Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 505

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1A
Chunk 505
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 a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business,
prospects or operations and potentially the value of any bitcoin or other digital assets we mine or otherwise acquire or hold for our
own account.

To the extent that
the profit margins of bitcoin mining operations are not high, operators of bitcoin mining operations are more likely to immediately sell
bitcoin rewards earned by mining in the market, thereby constraining growth of the price of bitcoin that could adversely impact us, and
similar actions could affect other digital assets.

Over the past
several years, bitcoin mining operations have evolved from individual users mining with computer processors, graphics processing
units and first-generation ASIC servers. Currently, new processing power is predominantly added by incorporated and unincorporated
“professionalized” mining operations. Professionalized mining operations may use proprietary hardware or sophisticated
ASIC machines acquired from ASIC manufacturers. They require the investment of significant capital for the acquisition of this
hardware, the leasing of operating space (often in data centers or warehousing facilities), incurring of electricity costs and the
employment of technicians to operate the mining farms. As a result, professionalized mining operations are of a greater scale than
prior miners and have more defined and regular expenses and liabilities. These regular expenses and liabilities require
professionalized mining operations to maintain profit margins on the sale of bitcoin. To the extent the price of bitcoin declines
and such profit margin is constrained, professionalized miners are incentivized to more immediately sell bitcoin earned from mining
operations, whereas it is believed that individual miners in past years were more likely to hold newly mined bitcoin for more
extended periods. The immediate selling of newly mined bitcoin greatly increases the trading volume of bitcoin, creating downward
pressure on the market price of bitcoin rewards.

46

The extent to which the
value of bitcoin mined by a professionalized mining operation exceeds the allocable capital and operating costs determines the profit
margin of such operation. A professionalized mining operation may be more likely to sell a higher percentage of its newly mined bitcoin
rapidly if it is operating at a low profit margin and it may partially or completely cease operations if its profit margin is negative.
In a low profit margin environment, a higher percentage could be sold more rapidly, thereby potentially depressing bitcoin prices. Lower
bitcoin prices could result in further tightening of profit margins for professionalized mining operations creating a network effect that
may further reduce the price of bitcoin until mining operations with higher operating costs become unprofitable forcing them to