Money (Utilized in) Working Actions


$

(6,663,428)



$

(2,537,979)


Internet Money (Utilized in) Offered by Investing Actions



(4,109,195)




1,080,412


Internet Money (Utilized in) Offered by Financing Actions



(2,219,355)




1,280,000


Money, money equivalents and restricted money, starting of interval



42,398,528




405,133


Money, money equivalents and restricted money, finish of interval


$

29,406,550



$

227,566


Working Actions

Internet money utilized in working actions was $6,663,428 for the three months ended March 31, 2022, derived primarily from (i) internet lack of $10,179,789 for the three months ended March 31, 2022 adjusted for depreciation bills of miners of $3,799,629, achieve from alternate of digital property of $1,637,023, impairment of digital property of $10,045,603, and earnings from sale of funding safety of $1,039,999, and (ii) internet adjustments in our working property and liabilities, principally comprising of (a) a rise in digital property of $8,573,730 as rewards to us for the availability of mining companies, (b) a rise in accounts payable of $1,420,280 primarily as a result of we paid upkeep service charges of $405,530 in digital property and we delayed funds of upkeep service charges to at least one internet hosting accomplice, and (c) a rise in different payables and accrued bills of $856,218 as we incurred growing journey charges in March 2022.

Internet money utilized in working actions was $2,537,979 for the three months ended March 31, 2021, primarily derived from (i) internet earnings of $35,786,323 for the three months ended March 31, 2021 adjusted for depreciation bills of miners of $3,650,374 and achieve from alternate of digital property of $10,456,497, and (ii) internet of adjustments in our working property and liabilities, principally comprising of (a) a rise in digital property of $43,190,371 as rewards to us for provision of mining companies, (b) a rise in different present property of $1,336,681, primarily attributable to cost of deposits of $1,296,512 to 2 service suppliers who paid utility fees in mining amenities on behalf of us, and (c) a rise in accounts payable of $12,757,378, primarily as a result of we paid upkeep companies charges of $12,726,320 in cryptocurrencies.

Investing Actions

Internet money utilized in investing actions was $4,109,195 for the three months ended March 31, 2022, primarily attributable to deposits made for miner buy of $11,052,500 and lack of money of $59,695 from gross sales of an inactive subsidiary, partially offset by money proceeds of $7,003,000 from gross sales of digital property.

Internet money supplied by investing actions was $1,080,412 for the three months ended March 31, 2021, primarily supplied by money proceeds of $1,766,950 from gross sales of digital property, partially offset by the purchases of miners of $686,538.

Financing Actions

Internet money utilized in financing actions was $2,219,355 for the three months ended March 31, 2022, primarily attributable to the cost of liquidated injury charges of $2,219,355 because the registration assertion for resale of shares issued in one in all our personal placements was not declared efficient by the SEC till January 25, 2021.

Internet money supplied by financing actions was $1,280,000 for the three months ended March 31, 2021, primarily supplied by internet proceeds of $1,280,000 from the issuance of convertible notes to Ionic Ventures LLC.

Vital Accounting Insurance policies and Estimates

Our dialogue and evaluation of our monetary situation and outcomes of operations are based mostly upon our consolidated monetary statements. These monetary statements are ready in accordance with US GAAP, which requires the Firm to make estimates and assumptions that have an effect on the reported quantities of our property and liabilities and revenues and bills, to reveal contingent property and liabilities on the dates of the consolidated monetary statements, and to reveal the reported quantities of revenues and bills incurred throughout the monetary reporting intervals. Essentially the most important estimates and assumptions embrace the valuation of digital property and different present property, helpful lives of property and tools, the recoverability of long-lived property, provision vital for contingent liabilities and realization of deferred tax property. We proceed to guage these estimates and assumptions that we imagine to be cheap below the circumstances. We depend on these evaluations as the premise for making judgments in regards to the carrying values of property and liabilities that aren’t readily obvious from different sources. Since the usage of estimates is an integral element of the monetary reporting course of, precise outcomes may differ from these estimates because of adjustments in our estimates. A few of our accounting insurance policies require larger levels of judgment than others of their software. We imagine crucial accounting insurance policies as disclosed on this launch replicate the extra important judgments and estimates utilized in preparation of our consolidated monetary statements. 

Not too long ago issued and adopted accounting pronouncements

The Firm has evaluated all different not too long ago issued accounting pronouncements and believes such pronouncements should not have a cloth impact on the Firm’s monetary statements. See Be aware 2 of the unaudited condensed consolidated monetary statements as of March 31, 2022.

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2022 and December 31, 2021

(Expressed in US {dollars}, aside from the variety of shares)











March 31,



December 31,




2022



2021









ASSETS







Present Belongings







Money and money equivalents


$

28,086,550



$

42,398,528


Restricted money



1,320,000





Digital property



43,899,644




51,112,146


Different present property



4,968,525




3,050,616


Whole Present Belongings



78,274,719




96,561,290











Non-Present Belongings 









Funding safety



333,334




1,000,000


Deposits for property and tools



54,147,381




43,094,881


Property and tools, internet



28,651,298




32,489,158


Deferred tax property



849,944




58,081


Different non-current property



7,305,223




6,714,571


Whole Non-Present Belongings



91,287,180




83,356,691











Whole Belongings


$

169,561,899



$

179,917,981











LIABILITIES AND SHAREHOLDERS’ EQUITY









Present Liabilities









Accounts payables


$

3,537,633



$

2,608,899


Revenue tax payable



348,253




559,774


Different payables and accrued liabilities



988,537




1,875,933


Whole Present Liabilities



4,874,423




5,044,606











Non-Present Liabilities









Deferred tax liabilities






462,372


Lengthy-term earnings tax payable



2,836,458




2,767,276


Whole Non-Present Liabilities



2,836,458




3,229,648











Whole Liabilities



7,710,881




8,274,254











Commitments and Contingencies


















Shareholders’ Fairness









Most popular shares, $0.01 par worth, 10,000,000 and nil shares licensed, 1,000,000
   and nil shares issued and excellent of March 31, 2022 and December 31, 2021,
   respectively



9,050,000




9,050,000


Abnormal shares, $0.01 par worth, 340,000,000 and 50,000,000 shares licensed,
   69,643,831 and 69,591,389 shares issued and excellent of March 31, 2022 and
   December 31, 2021, respectively



696,438




695,914


Treasury inventory, at value, 129,986 and 115,514 shares as of March 31, 2022 and
   December 31, 2021, respectively



(1,171,679)




(1,094,859)


Further paid-in capital



183,332,535




182,869,159


Accrued deficit



(30,056,276)




(19,876,487)


Whole Shareholders’ Fairness



161,851,018




171,643,727


Whole Liabilities and Shareholders’ Fairness


$

169,561,899



$

179,917,981


The accompanying notes are an integral a part of these unaudited condensed consolidated monetary statements.

