Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405]

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-56220

BITMINE IMMERSION TECHNOLOGIES, INC.

Delaware		84-3986354
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

2030 Powers Ferry Road SE, Suite 212,

Atlanta, Georgia 30339

(404) 816-8240

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒.

As of February 28, 2023 (the last trading day of the registrant’s second quarter), the aggregate market value of the common stock held by non-affiliates of the registrant, based on the $0.85 closing price of the registrant’s common stock as reported on the OTC Markets on that date, was approximately $10,217,162. For purposes of this computation, all officers, directors and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors or 10% beneficial owners are, in fact, affiliates of the registrant.

As of December 13, 2023 there were 49,665,649 shares of common stock of the registrant issued and outstanding.

TABLE OF CONTENTS

PART I
Item 1. Business	1
Item 1A. Risk Factors	14
Item 1B. Unresolved Staff Comments	53
Item 2. Properties	53
Item 3. Legal Proceedings	53
Item 4. Mine Safety Disclosures	53

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	54
Item 6. Selected Financial Data	55
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	55
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	67
Item 8. Financial Statements and Supplementary Data	67
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	67
Item 9A. Controls and Procedures	68
Item 9B. Other Information	69
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	69

PART III
Item 10. Directors, Executive Officers and Corporate Governance Directors and Executive Officers	70
Item 11. Executive Compensation	74
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	78
Item 13. Certain Relationships and Related Transactions, and Director Independence	80
Item 14. Principal Accountant Fees and Services.	81

PART IV
Item 15. Exhibits, Financial Statement Schedules.	83
Item 16. 10-K Summary	83

INDEX TO EXHIBITS	84

Unless the context otherwise requires, when we use the words the “Company,” “Bitmine,” “we,” “us,” “our” or “our Company” in this Form 10-K, we are referring to Bitmine Immersion Technologies, Inc., a Delaware corporation, and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements (such as when we describe what “will,” “may,” or “should” occur, what we “plan,” “intend,” “estimate,” “believe,” “expect” or “anticipate” will occur, and other similar statements) include, but are not limited to, statements regarding future operating results, potential risks pertaining to these future operating results, future plans or prospects, anticipated benefits of proposed (or future) acquisitions, dispositions and new facilities, growth, the capabilities and capacities of business operations, any financial or other guidance, expected capital expenditures and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. We make certain assumptions when making forward-looking statements, any of which could prove inaccurate, including assumptions about our future operating results and business plans. However, the inclusion of forward-looking statements should not be regarded as a representation by the Company or any other person that future events, plans or expectations contemplated by the Company will be achieved. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section named “Risk Factors” as well as those disclosed in subsequent reports we file with the Securities and Exchange Commission (“SEC”).

Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we comprehensively assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Current Report on Form 8-K may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements.

Further, certain information regarding market and industry statistics contained in this Current Report on Form 8-K has been obtained from industry and other publications that we believe to be reliable, but that are not produced for purposes of securities filings and which may contain such forward-looking statements. We have not independently verified any market, industry or similar data presented in this Current Report on Form 8-K and cannot assure you of its accuracy or completeness. Further, we have not reviewed or included data from all sources. Forecasts and other forward-looking statements obtained from third-party sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future markets or events.

All forward-looking statements included in this Annual Report on Form 10-K are made only as of the date of this Annual Report on Form 10-K, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware, except as required by law. You should read this document completely and with the understanding that our actual future results or events may be materially different from what we expect. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

PART I

Item 1. Business

Company Background

A predecessor to the Company was incorporated in the state of Nevada on August 16, 1995 as Interactive Lighting Showrooms, Inc. On June 30, 2004, the predecessor changed its name to Am/Tex Oil and Gas, Inc. On January 24, 2008, the predecessor changed its name to Critical Point Resources, Inc. On February 2, 2012, the predecessor changed its name to Renewable Energy Solution Systems, Inc. On May 18, 2012, the predecessor changed its name to RES Systems, Inc. On May 23, 2013, the predecessor changed its name back to Renewable Energy Solution Systems, Inc.

