UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2025

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

For the transition period from __________ to __________

Commission file number: 001-38421

BIT DIGITAL, INC.

(Exact name of registrant as specified in its charter)

Cayman Islands		98-1606989
(State or other jurisdiction of Company or organization)		(I.R.S. Employer Identification No.)

31 Hudson Yards, Floor 11, New York, NY		10001
(Address of principal executive offices)		(Zip Code)

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

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

Title of each class		Name of each exchange on which registered
Ordinary Shares, $.01 par value		Nasdaq Capital Market

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

Title of each class		Name of each exchange on which registered

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

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

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

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

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

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

Applicable only to Corporate Issuers:

Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date: 207,780,871 as of May 12, 2025.

TABLE OF CONTENTS

PART I

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	34

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	54

Item 4.	Controls and Procedures.	55

PART II

Item 1.	Legal Proceedings.	56

Item 1A.	Risk Factors.	56

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	56

Item 3.	Defaults Upon Senior Securities.	56

Item 4.	Mine Safety Disclosures.	56

Item 5.	Other Information.	56

Item 6.	Exhibits.	57

SIGNATURES		58

Item 1. Financial Statements and Supplementary Data

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2025 and December 31, 2024

(Expressed in US dollars, except for the number of shares)

	March 31,			December 31,
	2025			2024
ASSETS
Current Assets
Cash and cash equivalents	$	57,555,011		$	95,201,335
Restricted cash		3,732,792			3,732,792
Accounts receivable		2,531,188			5,267,863
USDC		1,036,596			411,413
Digital assets		79,030,760			161,377,344
Net investment in lease - current		2,632,603			2,546,519
Other current assets		41,505,238			28,319,669
Total Current Assets		188,024,188			296,856,935

Non-Current Assets
Loans receivable		400,000			400,000
Deposits for property, plant, and equipment		17,096,261			39,059,707
Property, plant, and equipment, net		185,305,935			107,302,458
Goodwill		19,243,410			19,383,291
Intangible assets		12,762,627			13,028,730
Operating lease right-of-use assets		15,138,730			14,967,569
Net investment in lease - non-current		6,087,814			6,782,479
Investment securities		33,135,336			30,797,365
Deferred tax asset		88,602			89,246
Other non-current assets		7,965,671			9,579,884
Total Non-Current Assets		297,224,386			241,390,729

Total Assets	$	485,248,574		$	538,247,664

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	1,812,165		$	3,418,172
Current portion of deferred revenue		21,175,064			30,698,458
Current portion of operating lease liability		5,030,826			4,529,291
Dividend payable		-			800,000
Income tax payable		1,910,726			1,595,308
Other payables and accrued liabilities		18,322,256			13,985,375
Total Current Liabilities		48,251,037			55,026,604

Non-Current Liabilities
Non-current portion of deferred revenue		72,963			73,494
Non-current portion of operating lease liability		8,984,489			9,276,926
Long-term income tax payable		3,196,204			3,196,204
Deferred tax liability		6,736,959			6,409,915
Other long-term liabilities		589,029			785,372
Total Non-Current Liabilities		19,579,644			19,741,911

Total Liabilities		67,830,681			74,768,515

Commitments and Contingencies

Shareholders’ Equity
Preferred shares, $0.01 par value, 10,000,000 and 10,000,000 shares authorized, 1,000,000 and 1,000,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		9,050,000			9,050,000
Ordinary shares, $0.01 par value, 340,000,000 and 340,000,000 shares authorized, 182,896,328 and 179,255,191 shares issued, 182,766,342 and 179,125,205 shares outstanding as of March 31, 2025 and December 31, 2024, respectively		1,828,963			1,792,548
Treasury stock, at cost, 129,986 and 129,986 shares as of March 31, 2025 and December 31, 2024, respectively		(1,171,679	)		(1,171,679	)
Additional paid-in capital		565,702,081			553,583,437
Accumulated deficit		(155,921,306	)		(98,209,661	)
Accumulated other comprehensive loss		(2,070,166	)		(1,565,496	)
Total Shareholders’ Equity		417,417,893			463,479,149
Total Liabilities and Shareholders’ Equity	$	485,248,574		$	538,247,664

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

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended March 31, 2025 and 2024

(Expressed in US dollars, except for the number of shares)