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE (LOSS) INCOME

For the Three Months Ended March 31, 2022 and 2021

(Expressed in US {dollars}, aside from the variety of shares)






For the
Three Months Ended
March 31,




2022



2021


Income from digital asset mining


$

8,573,747



$

43,953,050











Working prices and bills









Value of income (unique of depreciation and amortization proven under)



(4,268,251)




(12,467,728)


Depreciation and amortization bills



(3,799,629)




(3,650,374)


Basic and administrative bills



(4,272,695)




(2,225,170)


Whole working bills



(12,340,575)




(18,343,272)











(Loss) Revenue from Operations



(3,766,828)




25,609,778











Realized achieve on alternate of digital property



1,637,023




10,456,497


Impairment of digital property



(10,045,603)





Achieve from disposal of property and tools



174,568





Achieve from sale of funding safety



1,039,999





Different (expense) earnings, internet



(570,890)




2,190


Whole different (bills) earnings, internet



(7,764,903)




10,458,687











(Loss) Revenue earlier than earnings taxes



(11,531,731)




36,068,465











Revenue tax advantages (bills)



1,351,942




(282,142)


Internet (loss) earnings and complete (loss) earnings


$

(10,179,789)



$

35,786,323











Weighted common variety of atypical share excellent









Fundamental and Diluted



69,627,314




48,291,310











Internet (loss) earnings per share









Fundamental and Diluted


$

(0.15)



$

0.74


The accompanying notes are an integral a part of these unaudited condensed consolidated monetary statements.

BIT DIGITAL, INC. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY  

For the Three Months Ended March 31, 2022 and 2021

(Expressed in U.S. {dollars}, aside from the variety of shares)




Most popular Shares



Frequent Shares



Treasury



Further
paid-in



Retained
earnings
(Accrued



Whole
stockholders’




Shares



Quantity



Shares



Par Worth



Shares



capital



deficits)



fairness


Steadiness,
   December 31,
   2020









48,043,788



$

480,438



$



$

53,219,626



$

(15,700,489)



$

37,999,575


Issuance of
   atypical
   shares
   pursuant to
   a personal
   placement









262,082




2,621







1,176,747







1,179,368


Internet earnings





















35,786,323




35,786,323


Steadiness,
   March 31,
   2021









48,305,870



$

483,059



$



$

54,396,373



$

20,085,834



$

74,965,266



































Steadiness,
   December 31,
   2021



1,000,000




9,050,000




69,591,389



$

695,914



$

(1,094,859)



$

182,869,159



$

(19,876,487)



$

171,643,727


      Withholding
        of atypical
        shares for
        cost of
        worker
        withholding
        taxes















(76,820)










(76,820)


      Issuance of
        atypical
        shares in
        connection
        with share-
        based mostly
        compensation









52,442




524







450, 472







450,996


      Issuance of
        share
        choices in
        connection
        with share-
        based mostly
        compensation


















12,904







12,904


     Internet loss





















(10,179,789)




(10,179,789)


Steadiness,
   March 31,
   2022



1,000,000




9,050,000




69,643,831



$

696,438



$

(1,171,679)



$

183,332,535



$

(30,056,276)



$

161,851,018


The accompanying notes are an integral a part of these unaudited condensed consolidated monetary statements.

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

 For the Three Months Ended March 31, 2022 and 2021

(Expressed in US {dollars})






For the
Three Months Ended
March 31,




2022



2021


Money Flows from Working Actions:







Internet (loss) earnings


$

(10,179,789)



$

35,786,323


Changes to reconcile internet (loss) earnings to internet money utilized in working actions:









     Depreciation of property and tools



3,799,629




3,650,374


     Achieve from disposal of property and tools



(174,568)





     Realized achieve on alternate of digital property



(1,637,023)




(10,456,497)


     Impairment of digital property



10,045,603





     Achieve from sale of funding safety



(1,039,999)





     Share based mostly compensation bills in reference to issuance of restricted shares
        and share choices



463,900





     Liquidation injury bills



619,355





     Achieve from divestiture of a subsidiary



(52,383)





     Deferred tax (advantages) bills



(1,254,235)




30,223


Adjustments in working property and liabilities:









     Digital property



(8,573,730)




(43,190,371)


     Different present property



(223,745)




(1,336,681)


     Different noncurrent property



(590,652)





     Accounts payables



1,420,280




12,757,378


     Revenue tax payable



(211,471)




251,919


     Lengthy-term earnings tax payable



69,182





     Different payables and accrued liabilities



856,218




(30,647)


Internet Money Utilized in Working Actions



(6,663,428)




(2,537,979)











Money Flows from Investing Actions:









Purchases of property and tools






(686,538)


Deposits for property and tools



(11,052,500)





Proceeds from gross sales of digital property



7,003,000




1,766,950


Lack of money in reference to divestiture of a subsidiary



(59,695)





Internet Money (Utilized in) Offered by Investing Actions



(4,109,195)




1,080,412











Money Flows from Financing Actions:









Cost of liquidated damages associated to personal placement transactions



(2,219,355)





Proceeds from issuance of convertible notes, internet of issuance prices






1,280,000


Internet Money (Utilized in) Offered by Financing Actions



(2,219,355)




1,280,000











Impact of alternate charge adjustments on money and money equivalents
















Internet lower in money, money equivalents and restricted money



(12,991,978)




(177,567)


Money, money equivalents and restricted money, starting of interval



42,398,528




405,133


Money, money equivalents and restricted money, finish of interval


$

29,406,550



$

227,566











Supplemental Money Circulation Info









Money paid for curiosity expense


$



$


Money paid for earnings tax


$

3,500



$











Non-cash Transactions of Investing and Financing Actions









Assortment of USDC from personal placement


$



$

1,179,368


Funding in an funding safety in USDC


$



$

(1,000,000)


Purchases of property and tools in USDT


$



$

(13,487,791)


Purchases of property and tools in USDC


$



$

(895,893)


Compensation of USDC to a associated occasion


$



$

(329,722)


Receivable due from a 3rd occasion for gross sales of funding safety


$

1,706,665



$


Assortment of USDC from gross sales of property and tools


$

212,800



$


Reconciliation of money, money equivalents and restricted money






March 31,



December 31,




2022



2021


Money and money equivalents


$

28,086,550



$

42,398,528


Restricted money



1,320,000





Money, money equivalents and restricted money


$

29,406,550



$

42,398,528


The accompanying notes are an integral a part of these consolidated monetary statements.

 

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Bit Digital, Inc. (“BTBT” or the “Firm”), previously often called Golden Bull Restricted, is a holding firm integrated on February 17, 2017, below the legal guidelines of the Cayman Islands. The Firm is presently engaged within the bitcoin mining enterprise by means of its wholly owned subsidiaries in the US and Canada.

The accompanying unaudited condensed consolidated monetary statements replicate the actions of the Firm and every of the next entities:

Identify


Background


Possession

Bit Digital USA, Inc. (“BT USA”)


● A United States firm
● Integrated on September 1,
2020
● Engaged in bitcoin mining
enterprise


100% owned by Bit Digital, Inc.

Bit Digital Canada, Inc. (“BT
Canada”)


● A Canadian firm
● Integrated on February 23, 2021
● Engaged in bitcoin mining
enterprise


100% owned by Bit Digital, Inc.

Bit Digital Hong Kong Restricted (“BT
HK”)


● A Hong Kong firm
● Acquired on April 8, 2020
● Engaged in bitcoin mining
enterprise


100% owned by Bit Digital, Inc.