On April 6, 2020, the predecessor redomiciled in the State of Delaware by merging with a Delaware subsidiary named RESS Merger Corp., which was the successor in the merger. Thereafter, effective July 15, 2020, the predecessor and the Company effected a holding company reorganization pursuant to Section 251(g) of the Delaware General Corporation Law (the “DGCL”) under which RESS Merger Corp. merged with RESS of Delaware, Inc., a Delaware subsidiary of RESS Merger Corp., and all shareholders of RESS Merger Corp. received one share of common stock of the Company, another Delaware subsidiary of RESS Merger Corp., for each share that they previously held in RESS Merger Corp., and RESS of Delaware, Inc. (the successor in the merger with RESS Merger Corp.) becoming a subsidiary of the Company.

Effective July 17, 2020, the Company divested RESS of Delaware, Inc. to Sterling Acquisitions I, Inc. (“Sterling”), which is owned by the chief executive officer of the Company, pursuant to an agreement under Sterling (i) purchased Ten Million (10,000,000) common shares of the Company for an aggregate price of Ten Dollars ($10), and (ii) was issued Ten Million (10,000,000) Class A Warrants at an aggregate price of Ten Dollars ($10), and (iii). Ten Million (10,000,000) Class B Warrants at an aggregate price of Ten Dollars ($10). In addition, the Company agreed to pay a fee of $1,000 to Sterling to cover the expenses associated with the maintenance of RESS of Delaware, Inc. until such time as a certificate of dissolution is filed with the state of Delaware.

By a written consent dated July 16, 2021, holders of a majority of the Company’s issued and outstanding common stock approved a resolution to appoint Jonathan Bates, Raymond Mow, Michael Maloney and Seth Bayles to the board of directors of the Company, and to appoint Jonathan Bates as Chairman, Seth Bayles as Corporate Secretary, Raymond Mow as Chief Financial Officer, and Ryan Ramnath as Chief Operating Officer (collectively, the “New O&Ds”). Erik S. Nelson remained a director and the chief executive officer. At the same time, the shareholders approved the issuance of 32,994,999 shares of common stock in the Company’s offering of common stock at $0.015 per share, and the grant of 4,750,000 shares for services, which were valued at $0.015 per share. As a result of the foregoing stock issuances, the New O&Ds (or entities controlled by them) collectively acquired 24,893,877 shares of common stock, which represented approximately 62% of the issued and outstanding shares at the time.

The appointment of certain of the New O&Ds to the Company’s board, and issuance to the New O&Ds of a controlling interest in the Company, were made in order to enable the Company to enter the business of creating a hosting center for Bitcoin mining computers primarily utilizing immersion cooling technology, as well mining the Bitcoin digital currency for its own account. Prior to the change of control to the New O&Ds, the Company was a shell company.

Company Overview

Since July 2021, our business has been as a blockchain technology company that is building out industrial scale digital asset mining, equipment sales and hosting operations. The Company’s primary business is self-mining bitcoin for its own account, as well as hosting third-party equipment used in mining of digital asset coins and tokens, specifically bitcoin. Our state-of-the-art facilities will be specifically designed and constructed for housing advanced mining equipment. Our data centers will provide power, racks, proprietary thermodynamic management (heat dissipation and airflow management), redundant connectivity, 24/7 security, as well as software which provide infrastructure management and custom firmware that boost performance and energy efficiency.

We plan to operate our data centers using immersion cooling technology. Immersion cooling is the process of submerging computer components (or full servers) in a thermally, but not electrically, conductive liquid (dielectric coolant) allowing higher heat transfer performance than air and many other benefits. Immersion cooling can be up to 95% more efficient than standard air cooling, producing an estimated PUE (power usage effectiveness) of 1.05. This cooler environment has been shown to extend machine lives by 30% or longer.

Our digital asset mining operation is focused on the generation of digital assets by solving complex cryptographic algorithms to validate transactions on specific digital asset network blockchains, which is commonly referred to as “mining.” Mining requires the use of specialized computers equipped with application-specific integrated circuit (ASIC) chips (known as “miners”) to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) in exchange for digital asset rewards (to date, only bitcoin). Whether we are hosting our client’s computers or mining for our own account with our own computers, the miners participate in “mining pools” organized by “mining pool operators” in which we or our clients share mining power (known as “hash rate”) with the hash rate generated by other miners participating in the pool to earn digital asset rewards. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool. Fees are paid to the mining pool operator to cover the costs of maintaining the pool. The pool uses software that coordinates the pool members’ mining power, identifies new block rewards, and records how much hash rate each participant contributes to the pool. Pools typically pay rewards in different ways: as a percentage of the total reward received by the mining pool each day based on each pool participant’s proportionate share of hashing power provided that day (the “Actual Reward Method”); or based on the theoretical reward the pool participant should have received each day based on its hashing power contributed to the pool each day times the difficulty index (the “Expected Reward Method”). We only use mining pools that pay rewards under the Expected Reward Method.