	For the Three Months Ended March 31,
	2025			2024

Revenues
Digital asset mining	$	7,776,963		$	21,891,760
Cloud services		14,842,286			8,069,584
Colocation services		1,644,663			-
ETH staking		560,641			325,746
Other		280,567			99,748
Total revenues	$	25,105,120		$	30,386,838

Operating costs and expenses
Cost of revenues (exclusive of depreciation shown below)
Digital asset mining		(6,123,889	)		(12,984,932	)
Cloud services		(6,088,000	)		(3,157,327	)
Colocation services		(545,836	)		-
ETH staking		(32,568	)		(16,433	)
Depreciation and amortization expenses		(7,241,989	)		(6,845,949	)
General and administrative expenses		(8,235,923	)		(5,955,740	)
(Losses) gains on digital assets		(49,205,227	)		45,732,577
Total operating expenses		(77,473,432	)		16,772,196

(Loss) income from operations		(52,368,312	)		47,159,034

Loss from disposal of property, plant, and equipment		(333,620	)		-
Other (expense) income, net		(4,337,997	)		4,500,173
Total other (expense) income, net		(4,671,617	)		4,500,173

(Loss) income before income taxes		(57,039,929	)		51,659,207

Income tax expenses		(671,716	)		(1,577,350	)
Net (loss) income	$	(57,711,645	)	$	50,081,857

Other comprehensive (loss) income
Foreign currency translation adjustment		(504,670	)		-
Comprehensive (loss) income	$	(58,216,315	)	$	50,081,857

Weighted average number of ordinary share outstanding
Basic		181,413,307			114,594,710
Diluted		181,413,307			115,594,710

(Loss) earning per share
Basic	$	(0.32	)	$	0.44
Diluted	$	(0.32	)	$	0.43

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

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended March 31, 2025 and 2024

(Expressed in U.S. dollars, except for the number of shares)

	Preferred Shares				Common Shares				Treasury						Additional paid -in		Retained Earnings (Accumulated			Accumulated other comprehensive			Total Stockholders’
	Shares		Amount		Shares		Par Value		Shares			Par Value			capital		Deficit)			loss			Equity
Balance, December 31, 2023		1,000,000		9,050,000		107,291,827		1,074,218		(129,986	)		(1,171,679	)		290,660,609		(146,909,292	)		-			152,703,856
Share-based compensation expense		-		-		-		-		-			-			106,199		-			-			106,199
Issuance of common stock/At-the-market offering, net of offering costs		-		-		12,871,934		128,719		-			-			38,523,688		-			-			38,652,407
Share-based compensation in connection with issuance of ordinary shares to employees		-		-		100,000		1,000		-			-			275,000		-			-			276,000
Share-based compensation in connection with issuance of ordinary shares to consultants		-		-		700,000		7,000		-			-			2,058,000		-			-			2,065,000
Share-based compensation in connection with issuance of ordinary shares to director		-		-		40,000		400		-			-			110,000		-			-			110,400
Cumulative effect upon adoption of ASU 2023-08		-		-		-		-		-			-			-		21,193,820			-			21,193,820
Net income		-		-		-		-		-			-			-		50,081,857			-			50,081,857
Balance, March 31, 2024		1,000,000		9,050,000		121,003,761		1,211,337.00		(129,986	)		(1,171,679	)		331,733,496		(75,633,615	)		-			265,189,539

Balance, December 31, 2024		1,000,000		9,050,000		179,125,205		1,792,548		(129,986	)		(1,171,679	)		553,583,437		(98,209,661	)		(1,565,496	)		463,479,149
Share-based compensation expense		-		-		-		-		-			-			219,255		-			-			219,255
Issuance of common stock/At-the-market offering, net of offering costs		-		-		3,149,887		31,499		-			-			10,145,739		-			-			10,177,238
Share-based compensation in connection with issuance of ordinary shares to employees		-		-		21,250		216		-			-			48,050		-			-			48,266
Share-based compensation in connection with issuance of ordinary shares to consultants		-		-		450,000		4,500		-			-			1,638,000		-			-			1,642,500
Share-based compensation in connection with issuance of ordinary shares to director		-		-		20,000		200		-			-			67,600		-			-			67,800
Other comprehensive loss		-		-		-		-		-			-			-		-			(504,670	)		(504,670	)
Net loss		-		-		-		-		-			-			-		(57,711,645	)		-			(57,711,645	)
Balance, March 31, 2025		1,000,000		9,050,000		182,766,342		1,828,963		(129,986	)		(1,171,679	)		565,702,081		(155,921,306	)		(2,070,166	)		417,417,893