Bit Digital Methods Restricted (“BT
Methods”)


● A Hong Kong firm
● Integrated on June 1, 2021
● Engaged in treasury administration
actions


100% owned by Bit Digital, Inc.

Bit Digital Singapore PTE. LTD.
(“BT Singapore”)


● A Singapore firm
● Integrated on July 1, 2021
● Engaged in treasury administration
actions


100% owned by Bit Digital, Inc.

Disposition of Golden Bull USA

On June 3, 2019, Golden Bull USA, Inc. was integrated within the State of New York as a wholly-owned subsidiary of the Firm. This entity was fashioned to develop a automobile rental enterprise in the US, which by no means commenced and was terminated. On March 16, 2022, the Firm entered right into a Share Buy Settlement with Star Selection Investments Restricted (“Star Selection“), an unrelated Hong Kong entity. Pursuant to the settlement, Star Selection agreed to buy 100 (100%) % of the excellent shares of Golden Bull USA, Inc. for $10.00 and different good and helpful consideration. The sale was accomplished on March 16, 2022.

On the identical date, the events accomplished the entire share switch registration procedures as required by the legal guidelines of New York State and all different closing situations had been glad. Because of this, the disposition contemplated by the settlement was accomplished. Upon completion of the disposition, the Purchaser turned the only real shareholder of Golden Bull USA and assumed all property and obligations of Golden Bull USA. Upon the closing of the transaction, the Firm doesn’t bear any contractual dedication or obligation to the enterprise of Golden Bull USA, nor to the Purchaser.

Administration believes that the disposition of Golden Bull USA doesn’t symbolize a strategic shift that has (or can have) a serious impact on the Firm’s operations and monetary outcomes. The disposition shouldn’t be accounted as discontinued operations in accordance with ASC 205-20 (see Be aware 14).

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Foundation of presentation and rules of consolidation

The interim unaudited condensed consolidated monetary statements are ready and offered in accordance with accounting rules typically accepted in the US (“US GAAP”).

The unaudited condensed consolidated monetary info as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 has been ready with out audit, pursuant to the foundations and rules of the SEC and pursuant to Regulation S-X. Sure info and footnote disclosures, that are usually included in annual monetary statements ready in accordance with US GAAP, have been omitted pursuant to these guidelines and rules. The unaudited interim monetary info must be learn at the side of the audited monetary statements and the notes thereto, included within the Type 20-F for the fiscal yr ended December 31, 2021, which was filed with the SEC on April 15, 2022.

Within the opinion of the administration, the accompanying unaudited condensed consolidated monetary statements replicate all regular recurring changes, that are vital for a good presentation of economic outcomes for the interim intervals offered. The Firm believes that the disclosures are sufficient to make the data offered not deceptive. The accompanying unaudited condensed consolidated monetary statements have been ready utilizing the identical accounting insurance policies as used within the preparation of the Firm’s consolidated monetary statements for the yr ended December 31, 2021. The outcomes of operations for the three months ended March 31, 2022 and 2021 are usually not essentially indicative of the outcomes for the complete years.

Truthful worth of economic devices

ASC 825-10 requires sure disclosures concerning the honest worth of economic devices. Truthful worth is outlined as the worth that will be acquired to promote an asset or paid to switch a legal responsibility in an orderly transaction between market members on the measurement date. A 3-level honest worth hierarchy prioritizes the inputs used to measure honest worth. The hierarchy requires entities to maximise the usage of observable inputs and reduce the usage of unobservable inputs. The three ranges of inputs used to measure honest worth are as follows:

  • Degree 1 – inputs to the valuation methodology are quoted costs (unadjusted) for an identical property or liabilities in energetic markets.
  • Degree 2 – inputs to the valuation methodology embrace quoted costs for related property and liabilities in energetic markets, quoted market costs for an identical or related property in markets that aren’t energetic, inputs apart from quoted costs which can be observable and inputs derived from or corroborated by observable market knowledge.
  • Degree 3 – inputs to the valuation methodology are unobservable.

Truthful worth of digital property is predicated on quoted costs in energetic markets. The honest worth of the Firm’s different monetary devices together with money and money equivalents, restricted money, deposits, different receivables, accounts payable, attributable to associated events, accounts payable and different payables, approximate their honest values due to the short-term nature of those property and liabilities. Warrants have been measured at honest worth utilizing unobservable inputs and categorized in Degree 3 of the honest worth hierarchy (Be aware 9).

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Digital property

Digital property (together with bitcoin, ETH and USDC) are included in present property within the accompanying unaudited condensed consolidated stability sheets. Digital property bought are recorded at value and digital property awarded to the Firm by means of its mining actions are accounted for in reference to the Firm’s income recognition coverage disclosed under.

Digital property held are accounted for as intangible property with indefinite helpful lives. An intangible asset with an indefinite helpful life shouldn’t be amortized however assessed for impairment yearly, or extra ceaselessly, when occasions or adjustments in circumstances happen indicating that it’s extra probably than not that the indefinite-lived asset is impaired. Impairment exists when the carrying quantity exceeds its honest worth, which is measured utilizing the quoted value of the digital property on the time its honest worth is being measured. In testing for impairment, the Firm has the choice to first carry out a qualitative evaluation to find out whether or not it’s extra probably than not that an impairment exists. Whether it is decided that it’s not extra probably than not that an impairment exists, a quantitative impairment check shouldn’t be vital. If the Firm concludes in any other case, it’s required to carry out a quantitative impairment check. To the extent an impairment loss is acknowledged, the loss establishes the brand new value foundation of the asset. Subsequent reversal of impairment losses shouldn’t be permitted.

Purchases of digital property by the Firm, if any, shall be included inside investing actions within the accompanying unaudited condensed consolidated statements of money flows, whereas digital property awarded to the Firm by means of its mining actions are included inside working actions on the accompanying unaudited condensed consolidated statements of money flows. The gross sales of digital property are included inside investing actions within the accompanying unaudited condensed consolidated statements of money flows and any realized beneficial properties or losses from such gross sales are included in “realized achieve (loss) on alternate of digital property” within the unaudited condensed consolidated statements of operations and complete earnings (loss). The Firm accounts for its beneficial properties or losses in accordance with the first-in first-out methodology of accounting.

Income recognition

The Firm acknowledges income in accordance with ASC 606, Income from Contracts with Prospects (“ASC 606”).

To find out income recognition for contracts with prospects, the Firm performs the next 5 steps: (i) determine the contract with the shopper, (ii) determine the efficiency obligations within the contract, (iii) decide the transaction value, together with variable consideration to the extent that it’s possible {that a} important future reversal will not happen, (iv) allocate the transaction value to the respective efficiency obligations within the contract, and (v) acknowledge income when (or as) the Firm satisfies the efficiency obligation.

The Firm acknowledges income when it transfers its items and companies to prospects in an quantity that displays the consideration to which the Firm expects to be entitled in such alternate.

Digital asset mining

The Firm has entered into digital asset mining swimming pools by executing contracts with the mining pool operators to offer computing energy to the mining pool. The contracts are terminable at any time by both occasion and the Firm’s enforceable proper to compensation solely begins when the Firm offers computing energy to the mining pool operator. In alternate for offering computing energy, the Firm is entitled to a fractional share of the mounted digital property award the mining pool operator receives, for efficiently including a block to the blockchain. The Firm’s fractional share is predicated on the proportion of computing energy the Firm contributed to the mining pool operator to the overall computing energy contributed by all mining pool members in fixing the present algorithm.