As the demand for digital assets increases and digital assets become more widely accepted, there is an increasing demand for professional-grade, scalable infrastructure to support growth of the blockchain ecosystem. We expect to continually evaluate the performance of our data centers, including our ability to access additional megawatts of electric power and to expand our total self-mining and customer and related party hosting hash rates.

Our digital asset self-mining activity competes with a myriad of mining operations throughout the world to complete new blocks in the blockchain and earn the reward in the form of an established unit of a digital asset. Revenue from digital asset mining and hosting third party digital asset miners are impacted by volatility in bitcoin prices, as well as increases in the Bitcoin blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Gross profits from digital asset mining are primarily impacted by the market price of bitcoin at the time of mining and the cost of electricity to operate the miners and to a lesser extent by other operating costs. While we expect to sell or exchange a portion of the digital assets we mine to fund our growth strategies or for general corporate purposes, we may hold our digital assets as investments in anticipation of continued adoption of digital assets as a “store of value” and a more efficient medium of exchange than traditional fiat currencies.

We also generate revenues from the advantageous purchase and sale of equipment used for digital asset mining and hosting. We have relationships with some suppliers that enable us to acquire highly desired equipment at attractive prices, which we plan to resell to third parties. In most cases, resales of digital asset mining equipment would be to our hosting customers, which have the dual benefit of generating short-term gross profits from the equipment sale as well as growing the customer base of our hosting business.

Trinidad Operations

We initially decided to locate our initial facilities in Trinidad, because it has some of the cheapest electricity in the world due to its abundant supplies of oil and gas and because some of our technical staff is located there. We have entered into an agreement with Telecommunications Services of Trinidad & Tobago Limited (“TSTT”), the largest and oldest telecom company in Trinidad, to co-locate up to 125 800 kw containers for hosting digital asset miners. TSTT has up to 93 potential locations for co-location of our containers. Under the agreement, we have the option, but not obligation, to co-locate containers at our own pace. We pay a fixed amount per container, plus the actual electricity costs incurred by our containers in the amount billed to TSTT by the local utility without any markup. The agreement provides that our hosting containers will be billed for electricity usage at the local utility’s standard rates, which is the greater of 3.5 cents per kwh or 75% of the declared reserve capacity, which is equal to the customer’s highest expected monthly kilovolt-ampere demand at $7.40. The term of the agreement expires on October 14, 2031. We have the right to terminate our agreement with TSTT at any time that the price for electricity consumption exceeds $0.05 per kwh.

In October 2022, we completed the installation of initial hosting containers under our agreement with TSTT. However, prior to commencing operations, TSTT advised us that the utility refused to honor its existing agreement with TSTT with respect to electricity supplied to our pilot hosting site, and instead indicated that the rate would be approximately $0.09 per kwh, which TSTT disputed. At this time, the dispute has been resolved, the site became operational in October 2023, and our rate for electricity will be TSTT’s existing rate of 3.5 cents per kwh. While our TSTT site was delayed pending electrification, we entered into a hosting agreement with a third party in Trinidad to host up to 192 miners in one immersion container until August 31, 2024, and are leasing space with a third party on an at will basis to co-host 56 miners. We ultimately intend to move all of our currently owned and customer owned miners to our new TSTT hosting facilities.

Despite the expective favorable resolution of our dispute in Trinidad, we are currently focusing our efforts on the development of hosting centers in the United States and Canada, both directly and in joint ventures with third parties. We are exploring situations where medium to long-term power agreements may be available at affordable prices, whether using traditional power sources such as coal or natural gas, as well as environmentally friendly sources such as hydroelectric, wind and solar-backed projects, which might allow us to generate collateral revenue from the sale of excess power to the local utility grid and from the generation of saleable carbon credits.