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

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2025 and 2024

(Expressed in US dollars)

	For the Three Months Ended March 31,
	2025			2024
Cash Flows from Operating Activities:
Net (loss) income	$	(57,711,645	)	$	50,081,857
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization expenses		7,241,989			6,845,949
Loss from disposal of property, plant, and equipment		333,620			-
Losses (gains) on digital assets		49,205,227			(45,732,577	)
Share-based compensation expenses		252,390			492,599
Realized and unrealized gains on digital assets held within Investment Fund		-			(3,007,862	)
Changes in fair value of investment security		4,692,428			(454,705	)
Digital assets mined		(7,776,963	)		(21,891,760	)
Digital assets earned from staking		(560,641	)		(325,746	)
Changes in operating assets and liabilities:
Digital assets and stable coins		32,541,117			396,210
Operating lease right-of-use assets		1,096,155			460,955
Deferred revenue		(9,520,254	)		(9,321,861	)
Lease liability		(1,064,735	)		(460,954	)
Other current assets		(10,690,340	)		3,428,276
Other non-current assets		1,536,347			140,645
Accounts receivable		2,727,964			-
Accounts payable		(917,012	)		4,786,557
Other payables and accrued liabilities		4,934,594			(4,764,318	)
Net investment in lease		608,581			(3,118,145	)
Other long-term liabilities		(196,343	)		-
Income tax payable		315,419			1,983
Deferred tax liability		354,017			1,575,367
Net Cash Provided by (Used in) Operating Activities		17,401,915			(20,867,530	)

Cash Flows from Investing Activities:
Purchases of and deposits made for property, plant and equipment		(64,961,231	)		(474,409	)
Net Cash (Used in) Investing Activities		(64,961,231	)		(474,409	)

Cash Flows from Financing Activities:
Net proceeds from issuance of common stock/At-the-market offering		10,177,238			38,652,407
Payment of dividends		(800,000	)		-
Net Cash Provided by Financing Activities		9,377,238			38,652,407

Net (decrease) increase in cash, cash equivalents and restricted cash		(38,182,078	)		17,310,468
Effect of exchange rate changes on cash, cash equivalents and restricted cash		535,754			-
Cash, cash equivalents and restricted cash, beginning of period		98,934,127			18,180,934
Cash, cash equivalents and restricted cash, end of period	$	61,287,803		$	35,491,402

Supplemental Cash Flow Information
Cash paid for income taxes, net of (refunds)	$	-		$	-

Non-cash Transactions of Investing and Financing Activities
Reclassification of deposits to property and equipment	$	80,305,941		$	7,540,304
Right of use assets exchanged for operating lease liability		1,298,508			460,955

Reconciliation of cash, cash equivalents and restricted cash

	March 31,		December 31,
	2025		2024
Cash and cash equivalents	$	57,555,011	$	95,201,335
Restricted cash		3,732,792		3,732,792
Cash, cash equivalents and restricted cash	$	61,287,803	$	98,934,127

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

BIT DIGITAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Bit Digital, Inc. (“BTBT” or the “Company”), is a holding company incorporated on February 17, 2017, under the laws of the Cayman Islands. The Company is primarily engaged in the digital asset mining business, high performance computing (“HPC”) business and Ethereum staking activities through its wholly owned subsidiaries.

On June 27, 2024, WhiteFiber HPC, Inc. (f/k/a Bit Digital HPC, Inc.) (“WF HPC”) was incorporated to support the Company’s cloud services in the United States. WhiteFiber HPC, Inc. is 100% owned by WhiteFiber AI, Inc. which is 100% owned by Bit Digital, Inc.

On August 15, 2024, WhiteFiber, Inc. (f/k/a Celer, Inc.) (“WhiteFiber”) was incorporated to support the Company’s generative artificial intelligence (“AI”) workstreams. WhiteFiber, Inc. is 100% owned by Bit Digital, Inc.