Offering computing energy in digital asset transaction verification companies is an output of the Firm’s atypical actions. The availability of such computing energy is the one efficiency obligation within the Firm’s contracts with mining pool operators. The transaction consideration the Firm receives, if any, is noncash consideration, which the Firm measures at honest worth on the date acquired, which isn’t materially totally different than the honest worth at contract inception or the time the Firm has earned the award from the swimming pools. The consideration is all variable. As a result of it’s not possible {that a} important reversal of cumulative income is not going to happen, the consideration is constrained till the mining pool operator efficiently locations a block (by being the primary to resolve an algorithm) and the Firm receives affirmation of the consideration it’s going to obtain, at which era income is acknowledged. There is no such thing as a important financing element in these transactions.

Truthful worth of the digital property award acquired is decided utilizing the quoted value of the associated digital property on the time of receipt. There may be presently no particular definitive steering below US GAAP or different accounting framework for the accounting for digital property acknowledged as income or held, and administration has exercised important judgment in figuring out the suitable accounting remedy. Within the occasion authoritative steering is enacted by the FASB, the Firm could also be required to alter its insurance policies, which may impact the Firm’s consolidated monetary place and outcomes from operations.

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Share-based compensation

Share-based awards granted are measured at honest worth on grant date and share-based compensation expense is acknowledged (i) instantly on the grant date if no vesting situations are required, or (ii) utilizing the straight-line attribution methodology, internet of estimated forfeitures, over the requisite service interval. The honest values of restricted inventory models (“RSUs”) and restricted shares are decided with regards to the honest worth of the underlying shares and the honest worth of share choices is usually decided utilizing the Black-Scholes valuation mannequin. The worth is acknowledged as an expense over the respective service interval, internet of estimated forfeitures. Share-based compensation expense, when acknowledged, is charged to the consolidated earnings statements with the corresponding entry to further paid-in capital, legal responsibility or noncontrolling pursuits.

On every measurement date, the Firm evaluations inside and exterior sources of data to help within the estimation of varied attributes to find out the honest worth of the share-based awards granted by the Firm, together with the honest worth of the underlying shares, anticipated life and anticipated volatility. The Firm acknowledges the affect of any revisions to the unique forfeiture charge assumptions within the consolidated earnings statements, with a corresponding adjustment to fairness.

In April 2019, the Firm adopted ASU 2018-07, Compensation – Inventory Compensation (Matter 718): Enhancements to Nonemployee Share-Primarily based Cost Accounting, which expands the scope of ASC 718 to incorporate share-based cost transactions for buying items and companies from non-employees. The amendments specify that ASC 718 applies to all share-based cost transactions through which a grantor acquires items or companies for use or consumed in a grantor’s personal operations by issuing share-based cost awards. Upon the adoption of this steering, the Firm now not re-measures equity-classified share-based awards granted to consultants or non-employees at every reporting date by means of the vesting date and the accounting for these share-based awards to consultants or non-employees and workers shall be considerably aligned. The adoption of this steering didn’t have a cloth affect on the Firm’s monetary place, outcomes of operations and money flows. The unaudited condensed consolidated monetary statements for the three months ended March 31, 2022 and 2021 weren’t retroactively adjusted.

Reclassification

Sure gadgets within the monetary statements of comparative interval have been reclassified to evolve to the monetary statements for the present interval. The reclassification has no affect on the overall property and complete liabilities as of March 31, 2022 or on the statements of operations for the three months ended March 31, 2022.

Current accounting pronouncements

The Firm regularly assesses any new accounting pronouncements to find out their applicability. When it’s decided {that a} new accounting pronouncement impacts the Firm’s monetary reporting, the Firm undertakes a examine to find out the results of the change to its consolidated monetary statements and assures that there are correct controls in place to establish that the Firm’s consolidated monetary statements correctly replicate the change.

In June 2016, the FASB issued ASU 2016-13, Monetary Devices-Credit score Losses (Matter 326), which requires entities to measure all anticipated credit score losses for monetary property held on the reporting date based mostly on historic expertise, present situations, and cheap and supportable forecasts. This replaces the prevailing incurred loss mannequin and is relevant to the measurement of credit score losses on monetary property measured at amortized value. ASU 2016-13 was subsequently amended by Accounting Requirements Replace 2018-19, Codification Enhancements to Matter 326, Monetary Devices—Credit score Losses, Accounting Requirements Replace 2019-04 Codification Enhancements to Matter 326, Monetary Devices—Credit score Losses, Matter 815, Derivatives and Hedging, and Matter 825, Monetary Devices, and Accounting Requirements Replace 2019-05, Focused Transition Reduction. For public entities, ASU 2016-13 and its amendments are efficient for fiscal years, and interim intervals inside these fiscal years, starting after December 15, 2019. For all different entities, this steering and its amendments shall be efficient for fiscal years starting after December 15, 2022, together with interim intervals inside these fiscal years. Early software shall be permitted for all entities for fiscal years, and interim intervals inside these fiscal years, starting after December 15, 2018. As an rising development firm, the Firm plans to undertake this steering efficient January 1, 2023. The Firm is presently evaluating the affect of its pending adoption of ASU 2016-13 on its consolidated monetary statements. 

In 2020, the Monetary Accounting Requirements Board issued Accounting Requirements Replace (ASU) 2020-06, Debt—Debt with Conversion and Different Choices (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Personal Fairness (Subtopic 815-40): Accounting for Convertible Devices and Contracts in an Entity’s Personal Fairness, to handle the complexity in accounting for sure monetary devices with traits of liabilities and fairness. Amongst different provisions, the amendments on this ASU considerably change the steering on the issuer’s accounting for convertible devices and the steering on the spinoff scope exception for contracts in an entity’s personal fairness such that fewer conversion options would require separate recognition, and fewer freestanding devices, like warrants, would require legal responsibility remedy. This steering is efficient for fiscal years starting after December 15, 2021, with early adoption permitted. As an rising development firm, the Firm plans to undertake this steering efficient January 1, 2023. The Firm is presently evaluating the affect of its pending adoption of ASU 2020-06 on its consolidated monetary statements.

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. DIGITAL ASSETS 

Digital asset holdings have been comprised of the next:



March 31,
2022



December 31,
2021









BTC


$

27,553,170



$

35,025,158


USDC



15,768,934




15,829,464


ETH



577,540




257,524


Whole


$

43,899,644



$

51,112,146


For the three months ended March 31, 2022, the Firm acknowledged impairment lack of $10,045,603 on digital property, consisting of $9,887,087 on BTC and $158,516 on ETH, respectively. For the three months ended March 31, 2021, the Firm didn’t acknowledge impairment on digital property.