Pecos, Texas Operations

In October 2022, we entered into a joint venture arrangement with ROC Digital Mining to jointly develop and operate a Bitcoin mining operation in Pecos, Texas. Under the joint venture, we contributed one immersion container, six transformers and cash with a value of $987,429 as a capital contribution to ROC Digital Mining I, LLC (the “ROC Digital”). In return, we received 240 Class B Units of ROC Digital pursuant to an ongoing offering of a total of 1,000 Class B Units at $4,400 per unit. We simultaneously sold ROC Digital four immersion containers for $1,200,000, which is payable pursuant to a promissory note the bears interest at 5% per annum, and is payable pursuant to monthly payments of $31,203.64 per month commencing on December 30, 2022, with any remaining principal and interest payable in full on May 31, 2026. The note is secured by the equipment that was sold. We also obtained the right to locate one container at the location that we would be able to use for self-mining. As of August 31, 2023 the note receivable from ROC Digital amounted to $1,029,721.

Any distributions of assets by ROC Digital are allocated as follows: i) 100% to the Class B Members until each Class B Member has received the return of its capital contributions; ii) 100% to the Class B Members until each Class B Member has received a non-compounded preferred return of 1% per month (12% per year) on its capital contribution, provided that a Class Member will no longer entitled to a preferred return once it has received total distributions equal to five times its capital contributions; iii) 70% to the Class Members and 30% to the Class A Members until each Class B Member has received total distributions equal to three times its capital contributions; (iv) 60% to the Class Members and 40% to the Class A Members until each Class B Member has received total distributions equal to four times its capital contributions; (v) 50% to the Class Members and 50% to the Class A Members until the seventh anniversary of the final closing of Class B Units; and (vi) thereafter, all to the Class A Members.

ROC Digital is managed by ROC Digital Mining Manager LLC (“ROC Manager”), which owns all of the Class A Units of ROC Digital. The Class A Units have the sole right to vote on any matter that requires a vote of members, including in the selection of the manager. We own 33 1/3% of ROC Manager. ROC Manager is managed by from one to three managers selected by a vote of the members. We do not currently have a representative or designee serving as manager of ROC Manager. However, the operating agreement for ROC Manager provides that ROC Manager may not take a number of actions in relation to ROC Digital without the unanimous consent of its members, such as incurring more than $50,000 of indebtedness, approval of operating budget, filing for bankruptcy, making any material change in ROC Digital’s business, merging, consolidating or combining ROC Digital with another entity, selling off a substantial part of ROC Digital’s assets, amending the operating agreement of ROC Digital, or causing ROC Digital to enter into any agreement with a related party.

Day to day management of the operations of ROC Digital is provided by ROC Digital Mining LLC (“ROC Mining”), an affiliate of ROC Manager in which we do not have an interest. ROC Mining is entitled to a monthly management fee equal to 3% of ROC Digital’s gross revenue, subject to a monthly minimum of $10,000 and a monthly maximum of $15,000. In additional ROC Mining is entitled to an acquisition fee of 1% of the cost of any assets acquired by ROC Digital.

Our joint venture partner initially expected the site would be operational by December 31, 2022. After the site work was substantially completed, the commencement of operations was delayed as a result of a request by the electricity provider for an additional deposit as a result of recent bankruptcies in the mining and hosting industry. In addition, a dispute with the joint venture’s vendor for ASIC miners delayed the delivery of miners for the facility.

In April 2023, the joint venture entered into a new one year agreement with the electricity provider, under which the site will receive electricity at $0.03991 per kwh for at least 95% of the annualized hourly intervals during the period. The initial agreement had a term of four years and seven months, and supplied electricity at $0.06896 per kwh, which the joint venture expected to reduce by reselling electricity during peak periods. The new agreement provides the joint venture with more predictable pricing, although a new agreement will need to be negotiated after the one year term. At the same time, we finalized a hosting agreement with the joint venture, under which we will locate one immersion container at the site for $500 per month, plus payment of our pro rata share of electricity, internet and insurance for the site. Under the hosting agreement, we also agreed to contribute $100,000 toward the electricity deposit for the site, which is refundable to us at the earlier of the date the electricity provider releases the deposit or 90 days after the expiration or termination of the hosting agreement. The hosting agreement has a term of one year, subject to our right to renew the agreement for two one year terms after receipt of notice of the renewal terms of the joint venture’s electricity supply agreement for the upcoming year. The site became fully electrified in June 2023. As of December 1, 2023, we had deployed 96 Antminer S-19 pro miners to our hosting container at the site. The joint venture has filled its five immersion containers with ASIC miners provided by hosting clients.

