Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 509

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1A
Chunk 509
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 thereon. On April 12, 2023, Ethereum’s Shanghai hard fork, also referred to as “Shapella,”
has been finalized, enabling withdrawals for users who have “staked” their ETH to secure and validate transactions on the
blockchain.

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

48

Risks under the
Federal securities laws associated with Staking

The Merge and the switch
from PoW to PoS did not change our characterization of ETH as a digital asset. We intend to hold our staked ETH for our own account. In
the event we exchange ETH for other digital assets (such as liquid staking tokens) which may be deemed to be securities, it would be for
our own account. In all instances, we will perform a risk-based analysis to evaluate whether the digital asset may be deemed to be a “security”
under the Federal securities laws prior to mining the digital asset. We do not believe if we hold for our own account a particular digital
asset which may be deemed to be a security, it will be a risk to our business operations. Nevertheless, we will continue to implement
a compliance infrastructure to ensure full compliance with the federal securities laws. In the event our staking program is found to not
be in compliance with the federal securities laws, we could face legal or regulatory consequences. We would also need to undertake a regulatory
review to ensure compliance with the Federal securities laws if and when we decide to offer staking-as-a-service for value to individuals.
The Company would need to install a fully compliant organic infrastructure or hire third-party contractors.

Speculative and
Volatile Nature of ETH  

To date, the Company
has deployed a portion of the capital it has raised into ETH. The price of ETH is subject to significant