On October 11, 2024, the Company completed the acquisition of Enovum Data Centers Corp, a Montreal-based owner, operator, and developer of HPC data centers. Enovum Data Centers Corp is 100% owned by WhiteFiber, Inc. which is 100% owned by Bit Digital, Inc.

On March 11, 2025, WhiteFiber Canada, Inc. (“WF Canada”) was incorporated to support the Company’s generative artificial intelligence (“AI”) workstreams in Canada. WhiteFiber Canada, Inc. is 100% owned by WhiteFiber AI, Inc. which is 100% owned by Bit Digital, Inc.

The accompanying unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities:

Name	Background		Ownership
Bit Digital USA, Inc. (“BT USA”)	●	A United States company	100% owned by Bit Digital, Inc.
	●	Incorporated on September 1, 2020
	●	Engaged in digital asset mining business

Bit Digital Canada, Inc. (“BT Canada”)	●	A Canadian company	100% owned by Bit Digital, Inc.
	●	Incorporated on February 23, 2021
	●	Engaged in digital asset mining business
	●	Dormant and previously engaged in digital asset mining-related business

Bit Digital Hong Kong Limited (“BT HK”)	●	A Hong Kong company	100% owned by Bit Digital, Inc.
	●	Acquired on April 8, 2020
	●	Dormant and previously engaged in digital asset mining-related business

Bit Digital Strategies Limited (“BT Strategies”)	●	A Hong Kong company	100% owned by Bit Digital, Inc.
	●	Incorporated on June 1, 2021
	●	Engaged in treasury management activities

Bit Digital Singapore Pte. Ltd. (“BT Singapore”)	●	A Singapore company	100% owned by Bit Digital, Inc.
	●	Incorporated on July 1, 2021
	●	Engaged in digital asset staking activities

Bit Digital Investment Management Limited (“BT IM”)	●	A British Virgin Islands company	100% owned by Bit Digital Strategies Limited.
	●	Incorporated on April 17, 2023
	●	Engaged in fund and investment management activities
	●	Disposed on July 1, 2024

Bit Digital Innovation Master Fund SPC Limited (“BT SPC”)	●	A British Virgin Islands company	100% owned by Bit Digital Strategies Limited.
	●	Incorporated on May 31, 2023
	●	A segregated portfolio company
	●	Disposed on July 1, 2024

WhiteFiber AI, Inc. (f/k/a Bit Digital AI, Inc.) (“WF AI”)	●	A United States company	100% owned by Bit Digital, Inc.
	●	Incorporated on October 19, 2023
	●	Engaged in cloud services

Name	Background		Ownership
WhiteFiber Iceland (f/k/a Bit Digital Iceland ehf) (“WF Iceland”)	●	An Icelandic company	100% owned by WhiteFiber AI, Inc
	●	Incorporated on August 17, 2023
	●	Engaged in cloud services

WhiteFiber HPC, Inc. (f/k/a Bit Digital HPC, Inc.) (“WF HPC”)	●	A United States company	100% owned by WhiteFiber AI, Inc
	●	Incorporated on June 27, 2024
	●	Engaged in HPC business

WhiteFiber, Inc. (f/k/a Celer, Inc.) (“WhiteFiber”)	●	A United States company	100% owned by Bit Digital, Inc
	●	Incorporated on August 15, 2024
	●	Engaged in HPC business

Enovum Data Centers Corp (“Enovum”)	●	A Canadian company	100% owned by WhiteFiber, Inc.
	●	Acquired on October 11, 2024
	●	Engaged in HPC data center services

WhiteFiber Canada, Inc. (“WF Canada”)	●	A Canadian company	100% owned by WhiteFiber AI, Inc
	●	Incorporated on March 11, 2025
	●	Engaged in cloud services

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The interim unaudited condensed consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States (“US GAAP”).

The unaudited condensed consolidated financial information as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 has been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with US GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim financial information should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 14, 2025.

In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2024. The results of operations for the three months ended March 31, 2025, and 2024 are not necessarily indicative of the results for the full years.

Use of estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of digital assets and other current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. Actual results could differ from those estimates.

We review the useful lives of equipment on an ongoing basis, and effective January 1, 2025 we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. The effect of this change in estimate for Q1 2025, based on cloud service equipment that were included in “Property, plant and equipment, net” as of December 31, 2024 and those acquired during the three months ended March 31, 2025, was a reduction in depreciation and amortization expense of $2.5 million and a benefit to net income of $2.0 million, or $0.01 per basic share and $0.01 per diluted share.