Murray, Kentucky Operations

On October 4, 2023, the Company purchased 1,050 used ASIC miners from Luxor Technology Corporation (“Luxor”) for $488,775, and simultaneously entered into a Co-Location Services Agreement to host the miners at a hosting facility owned by Soluna SW, LLC (“Soluna”) in Murray, Kentucky. The hosting agreement with Soluna has a term of 18 months, and provides that the Company is obligated to reimburse Soluna for the actual cost of the electricity used by the Company’s machines and pay a hosting fee equal to 50% of the net profit generated by the machines each month. The hosting fee is payable in bitcoin. The hosting facility has an electricity cost of $0.025 per kwh and guarantees uptime of 83% per week.

Revenue Sources

Our revenue will consist primarily of fees generated from our hosting operations, sales of mining equipment to be hosted in our data centers and proceeds related to Bitcoin transaction processing for our own account.

Hosting revenue from customers and related parties. Hosting revenue from customers and related parties is based on consumption-based contracts with our customers and related parties. Most contracts are renewable, and our customers are generally billed on a fixed and recurring basis each month for the duration of their contract, which vary from one to three years in length. Our typical agreement provides for full reimbursement of the client’s share of electricity costs of the hosting facility, and a percentage of bitcoin generated by the client’s activities. The percentage is negotiable on a case-by-case basis but is expected to average 25% of revenues. In addition, we may earn minor services revenue from equipment repairs and handling shipping logistics. We do not indemnify our hosting clients against loss. The agreements are normally terminable in the event of a default by either party. The agreements are often subject to suspension in the event force majeure events or when the prevailing gross margins on digital asset mining are not positive. In addition, some of our agreements may allow a client to terminate the agreement in the event the price of electricity exceeds a certain benchmark, which is negotiated on a case-by-case basis based on the location of the hosting facility. Our hosting customers may supply their own equipment or may purchase the equipment from us. Our hosting customers may select the mining pool that they want to use or use the mining pool that the Company uses for its own self-mining.

	·	Digital asset mining income. We will conduct proprietary digital asset mining operations using specialized computers equipped with application-specific integrated circuit (ASIC) chips (known as “miners”) to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) in exchange for digital asset rewards (to date, only Bitcoin). The Company will participate in “mining pools” organized by “mining pool operators” in which we share our mining power (known as “hash rate”) with the hash rate generated by other miners participating in the pool to earn digital asset rewards. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool. Fees are paid to the mining pool operator to cover the costs of maintaining the pool. The pool uses software that coordinates the pool members’ mining power, identifies new block rewards, and records how much hash rate each participant contributes to the pool. Pools typically pay rewards in different ways: as a percentage of the total reward received by the mining pool each day based on each pool participant’s proportionate share of hashing power provided that day (the “Actual Reward Method”); or based on the theoretical reward the pool participant should have received each day based on its hashing power contributed to the pool each day times the difficulty index (the “Expected Reward Method”). We only use mining pools that pay rewards under the Expected Reward Method. Revenues from digital asset mining are impacted by volatility in Bitcoin prices, as well as increases in the Bitcoin blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks.

	·	Equipment sales to customers and related parties. Equipment sales to customers and related parties is derived from our ability to leverage our partnerships with leading equipment manufacturers to secure equipment in advance, which is then sold to our customers and related parties. Our equipment sales are typically in connection with a hosting contract, but have sold equipment to parties that are not hosting customers where the terms are attractive.

We consider these all to be part of the same line of business. We do not have any fixed goals regarding the percentage of our data centers that we use for hosting third party miners versus the percentage that we use for self-mining. For mining or hosting equipment that we purchase, we also do not have any fixed goals regarding whether we utilize the equipment for our own account, sell it to a customer or other third party or contribute it to a joint venture. We let market conditions and overall profitability analysis guide the decisions. When we host, we look for opportunities to profitably sell miners to the hosting client in a buy/host transaction. In some instances, we may resell data centers and electrical equipment if we are offered an attractive price and believe that we can replace it at a lower price and by the time we may need it for our internal operations. These decisions are dynamic and based on the overall market for all of the above.

Our decision to utilize the data center space for hosting versus self-mining will depend on the relative profitability of each segment at the time and whether we have the capital to invest in new miners for mining for our own account at the time. In recent years, the prices of miners have fluctuated widely due to supply and demand factors, and mining for our own account is less profitable when the price of miners is high due to the capital costs needed to acquire the miners. In addition, the margins from mining have also fluctuated widely in recent years due to wide fluctuations in the price of digital assets and the electricity prices need to mine digital assets.