Further details about digital property

The next desk presents further details about BTC for the three months ended March 31, 2022 and 2021, respectively:



For the
Three Months Ended
March 31,




2022



2021









Opening stability


$

35,025,158



$

6,237,917


Receipt of BTC from mining companies



8,031,627




43,953,050


Gross sales of BTC in alternate of money



(6,803,200)




(1,766,950)


Cost of BTC for service fees in mining amenities



(405,530)




(12,726,320)


Cost of BTC for different bills



(22,337)




(17,461)


Change of BTC into USDC and USDT






(15,843,545)


Lending of BTC to a 3rd occasion






(1,148,593)


Realized achieve on alternate of BTC



1,614,539




10,456,497


Impairment of BTC



(9,887,087)





Ending stability


$

27,553,170



$

29,144,595


The next desk presents further details about ETH for the three months ended March 31, 2022 and 2021, respectively:



For the
Three Months Ended
March 31,




2022



2021









Opening stability


$

257,524



$


Receipt of ETH from mining companies



542,120





Cost of ETH for service fees in mining amenities



(86,017)





Cost of ETH for different bills



(55)





Realized achieve on alternate of ETH



22,484





Impairment of ETH



(158,516)





Ending stability


$

577,540



$


BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. DIGITAL ASSETS (CONTINUED)

The next desk presents further details about USDC for the three months ended March 31, 2022 and 2021, respectively:



For the
Three Months Ended
March 31,




2022



2021









Opening stability


$

15,829,464



$

56,005


Receipt of USDC from gross sales of property and tools



212,800





Receipt of USDC from alternate of BTC






1,430,305


Receipt of USDC from a personal placement






1,179,368


Gross sales of USDC in alternate of money



(199,800)





Cost of USDC for different bills



(73,530)




(433,919)


Funding in an funding safety






(1,000,000)


Purchases of miners






(895,893)


Compensation of borrowings from a associated occasion






(329,722)


Ending stability


$

15,768,934



$

6,144


The next desk presents further details about USDT for the three months ended March 31, 2022 and 2021, respectively:



For the
Three Months Ended

March 31,




2022



2021









Opening stability


$



$


Receipt of USDT from alternate of BTC






14,413,240


Cost of USDT for different bills






(714,589)


Purchases of miners






(13,487,791)


Ending stability


$



$

210,860


4. OTHER CURRENT ASSETS

Different present property have been comprised of the next:



March 31,
2022



December 31,
2021









Deposits (a)


$

2,981,684



$

2,981,684


Receivable from gross sales of funding safety (Be aware 6)



1,706,665





Workplace rental deposit



41,493




41,793


Others



238,683




27,139


Different present property


$

4,968,525



$

3,050,616




(a)

As of March 31, 2022 and December 31, 2021, the stability of deposits represented the deposits made to a few service suppliers respectively, who paid utility fees in mining amenities on behalf of the Firm. The deposits are refundable upon expiration of the settlement between the Firm and the service supplier, which can be due inside 12 months from the efficient date of the settlement.

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. PROPERTY AND EQUIPMENT, NET

Property and tools, internet was comprised of the next:



March 31,
2022



December 31,
2021









Miners for Bitcoin


$

33,217,475



$

33,268,859


Miners for ETH



5,829,019




5,829,019


Much less: collected depreciation



(10,395,196)




(6,608,720)


Property and tools, internet


$

28,651,298



$

32,489,158


For the three months ended March 31, 2022, the Firm bought 100 miners for bitcoins to at least one third occasion buyer for a complete consideration of $212,800. On the date of the transaction, the unique value and collected depreciation of those miners have been $51,384 and $13,152, respectively. The Firm acknowledged a achieve of $174,568 from the sale of miners which was recorded within the account of “achieve from disposal of property and tools”. As of the date of this report, the Firm has collected the consideration within the type of USDC.

For the three months ended March 31, 2022 and 2021, depreciation bills have been $3,799,629 and $3,650,374, respectively.

6. INVESTMENT SECURITY

Through the three months ended March 31, 2021, the Firm made an funding of $1,000,000, within the type of USDC, in a single privately held firm, over which the Firm neither has management nor important affect by means of funding in atypical shares.

Through the three months ended March 31, 2022, the Firm bought two-thirds (2/3) of the funding for consideration of $1,706,665. The Firm acknowledged a achieve of $1,039,999 from the sale of funding safety which was recorded within the account of “achieve from sale of funding safety”.

For the three months ended March 31, 2022 and 2021, the Firm didn’t report upward changes or downward changes on the funding. The Firm’s impairment evaluation considers each qualitative and quantitative components that will have a big impact on the honest worth of the fairness safety. As of March 31, 2022 and December 31, 2021, the Firm didn’t acknowledge impairment in opposition to the funding safety.

7. OTHER NON-CURRENT ASSETS

Different noncurrent property have been comprised of the next:



March 31,
2022



December 31,
2021









Deposits (a)


$

7,242,571



$

6,714,571


Others



62,652





Different non-current property


$

7,305,223



$

6,714,571




(a)

As of March 31, 2022 and December 31, 2021, the stability of deposits represented the deposits made to a few service suppliers respectively, who paid utility fees in mining amenities on behalf of the Firm. The deposits are refundable upon expiration of the settlement between the Firm and the service supplier, which can be due over 12 months from the efficient date of the settlement.

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. SHARE-BASED COMPENSATION

Share-based compensation akin to RSUs, incentive and non-statutory inventory choices, restricted shares, share appreciation rights and share funds could also be granted to any administrators, workers and consultants of the Firm or affiliated corporations below 2021 Omnibus Fairness Incentive Plan (“2021 Plan”) and 2021 Second Omnibus Fairness Incentive Plan (“2021 Second Plan”). An mixture of two,415,293 RSUs have been granted below the 2021 Plan and no atypical shares stay reserved for issuance below the 2021 Plan. There are 5,000,000 atypical shares reserved for issuance below the Firm’s 2021 Second Plan, below which 11,000 RSUs and 225,000 share choices have been granted to workers as of March 31, 2022.

Restricted Inventory Models (“RSUs”)

As of December 31, 2021, the Firm had 178,676 awarded and unvested RSUs. For the three months ended March 31, 2021, the Firm didn’t grant RSUs to workers or non-employees.

A abstract of the adjustments within the RSUs referring to atypical shares granted by the Firm throughout the three months ended March 31, 2022 is as follows:  



Variety of
RSUs



Weighted
common
grant date
honest
worth









Awarded and unvested as of January 1, 2022



178,676



$

13.68


Granted





$


Vested



(56,642)



$

12.09


Awarded and unvested as of March 31, 2022



122,034



$

14.54


Anticipated to vest as of March 31, 2022



122,034



$

14.54


As of March 31, 2022, there have been $1,365,237 of unrecognized compensation prices associated to all excellent RSUs. These quantities are anticipated to be acknowledged over a weighted common interval of 0.83 years.

For the three months ended March 31, 2022, the Firm acknowledged share-based compensation expense of $453,484 in reference to the above RSU awards.

Share choices

On March 16, 2022, the Firm granted 225,000 share choices to a few workers below 2021 Second Plan. All of those share choices are topic to a 24-month service vesting schedule, and vest 1/24 for every month at an train value of $3.17. The honest worth of the share possibility was decided at $3.17 per share possibility, by reference to the closing value on grant date. The Firm acknowledges compensation bills associated to these possibility on a straight-line foundation over the vesting intervals. For the three months ended March 31, 2022, the Firm acknowledged share-based compensation bills of $10,416.

