Company: BTBT
Filing Date: 2025-07-03
Form Type: S-8 POS
Source: 0001213900-25-061371
Chunk: 77

Company: Bit Digital, Inc
Filing Date: 2025-07-03
Form: S-8 POS
Chunk 77
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 that meets the demand for transacting
in ETH, otherwise users may become frustrated and lose faith in the network. As a decentralized network, strong consensus and unity is
particularly important to respond to potential growth and scalability challenges.

The Ethereum Blockchain may Temporarily or Permanently Fork and/or Split

The Ethereum network’s software and protocol
are open source. When a modification is released by the developers and a substantial majority of participants consent to the modification,
the change is implemented and the Ethereum network continues uninterrupted. However, if a change were activated with less than a substantial
majority consenting to the proposed modification, and the modification is not compatible with the software prior to its modification,
the consequence would be what is known as a “hard fork” (i.e., a split) of the Ethereum network (and the blockchain). One
blockchain would be maintained by the pre-modification software and the other by the post-modification software. The effect is that both
blockchain algorithms would be running parallel to one another, but each would be building an independent blockchain with independent
native assets.

A hard fork could present problems such as two
copies of a token for the same non-fungible tokens (NFTs). It could also present a problem for a customer having to choose to provide
services with respect to digital assets resulting from a fork. In addition, digital asset loan agreements often dictate when and how each
of the lender or the borrower of a digital asset pledging a certain digital asset gets the benefit of forked coins in the event of a hard
fork. Similarly, derivative counterparties using ISDA-based contractual documentation may be subject to hard fork-related termination
events.

Although forks are likely to be addressed by a
community-led effort to merge the two groups, such a fork could still adversely affect ETH’s viability.

Risk if a Person Gains a 33% or More Share of the Ethereum Validators

According to Ethereum.org, the likelihood of successful
attacks on the Ethereum network increases as the proportion of staked ETH controlled by the attacker increases. If an attacker controls
33% or more of the total stake, they can prevent the chain from finalizing by having 33% or more of the staked ETH maliciously attesting
or failing to attest. If an attacker controls about 50% of the total stake, they could theoretically split the chain into two equally
sized forks and then simply use their entire 50.1% stake to vote contrarily to the honest validator set, thereby maintaining