Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 208

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1
Chunk 208
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mining pools to receive our mining rewards from the network. Mining pools allow miners to combine their processing power, increasing their
chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to our contribution
to the pool’s overall mining power, used to generate each block. Should the pool operator’s system suffer downtime due to
a cyberattack, software malfunction or other similar issues, it will negatively impact our ability to mine and receive revenue. Furthermore,
we are dependent on the accuracy of the mining pool operator’s record keeping to accurately record the total processing power provided
to the pool for a given bitcoin mining application in order to assess the proportion of that total processing power we provided. While
we have internal methods of tracking both our power provided and the total used by the pool, the mining pool operator uses its own record-keeping
to determine our proportion of a given reward. We have little means of recourse against the mining pool operator if we determine the proportion
of the reward paid out to us by the mining pool operator is incorrect, other than leaving the pool. If we are unable to consistently obtain
accurate proportionate rewards from our mining pool operators, we may experience reduced reward for our efforts, which would have an adverse
effect on our business and operations.

43

The limited rights
of legal recourse available to us and our lack of insurance protection for risk of loss of our digital assets exposes us and our shareholders
to the risk of loss of our digital assets for which no person may ultimately be held liable and we may not be able to recover our losses.

The digital assets held
by us are not insured. Further, banking institutions will not accept our digital assets and they are therefore not insured by the Federal
Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”). Therefore,
a loss may be suffered with respect to our digital assets which is not covered by insurance and we may not be able to recover any of our
carried value in these digital assets if they are lost or stolen or suffer significant and sustained reduction in conversion spot price.
If we are not otherwise able to recover damages from a malicious actor in connection with these losses, our business and results of operations
may suffer, which may have a material negative impact on our share price.

Currently, we do not
have any insurance to cover our digital assets or mining equipment. The market for such insurance is in the early stages and we intend
to purchase such insurance in the