The next desk summarized the share possibility actions for the three months ended March 31, 2022:



Variety of
Choices



Weighted
Common
Train
Worth



Weighted
Common
Remaining
Contract
Life (in
years)












Choices excellent on December 31, 2021










Granted



225,000



$

3.17




2.00


Forfeited










Expired










Exercised










Choices excellent on March 31, 2022



225,000



$

3.17




1.92


Vested and exercisable on March 31, 2022










Vested and anticipated to vest on March 31, 2022



225,000



$

3.17




1.92


BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. SHARE CAPITAL

Abnormal shares

As of December 31, 2021, there have been 69,591,389 atypical shares issued and excellent. 

Through the three months ended March 31, 2022, 52,442 atypical shares have been issued to the Firm’s officers workers and consultants in settlement of an equal variety of absolutely vested restricted inventory models awarded to such people by the Firm pursuant to grants made below the Firm’s 2021 Plan.

As of March 31, 2022, there have been 69,643,831 atypical shares issued and excellent. 

Most popular shares

As of March 31, 2022 and December 31, 2021, there have been 1,000,000 most well-liked shares issued and excellent.

The choice shares are entitled to the next choice options: 1) an annual dividend of 8% when declared by the Board of Administrators; 2) a liquidation choice of $10.00 per share; 3) convert on a one for one foundation for atypical shares, topic to a 4.99% conversion limitation; 4) rank senior to atypical shares in insolvency; and 5) solely for voting functions vote 50 atypical shares, for every choice share.

Treasury inventory

The Firm treats shares withheld for tax functions on behalf of workers in reference to the vesting of restricted share grants as atypical share repurchases as a result of they scale back the variety of shares that will have been issued upon vesting. For the three months ended March 31, 2022, the Firm withheld 14,472 shares of its atypical shares that have been surrendered to the Firm for withholding taxes associated to restricted inventory vesting valued at $76,820, based mostly on honest worth of the withheld shares on the vesting date. As of March 31, 2022 and December 31, 2021, the Firm had treasury inventory of $1,171,679 and $1,094,859, respectively.

Warrants 

As of March 31, 2022 and December 31, 2021, the Firm had excellent 10,118,046 personal placement warrants to buy an mixture of 10,118,046 atypical shares at an train value of $7.91 per complete share.

In accordance with ASC 815, the Firm decided that the warrants meet the situations essential to be categorized as fairness as a result of the consideration is listed to the Firm’s personal fairness, there aren’t any train contingencies based mostly on an observable market not based mostly on its inventory or operations, settlement is in keeping with a fixed-for-fixed fairness instrument, the settlement accommodates an specific variety of shares and there aren’t any money cost provisions.

The honest worth of the warrants was estimated at $33.3 million utilizing the Black-Scholes mannequin. Inherent in these valuations are assumptions associated to anticipated stock-price volatility, anticipated life, risk-free rate of interest and dividend yield. The Firm estimates the volatility of its atypical shares based mostly on historic and implied volatilities of chosen peer corporations in addition to its personal that match the anticipated remaining lifetime of the warrants. The chance-free rate of interest is predicated on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity much like the anticipated remaining lifetime of the warrants. The anticipated lifetime of the warrants is assumed to be equal to their remaining contractual time period. The dividend charge is predicated on the historic charge, which the Firm anticipates it to stay at zero.

The next desk offers quantitative info concerning Degree 3 honest worth measurements inputs for the Firm’s warrants at their measurement dates:



As of
October 4,
2021






Volatility



192.85

%

Inventory value



7.59


Anticipated lifetime of the warrants to transform



3.81


Danger free charge



0.97

%

Dividend yield



0.0

%

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. INCOME TAXES  

Cayman Islands

Beneath the present and relevant legal guidelines of the Cayman Islands, the Firm shouldn’t be topic to tax on earnings or capital achieve. Moreover, upon funds of dividends by the Firm to its shareholders, no Cayman Islands withholding tax shall be imposed.

Hong Kong

In spite of everything bitcoin miners have been migrated to North America, BT HK operates below a cost-plus mannequin for its normal and administration companies supplied and is presently reimbursed by Bit Digital USA Inc. beginning in fiscal yr 2022. The Firm is presently partaking a third-party service supplier to carry out a benchmark examine for switch pricing function. At present the mark-up proportion for the final and administration companies supplied by BT HK is estimated to be 7% and the Firm will replace the share, if vital, as soon as the benchmark examine is finalized. The Firm doesn’t anticipate any materials affect because of change on the mark-up.

Our subsidiaries in Hong Kong are taxed at a decreased charge of 8.25% for assessable income not exceeding 2 million HKD and the remaining assessable income shall be taxed at the usual tax charge of 16.5% below Hong Kong income tax.

Based on ASC Matter 740, Revenue Taxes, (“ASC 740”), the uncertainty in earnings taxes shall be acknowledged in an enterprise’s monetary statements and prescribes a recognition threshold and measurement course of for monetary assertion recognition and measurement of a tax place taken or anticipated to be taken in a tax return. For these advantages to be acknowledged, a tax place should be more-likely-than-not to be sustained upon examination by taxing authorities. Primarily based on the Firm’s analysis, the Firm believes that its earnings tax positions are more-likely-than-not to be sustained upon audit.

By advantage of the territorial supply system adopted in Hong Kong, BT HK is within the strategy of making use of for the Offshore Non-taxable Declare on its bitcoin mining earnings earned for the three months ended March 31, 2022 and 2021 below Hong Kong income tax with the Hong Kong Inland Income Division (“HKIRD”) on the bottom that the mentioned earnings shouldn’t be arising in or derived from Hong Kong. Given the Offshore Non-taxable Declare continues to be topic to evaluation and settlement by the HKIRD and there are uncertainties surrounding the declare in addition to the Firm’s stock-based compensation deduction tax place, the Hong Kong subsidiary recorded an unrecognized tax advantage of $69,182 and $nil as long-term earnings tax bills for the three months ended March 31, 2022 and 2021. The $69,182 tax expense is for the incremental curiosity accrued for the present quarter on the prevailing unrecognized tax advantages.

For the three months ended March 31, 2022, BT HK recorded present earnings tax advantage of $12,138 for its taxable loss. For BT Methods, the Firm generated a pre-tax lack of $763,728 and $nil tax expense for the quarter ended March 31, 2022.

United States of America

For the US jurisdiction, the Firm is topic to federal and state earnings taxes on its enterprise operations.

The Firm additionally evaluated the affect from the latest tax reforms in the US, together with the Coronavirus Assist, Reduction, and Financial Safety Act (“CARES Act”) and Construct Again Higher Act (“BBB Act”). No materials affect on the Firm is predicted based mostly on our evaluation. We’ll proceed to observe the potential affect going ahead.

For the three months ended March 31, 2022, the Firm is topic to US federal earnings taxes and withholding taxes, state earnings taxes and franchise taxes, primarily from Nebraska and Texas. The Firm will proceed to observe its publicity to totally different states and adjust to state earnings taxes submitting requirement because the Firm continues to develop its enterprise in the US. The Firm has not been below any tax examination in the US since inception.