Fair value of financial instruments

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

●

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

●

Level 3 - inputs to the valuation methodology are unobservable.

Fair value of digital assets is based on Level 1 inputs as these were based on observable quoted prices in the Company’s principal market for identical assets. The fair value of the Company’s other financial instruments, including cash and cash equivalents, restricted cash, loans receivable, deposits, accounts receivable, other receivables, accounts payable, and other payables, approximate their fair values because of the short-term nature of these assets and liabilities. Non-financial assets, such as goodwill, intangible assets, operating lease right-of-use assets, and property, plant and equipment, are adjusted to fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only upon recognition of an impairment charge.

USDC

USD Coin (“USDC”) is accounted for as a financial instrument that can be redeemed one USDC for one U.S. dollar on demand from the issuer. While not accounted for as cash or cash equivalents, we treat our USDC holdings as a liquidity resource.

Accounts Receivable

Accounts receivable consist of amounts due from our customers. Receivables are recorded at the invoiced amount less an allowance for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. In accordance with ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for credit loss that reflects its best estimate of the lifetime expected credit losses. Uncollectible accounts are written off against the allowance when collection does not appear probable.

Due to the short-term nature of the Company’s accounts receivable, the estimate of expected credit loss is based on the aging of accounts using an aging schedule as of period ends. In determining the amount of the allowance for credit losses, the Company considers historical collection history based on past due status, the current aging of receivables, customer-specific credit risk factors including their current financial condition, current market conditions, and probable future economic conditions which inform adjustments to historical loss patterns.

As of March 31, 2025, the allowance for credit loss has not been material to the consolidated financial statements.

Digital assets

Digital assets (primarily include bitcoin and ETH) are included in current assets in the accompanying consolidated balance sheets. Digital assets purchased are recorded at cost and digital assets awarded to the Company through its mining activities and staking activities are accounted for in accordance with the Company’s revenue recognition policy disclosed below.

Effective January 1, 2024, the Company early adopted ASU 2023-08, which requires entities to measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. The Company’s digital assets are within the scope of ASU 2023-08 and the transition guidance requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any difference between the carrying amount of the Company’s digital assets and fair value.

Prior to the adoption of ASU 2023-08, digital assets were accounted for as intangible assets with indefinite useful lives and are recorded at cost less impairment in accordance with ASC 350 - Intangibles-Goodwill and Other. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Digital assets held are accounted for as intangible assets with indefinite useful lives and are subject to impairment losses if the fair value of digital assets decreases below the carrying value at any time during the period. The fair value is measured using the quoted price of the digital assets at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company does not use any exchanges to buy or sell digital assets. Instead, the Company uses Amber Group’s OTC desk for selling or exchanging bitcoins for U.S. dollars or vice versa. The Company determines CoinMarketCap as its principal market, as it is one of the earliest and the most trusted sources by users, institutions, and media for comparing thousands of crypto assets and selected by the U.S. government.

The Company recognizes revenue by utilizing daily close prices obtained from CoinMarketCap. During that specific year, the Company also used hourly close price from CryptoCompare to recognize revenue from our digital asset mining activities. The Company believed the hourly close price can better reflect revenue recognized from our digital asset mining activities as compared to daily close price from CoinMarketCap.

Purchases of digital assets by the Company and digital assets awarded to the Company through its mining activities and staking activities are included within operating activities on the accompanying consolidated statements of cash flows. The changes of digital assets are included within operating activities in the accompanying consolidated statements of cash flows. After adopting ASU 2023-08, changes in fair value and realized gains or losses are now reported as “gains (losses) on digital assets” in the consolidated statements of operations. Prior to this adoption, realized gains or losses were reported as “realized gains (losses) on exchange of digital assets” in the consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting.

Deposits for property, plant, and equipment

The deposits for property, plant, and equipment represented advance payments for purchases of miner and high performance computing equipment. The Company initially recognizes deposits for property, plant, and equipment when cash is advanced to our suppliers. Subsequently, the Company derecognizes and reclassifies deposits for property, plant, and equipment to property, plant, and equipment when control is transferred to and obtained by the Company.

