Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 516

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1A
Chunk 516
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 it, simply because they can vote with a dishonest supermajority.

Dependence on the
Internet

ETH stakers relay transactions
to one another via the Internet, and when blocks are mined, they are also forwarded via the Internet. Users and developers access Ethereum
via the Internet. Thus, the Ethereum network is dependent upon the continued functioning of the Internet.

Attacks on the
Ethereum Network

The Ethereum network
is periodically subject to distributed denial of service attacks to clog the list of transactions being tabulated by miners, which can
slow the confirmation of authentic transactions. Another avenue of attack would be if a large number of miners were taken offline then
it could take some time before the difficulty of the mining process algorithmically adjusts, which would stall block creation time and
therefore transaction confirmation time. Thus far these scenarios have not plagued the network for long or in a systemic manner. This
risk is expected to be substantially mitigated on Ethereum 2.0, as the PoS method of validating transactions was expected to improve the
speed and efficiency of the network.

52

Decrease in Block
Reward or Yield

In the event of a material
decrease in the block reward to the Ethereum network, stakers may cease to provide their staked ETH to the consensus mechanism for the
Ethereum network blockchain. This risk was expected to be mitigated in part on Ethereum 2.0, as the rewards earned by stakers of ETH will
proportionately decline as more stakers participate in the network. Conversely, if some stakers decide to stop participating because the
yield is too low, remaining stakers will enjoy a higher yield. Consequently, Ethereum 2.0 is expected to attract a sufficient number of
stakers and validators to keep the network running efficiently.

Competitors to
ETH and the Ethereum Network

Currently, ETH is the
second largest digital asset by market capitalization, with Coingecko citing more than 5,000 alternative digital assets. To the extent
a competitor to ETH gains popularity and greater market share, the use and price of ETH could be negatively impacted, which may adversely
affect the investments of the Company. Similarly, the price of ETH could be negatively impacted by competition from incumbents in the
credit card and payments industries or from other developing blockchain protocols.

Financial Institutions
may Refuse to Support Transactions Involving ETH

In the uncertain regulatory
climate for digital assets, including ETH, regulated financial institutions may refuse to support transactions