For the three months ended March 31, 2022 and 2021, the Firm incurred earnings tax and withholding tax advantages (bills) as under: 



For the
Three Months Ended
March 31,




2022



2021









Federal earnings tax advantages (bills)


$

239,545



$

(251,919)


State earnings tax advantages (bills)



1,105,598




(30,223)


Whole


$

1,345,143



$

(282,142)


BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. INCOME TAXES (CONTINUED)

Canada

The Firm is topic to each federal and provincial earnings taxes for its enterprise operation in Canada for the three months ended March 31, 2022.

For 3 months ended March 31, 2022 and 2021, the Firm incurred Canada federal and state earnings tax advantages as under: 



For the
Three Months Ended
March 31,




2022



2021









Federal earnings tax advantages


$

41,637



$


State earnings tax advantages



22,206





Whole


$

63,843



$


Singapore

The Firm is topic to company earnings tax for its enterprise operation in Singapore. The Firm generated a pre-tax lack of $3,051 and $nil tax expense for the quarter ended March 31, 2022.

Deferred Tax Belongings/Liabilities

The Firm evaluations deferred tax property for a valuation allowance based mostly upon whether or not it’s extra probably than not that the deferred tax asset shall be absolutely realized. The Firm evaluates its valuation allowance necessities at finish of every reporting interval by reviewing all obtainable proof, each optimistic and unfavorable, and contemplating whether or not, based mostly on the burden of that proof, a valuation allowance is required. When circumstances trigger a change in administration’s judgement in regards to the recoverability of deferred tax property, the affect of the change on the valuation allowance is usually mirrored in earnings from operations. The long run realization of the tax advantage of an current deductible momentary distinction in the end is determined by the existence of enough taxable earnings of the suitable character throughout the carryforward interval obtainable below relevant tax legislation. As of March 31, 2022, the Firm applies a full valuation allowance on the deferred tax property of Bit Digital Methods Restricted and Bit Digital Singapore Ptd Ltd.

Unrecognized Tax Advantages

For unrecognized tax advantages, the Firm’s coverage is to acknowledge curiosity and penalties that will be assessed in relation to the settlement worth of unrecognized tax advantages as a element of earnings tax expense. For the three months ended March 31, 2022 and 2021, the Firm recorded an unrecognized tax advantage of $69,128 and $nil associated to its HK operations and the Firm will proceed to evaluation its tax positions and supply for unrecognized tax advantages as they come up.

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. (LOSS) EARNINGS PER SHARE 



For the
Three Months Ended
March 31,




2022



2021


Internet (loss) earnings


$

(10,179,789)



$

35,786,323











Weighted common variety of atypical share excellent









Fundamental and Diluted



69,627,314




48,291,310











(Loss) Earnings per share









Fundamental and Diluted


$

(0.15)



$

0.74


Fundamental earnings (loss) per share is computed by dividing internet earnings (loss) attributable to atypical shareholders by the weighted common variety of atypical shares excellent throughout the interval. Diluted EPS displays the potential dilution that might happen if securities or different contracts to problem atypical share have been exercised or transformed into atypical shares or resulted within the issuance of atypical shares that then shared within the earnings of the entity.

For the three months ended March 31, 2022, the unvested RSUs, warrants and most well-liked shares have been excluded from the calculation of diluted earnings per share as a result of they have been anti-dilutive. For the three months ended March 31, 2021, the Firm had no dilutive shares.

12. RELATED PARTIES

Through the Firm’s regular enterprise operations within the three months ended March 31, 2021, the Firm absolutely repaid the borrowings of $329,722 attributable to Mr. Erke Huang, the Firm’s Chief Monetary Officer within the type of USDC.

Through the three months ended March 31, 2022, the Firm didn’t enter into any transactions with associated events besides as set forth under.

On March 21, 2022, the Firm and an officer of the Firm entered right into a Confidential Settlement, Basic Launch and Separation Settlement (the “Settlement”) with a former worker (the “Worker”). The Worker asserted numerous disputes, which the Firm settled for a sum of $500,000. The events entered right into a non-disclosure settlement and agreed to mutual non-disparagement. The Board of Administrators of the Firm has retained counsel to evaluation the matter and can make suggestions if vital on insurance policies and procedures.

As of March 31, 2022 and December 31, 2021, the Firm had no excellent balances due from or attributable to associated events.

13. CONTINGENCIES  

On January 20, 2021, a securities class motion lawsuit was filed in opposition to the Firm and its former Chief Government Officer and Chief Monetary Officer titled Anthony Pauwels v. Bit Digital, Inc., Min Hu and Erke Huang (Case No. 1:21-cv-00515) (U.S.D.C. S.D.N.Y.). A second class motion lawsuit was filed, considerably an identical on January 26, 2021, titled, Yang v. Bit Digital, Inc., Min Hu and Erke Huang (Case No. 1:21-cv- 00721). A number of different associated circumstances have since been filed searching for lead plaintiff standing. The category motion is on behalf of individuals that bought or acquired our atypical shares between December 21, 2020 and January 8, 2021, a interval of volatility in our inventory, in addition to volatility within the value of bitcoin. We imagine the complaints are based mostly solely upon a analysis article issued on January 11, 2021, which included false claims and to which the Firm responded in a press launch filed on Type 6-Ok on January 19, 2021. On April 21, 2021, the Court docket consolidated a number of associated circumstances below the caption In re Bit Digital Securities Litigation. Joseph Franklin Monkam Nitcheu was appointed as lead counsel. We’ve filed a movement to dismiss the lawsuits and can proceed to vigorously defend the motion.

Every now and then, the Firm is a celebration to varied authorized actions arising within the atypical course of enterprise. The Firm accrues prices related to these issues after they develop into possible and the quantity might be moderately estimated. Authorized prices incurred in reference to loss contingencies are expensed as incurred.

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14. DISPOSITION OF GOLDEN BULL USA

On March 16, 2022, the Firm right into a share buy settlement (the “Disposition SPA”) with Star Selection Investments Restricted (“Star Selection“), an unrelated Hong Kong entity (the “Purchaser”). Pursuant to the Disposition SPA, the Purchaser bought Golden Bull USA in alternate for nominal consideration of $10.00 and different good and helpful consideration. Golden Bull USA has been inactive since Could 2021. The disposition was closed on the identical date.

On the identical date, the events accomplished the entire share switch registration procedures as required by the legal guidelines of State of New York and all different closing situations had been glad. Because of this, the disposition contemplated by the Disposition SPA was accomplished. Upon completion of the disposition, the Purchaser turned the only real shareholder of Golden Bull USA and assumed all property and obligations of Golden Bull USA. Upon the closing of the transaction, the Firm doesn’t bear any contractual dedication or obligation to the enterprise of Golden Bull USA, nor to the Purchaser.

Golden Bull USA has been inactive since Could 2020. It didn’t generate revenues or incur any working bills for the three months ended March 31, 2022 and 2021. Golden Bull USA had complete property of $72,196 and complete liabilities of $124,569, with unfavorable internet property of $52,373, absolutely the worth accounted for 0.03% of the unaudited consolidated internet property of the Firm as of March 31, 2022. The Firm recorded a achieve of $52,383 from the termination within the account of “different earnings, internet” within the consolidated statements of operations and complete (loss) earnings.