Below is the roll forward of the balance of deposits for property and equipment for the three months ended March 31, 2025 and 2024, respectively.

	For the Three Months Ended March 31,
	2025			2024

Opening balance	$	39,059,707		$	4,227,371
Reclassification to property, plant, and equipment		(80,305,941	)		(7,540,304	)
Addition of deposits for property, plant, and equipment		58,342,495			3,412,933
Ending balance	$	17,096,261		$	100,000

Property, plant, and equipment, net

Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets or declining-balance method. Direct costs related to developing or obtaining software for internal use are capitalized as property, plant, and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service. The estimated useful lives by asset category are:

		Estimated Useful Life
Digital asset miners		3 years
Cloud service equipment		5 years
Colocation service equipment		10 to 15 years
Building		30 years
Leasehold improvements		15 years
Purchased software		14 months
Vehicle		5 years
Other property and equipment		20% to 30%

Effective January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets.

Impairment of long-lived assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not subject to amortization, and instead, assessed for impairment annually at the end of each fiscal year, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount in accordance with ASC 350 - Intangibles -Goodwill and Other.

The impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment is performed.

The quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit over its fair value up to the amount of goodwill allocated to the reporting unit.

Finite-lived intangible Assets

Intangible assets are recorded at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets acquired through business combinations are measured at fair value at the acquisition date.

Intangible assets with finite lives are comprised of customer relationships and are amortized on straight-line basis over their estimated useful lives. The Company assesses the appropriateness of finite-lived classification at least annually. Additionally, the carrying value and remaining useful lives of finite-lived assets are reviewed annually to identify any circumstances that may indicate potential impairment or the need for a revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows expected to be generated from it. We apply judgment in selecting the assumptions used in the estimated future undiscounted cash flow analysis. Impairment is measured by the amount that the carrying value exceeds fair value. The useful lives of customer relationships is 19 years.

Business combinations

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805 - Business Combinations, by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at the acquisition date fair value. The determination of fair value involves assumptions, estimates, and judgments. The initial allocation of the purchase price is considered preliminary and therefore subject to change until the end of the measurement period (up to one year from the acquisition date). Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net assets acquired.

Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

Investment securities

As of March 31, 2025 and December 31, 2024, investment securities represent the Company’s investments in three funds, a privately held company via a simple agreement for future equity (“SAFE”), and four privately held companies over which the Company neither has control nor significant influence through investments in ordinary shares or preferred shares.

Investment in equity method investee

In accordance with ASC 323, Investments - Equity Method and Joint Ventures, the Company accounts for the investment in one privately held company using equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investee.

Under the equity method, the Company initially records its investment at cost and prospectively recognizes its proportionate share of each equity investee’s net income or loss into its consolidated statements of operations. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee.

The Company continually reviews its investment in the equity investee to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value.

Investment in funds

Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated income statements, according to ASC 321, Investments - Equity Securities. As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment in the fund. NAV is primarily determined based on information provided by the fund administrator.

Investment in privately held company

Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated income statements, according to ASC 321, Investments - Equity Securities. The Company elected to record the equity investments in privately held companies using the measurement alternative at cost, less impairment, with subsequent adjustments for observable price changes resulting from orderly transactions for identical or similar investments of the same issuer.

Equity investments in privately held companies accounted for using the measurement alternative are subject to periodic impairment reviews. The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of these equity securities. In computing realized gains and losses on equity securities, the Company calculates cost based on amounts paid using the average cost method. Dividend income is recognized when the right to receive the payment is established.

Investment in SAFE

SAFE investments provide the Company with the right to participate in future equity financing of preferred stock. The Company accounted for this investment under ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment under ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

Investment in Innovation Fund/Digital assets held in fund

On October 1, 2023, the Company made an investment of 2,701 Ethereum, with a fair value of $4.7 million, into Bit Digital Innovation Master Fund SPC Ltd. (the “Fund”). The Fund was subsequently consolidated based on the Company’s controlling financial interest. As a result, the assets held in the Fund are included in current assets in the consolidated balance sheets under the caption “Digital assets held in Fund” as of June 30, 2023 before the disposition.

