Company: BTBT
Filing Date: 2025-10-01
Form Type: 424B5
Source: 0001213900-25-094778
Chunk: 102

Company: Bit Digital, Inc
Filing Date: 2025-10-01
Form: 424B5
Chunk 102
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 constitutes a security depends on an overall evaluation of the nature of the obligation, including whether the holder of such obligation is subject to a material level of entrepreneurial risk and whether a continuing proprietary interest is intended. Although there are a number of factors that may affect the determination of whether a debt instrument is a “security,” one of the most important factors is the original term of the instrument, which is the length of time between the issuance of the instrument and its maturity. In general, instruments with an original term of more than ten years are likely to be treated as “securities,” and instruments with an original term of less than five years are less likely to be treated as “securities.” In addition, the convertibility of a debt instrument into stock of the issuer may favor “security” treatment because of the holder’s possible equity participation in the issuer. We intend to take the position that the notes are securities for U.S. federal income tax purposes and if, upon a conversion, a U.S. Holder receives a combination of cash (other than cash in lieu of a fractional share) and ordinary shares, that the conversion will be treated as a recapitalization for U.S. federal income tax purposes. However, there can be no guarantee that the IRS will not take a different position, and therefore, a note may not constitute a “security” for U.S. federal income tax purposes and the conversion may not be treated as a recapitalization for U.S. federal income tax purposes notwithstanding our position. If recapitalization treatment applies, then a U.S. Holder will recognize gain, but not loss (except with respect to cash received in lieu of a fractional share), in an amount equal to the lesser of (i) the excess of the sum of the cash (other than any cash in lieu of a fractional share) and the fair market value of the ordinary shares received over the U.S. Holder’s adjusted tax basis in the notes converted and (ii) the amount of cash received (other than cash received in lieu of a fractional share), subject to the discussion under “—Constructive Distributions” below regarding the possibility that an adjustment to the conversion rate of a note converted in connection with a make-whole fundamental change or during a redemption period or for which the interest make-whole provision applies may be treated as a taxable stock dividend. Any gain recognized on conversion generally will be capital gain and will be long-term capital gain if, at the time of the conversion, the note has been held for more than one year.

The tax basis