Administration believes that the disposition of Golden Bull USA doesn’t symbolize a strategic shift that has (or can have) a serious impact on the Firm’s operations and monetary outcomes. The disposition shouldn’t be accounted as discontinued operations in accordance with ASC 205-20.

15. SUBSEQUENT  EVENTS

On June 9, 2022, the Firm and Riot Blockchain, Inc. (“Riot”) entered right into a Hashrate Swap Settlement (the “HSA”). The HSA offers for the alternate of cryptocurrency mining energy (“Hashrate”) by means of the alternate of bitcoin mining computer systems. Riot’s miners are presently deployed on the Coinmint LLC (“Coinmint”) facility positioned in Massena, New York (the “Coinmint Facility”). Riot desired to accumulate Bit Digital’s factory-new miners for future deployment and Bit Digital desired to accumulate Riot’s working miners for quick deployment on the Coinmint Facility. As further consideration to Bit Digital to alternate its factory-new miners for Riot’s working miners, Riot agreed to ship twenty-five (25%) % extra Hashrate to Bit Digital than Bit Digital will ship to Riot. On account of the HSA, the Firm will obtain an mixture of 0.625 EH/s of Hashrate from Riot, in alternate for 0.500 EH/s.

On the primary supply date of June 14, 2022, Bit Digital delivered 2,500 S19j Professional Miners. This was adopted by Riot’s supply of two,841 S19 Professional Miners to Bit Digital on June 17, 2022. The Firm additional agreed to ship an extra 2,500 S19j Execs to Riot in alternate for two,841 S19 Execs scheduled to happen throughout the first week of July 2022.

Beneath the Coinmint Colocation Grasp Mining Companies Settlement (the “MMSA”) dated as of June 7, 2022 by and between Coinmint and Bit Digital USA, Inc., Coinmint will present the required Mining Energy (as outlined) for a one-year interval robotically renewing for three-month intervals except earlier terminated. The Firm can pay Coinmint electrical utility prices plus working prices required to guard the digital property; in addition to a efficiency payment equal to 27.5% of revenue, topic to a ten (10%) % discount if Coinmint fails to offer Uptime of ninety-eight (98%) % or higher for any interval.

The Coinmint Facility operates in Upstate New York area that makes use of energy that’s 90% emissions-free, as reported in Energy Tendencies 2021 report by the New York Impartial System Operator (“NYISO”).

In Could 2022, the Firm’s internet hosting accomplice Digihost Know-how Inc. (“Digihost”) suggested the Firm {that a} reduce in energy to its North Tonawanda, NY web site resulted in roughly 1,580 of the Firm’s miners going offline. As of the date of this report, energy had been restored to roughly 470 of the Firm’s miners, and Digihost continues efforts to revive energy in full. Moreover, Digihost continues to await approval from the relevant authorities to finish its acquisition of the positioning’s 60MW energy plant; at the moment there might be no assurances as to timing. The Firm’s administration continues to observe the state of affairs. 

The Firm’s internet hosting accomplice Blockfusion USA, Inc. (“Blockfusion”) suggested the Firm that the substation at its Niagara Falls, NY facility was broken by an explosion and subsequent fireplace, and energy was reduce off to roughly 2,515 of the Firm’s bitcoin miners and roughly 710 ETH miners that had been working on the web site instantly previous to the incident. The explosion and fireplace are believed to have been brought on by defective tools owned by the ability utility. Blockfusion and the Firm intend to pursue claims together with searching for reimbursement for misplaced income. Blockfusion is working with its insurer and the utility to revive energy as shortly as potential. Operations are hoped to renew inside just a few weeks, however at the moment there might be no assurances as to timing. The Firm’s administration continues to observe the state of affairs and Blockfusion’s pursuit of claims.

New York State Senate Invoice S6486D (the “Invoice”), handed by the New York State Senate on June 3, 2022, proposes a two-year moratorium on new or renewed permits filed sooner or later for behind-the-meter proof-of-work cryptocurrency mining operations at electrical producing amenities that make the most of carbon-based gas in New York State. The Firm’s amenities in New York are both grid powered, and/or at amenities for which renewal purposes have been beforehand filed. Whereas the Invoice may change previous to being signed by Governor Hochul, it’s not presently anticipated to have an opposed impact on the Firm’s operations.

Throughout April 4 by means of Could 12, 2022, the Firm issued an mixture of 10,881,598 atypical shares to Ionic Ventures LLC for gross proceeds of $22 million. The Firm acquired internet proceeds of $21 million after deducting commissions payable to broker-dealers.

Ahead Wanting Statements

The next dialogue and evaluation of our monetary situation and outcomes of operations must be learn at the side of our monetary statements and the associated notes included elsewhere on this information launch. Apart from the statements of historic reality, this information launch accommodates “forward-looking info” and “forward-looking statements reflecting our present expectations that contain dangers and uncertainties (collectively, “forward-looking info”) that’s based mostly on expectations, estimates and projections as on the date of this information launch. Precise outcomes and the timing of occasions on this information launch contains details about hash charge enlargement, diversification of operations, potential additional enhancements to profitability and effectivity throughout mining operations, potential for the Firm’s long-term development, and the enterprise objectives and targets of the Firm. Components that might trigger precise outcomes, efficiency or achievements to vary materially from these mentioned in our such forward-looking statements because of many components, together with, however not restricted to: continued results of the COVID19 pandemic could have a cloth opposed impact on the Firm’s efficiency as provide chains are disrupted and will stop the Firm from working its property; the flexibility to ascertain new amenities for bitcoin mining in North America; a lower in cryptocurrency migrating after which working its property; a lower in cryptocurrency pricing; quantity of transaction exercise or typically, the profitability of cryptocurrency mining; additional enhancements to profitability and effectivity is probably not realized; the digital foreign money market; the Firm’s capability to efficiently mine digital foreign money on the cloud; the Firm could not be capable to profitably liquidate its present digital foreign money stock, or in any respect; a decline in digital foreign money costs could have a big unfavorable affect on the Firm’s operations; the volatility of digital foreign money costs; and different associated dangers as extra absolutely set forth below “Danger Components” and elsewhere in our Annual Report on Type 20-F for the yr ended December 31, 2021 and different paperwork disclosed below the Firm’s filings at www.sec.gov. The forward-looking info on this information launch displays the present expectations, assumptions and/or beliefs of the Firm based mostly on info presently obtainable to the Firm. In reference to the forward-looking info contained on this information launch, the Firm has made assumptions about: the present profitability in mining cryptocurrency (together with pricing and quantity of present transaction exercise); worthwhile use of the Firm’s property going ahead; the Firm’s capability to profitably liquidate its digital foreign money stock as required; historic costs of digital currencies and the flexibility of the Firm to mine digital currencies on the cloud shall be in keeping with historic costs; and there shall be no regulation or legislation that may stop the Firm from working its enterprise. The Firm has additionally assumed that no important occasions happen exterior of the Firm’s regular course of enterprise. Though the Firm believes that the assumptions inherent within the forward-looking info are cheap, forward-looking info shouldn’t be a assure of future efficiency and accordingly undue reliance shouldn’t be placed on such info as a result of inherent uncertainty therein.

SOURCE Bit Digital, Inc.

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