The Fund qualified and operated as an investment company for accounting purposes pursuant to the accounting and reporting guidance under ASC 946, “Financial Services – Investment Companies” (“ASC 946”), which requires fair value measurement of the Fund. The Company retains the Fund’s investment company specific accounting principles under ASC 946 upon consolidation. The digital assets held by the Fund were traded on a number of active markets globally. A fair value measurement under ASC 820, “Fair Value Measurement” (“ASC 820”) for an asset assumes that the asset is exchanged in an orderly transaction between market participants either in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset (ASC 820-10-35-5). The fair value of the assets within the Fund was primarily determined using the price from CoinMarketCap. Any changes in the fair value of the assets were recorded in Other income (expense), net in the consolidated statements of operations.

On July 1, 2024, the Company entered into a share purchase agreement with Pleasanton Ventures Limited (“Pleasanton Ventures”) for the disposition of Bit Digital Innovation Master Fund SPC Ltd and Bit Digital Investment Management Limited. Refer to Note 21, Disposition of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund SPC Limited for more information. Upon the disposition, the Company no longer has a controlling financial interest in the Fund and therefore deconsolidated the Fund in accordance with ASC 810 – “Consolidation” (“ASC 810”). The Company did not record any gain or loss upon deconsolidation as the digital assets in the Fund were measured at fair value. Subsequently, the investment in the Fund is included under the caption “Investment securities” as Investment in Innovation Fund. Refer to Note 10, Investment Securities for more information.

Leases

The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term.

For leases with a term exceeding 12 months, an operating lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding operating lease right-of-use asset equal to the initial lease liability is also recorded, adjusted for any prepayment and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. Variable lease costs are recognized in the period in which the obligation for those payments is incurred and not included in the measurement of right-of-use assets and operating lease liabilities.

For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Company’s consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant.

For sales-type leases where the Company is the lessor, the Company recognizes a net investment in lease, which comprises of the present value of the future lease payments and any unguaranteed residual value. Interest income is recognized over the lease term at a constant periodic discount rate on the remaining balance of the lease net investment using the rate implicit in the lease and is included in “Revenue – other”. Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which will be recorded in “Other income, net.”

Revenue recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. Refer to Note 3, Revenue for further information.

Contract costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, including commissions that are incurred directly related to obtaining customer contracts. We amortize the deferred contract costs on a straight-line basis over the expected period of benefit. These amounts are included in the accompanying consolidated balance sheets, with the capitalized costs to be amortized to commission expense over the expected period of benefit and commission expense payable included in Other current assets and Other long-term liabilities.

The Company capitalized lease expense incurred in December 2023 that are directly related to fulfilling its cloud services which commenced operations in January 2024. The lease expense is directly related to fulfill customer contracts and is expected to be recovered. The capitalized lease expense was reclassified as lease expense in January 2024.

Deferred Revenue

Deferred revenue primarily pertains to prepayments received from customers for services that have not yet commenced as of March 31, 2025. Deferred revenues are recognized as revenue recognition criteria have been met.

Remaining performance obligation

Remaining performance obligations represent the transaction price of contracts for work that have not yet been performed. The amount represents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation.

Cost of revenue

The Company’s cost of revenue consists primarily of (i) direct production costs related to mining operations, including electricity costs, profit-sharing fees/variable performance fees and/or other relevant costs paid to our hosting facilities, (ii) direct production costs related to our cloud services, including electricity costs, data center lease costs, and other relevant costs, (iii) direct production costs related to our colocation services, including electricity costs, lease costs and other relevant costs, and (iv) direct cost related to ETH staking business, including service fees payable to the service provider.

Cost revenue excludes depreciation expenses, which are separately stated in the Company’s consolidated statements of operations.

Foreign currency

Accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of Accumulated other comprehensive income, net of any related taxes, in total shareholders’ equity. Income statement accounts expressed in functional currencies are translated using average exchange rates during the period. Functional currencies are generally the currencies of the local operating environment. Financial statement accounts expressed in currencies other than the functional currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange gains or losses recorded in other income (expense), net.

Operating segments

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our CODM is composed of the Chief Executive Officer and Chief Financial Officer, who use segment gross profit (loss) to assess the performance of the business of our reportable operating segments.

Income taxes

We account for current and deferred income taxes in accordance with the authoritative guidance, which requires that the income tax impact is to be recognized in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temp

SEC Form 10-Q filed by Bit Digital Inc.