Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 506

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1A
Chunk 506
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 reduce
mining power or cease mining operations temporarily.

If a malicious
actor or botnet obtains control of more than 50% of the processing power on a bitcoin network, or 33% or more share of the Ethereum Validators,
such actor or botnet could manipulate blockchains to adversely affect us, which would adversely affect an investment in us or our ability
to operate.

If a malicious actor
or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains
a majority of the processing power dedicated to mining a bitcoin, or the ability to valuate Ethereum transactions, it may be able to alter
blockchains on which transactions of bitcoin or 33% or more of ETH reside and rely by constructing fraudulent blocks or preventing certain
transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering
of transactions, though it is believed that it could not generate new units or transactions using such control. The malicious actor could
“double-spend” its own digital asset (i.e., spend the same digital asset in more than one transaction) and prevent the confirmation
of other users’ transactions for as long as it maintained control. To the extent that such malicious actor or botnet yields its
control of the processing power on the network or the bitcoin and/or Ethereum communities do not reject the fraudulent blocks as malicious,
reversing any changes made to blockchains may not be possible. The foregoing description is not the only means by which the entirety of
blockchains or digital assets may be compromised but is only an example.

Although there are no
known reports of malicious activity or control of blockchains achieved through controlling over 50% of the processing power on the bitcoin
network, it is believed that certain mining pools may have exceeded the 50% threshold in bitcoin. The possible crossing of the 50% threshold
for bitcoin or 33% for Ethereum indicates a greater risk that a single mining pool could exert authority over the validation of digital
asset transactions. To the extent that the digital asset ecosystem, and the administrators of mining pools, do not act to ensure greater
decentralization of digital asset mining processing power, the feasibility of a malicious actor obtaining control of the processing power
will increase because the botnet or malicious actor could compromise more than the threshold and thereby gain control of the blockchain,
whereas if the blockchain remains decentralized it is inherently more difficult for the botnet of malicious actor to