We do not generally accept digital assets as payment for goods and services. However, we have agreed to accept digital assets as payment in some situations, and expect to enter into more such arrangements in the future. To the extent we agree to accept digital assets as payment, we intend to only accept Bitcoin. We expect that most of our hosting contracts will provide that we receive a percentage of Bitcoin mined by our hosting customers as partial payment for our hosting services. In addition, under our hosting agreements we have the right to apply Bitcoin mined by our hosting customers toward payment of amounts invoiced in U.S. dollars if the invoiced amount is not paid by its due date; however, in such situations, the credit that is applied to the U.S. dollar invoice is based on the actual cash proceeds received from the conversion of the Bitcoin into U.S. dollars or a discount to the spot price of Bitcoin if it is not immediately converted in U.S. dollars. We have also agreed to sell hosting containers to a third party for a note payable in Bitcoin.

We do not have a set policy in regard to how long we hold digital assets that we receive as payment, although our practice has been to immediately sell digital assets as needed to pay operating expenses or for capital expenditures. We do not plan to hold any digital assets that we receive as a long-term investment. We hold our digital assets in a cold storage wallet account in our name, and not with a custodian or other intermediary. We have an account with Gemini Trust Company, LLC, which is a qualified custodian regulated by the New York Department of Financial Services, to which we transfer any digital assets that we decide to liquidate immediately prior to their liquidation. We do not store any digital assets at Gemini. We also seek to minimize the risk of a failure of any bitcoin exchange by opening accounts at more than one exchange. In July 2023, we established a relationship with BitGo Trust, a well-known Bitcoin Custodian. We intend to use BitGo for a significant amount of custody moving forward.

Blockchain and Cryptocurrencies Generally

Bitcoin was first introduced in 2008 and was first introduced as a means of exchange in 2009. Bitcoin is a digital asset that is issued by and transmitted through an open-source protocol collectively maintained by a peer-to-peer network of decentralized user nodes. This network hosts a public transaction ledger, known as the Bitcoin blockchain, on which Bitcoin holdings and transactions in Bitcoin are recorded. Balances of Bitcoin are stored in individual “wallet” functions, which associate network public addresses with a “private key” that controls the transfer of Bitcoin. The Bitcoin blockchain can be updated without any single entity owning or operating the network. New Bitcoin is created and allocated by the protocol that governs Bitcoin through a “mining” process that rewards users that verify transactions in the Bitcoin blockchain. The Bitcoin protocol limits the total issuance of Bitcoin over time to 21 million.

Bitcoin can be used to pay for goods and services, or it can be converted to fiat currencies, such as the U.S. dollar, at rates of exchange determined by market forces on Bitcoin trading platforms, which operate 24-hours-a-day, 7-days-a-week and are not regulated in as comprehensive a manner as traditional securities exchanges. As a result, trading on these markets is likely more subject to manipulation than on securities markets regulated by the SEC, and pricing on these markets is likely affected by such manipulative activity. In addition to these platforms, over-the-counter markets and derivatives markets for Bitcoin also exist; however, these markets are still maturing and many are unregulated.

We don’t have a fixed policy regarding fiat currencies, other than to immediately sell enough to cover operating expenses, to sell enough to cover capital expenses when required, and to ultimately sell all of it when needs arise. We do not plan to leverage our balance sheet in order to hold bitcoin.

Bitcoin exists entirely in electronic form, as virtually irreversible public transaction ledger entries on the blockchain, and transactions in Bitcoin are recorded and authenticated not by a central repository, but by a decentralized peer-to-peer network. This decentralization avoids certain threats common to centralized computer networks, such as denial of service attacks, and reduces the dependency of the Bitcoin network on any single system. While the Bitcoin network as a whole is decentralized, the private keys used to access Bitcoin balances are not widely distributed and are held on hardware (which can be physically controlled by the holder or by a third party such as a custodian) or via software programs on third-party servers and loss of such private keys results in an inability to access, and effective loss of, the corresponding Bitcoin. Consequently, Bitcoin holdings are susceptible to all of the risks inherent in holding any electronic data, such as power failure, data corruption, security breach, communication failure, and user error, among others. These risks, in turn, make Bitcoin subject to theft, destruction, or loss of value from hackers, corruption, or technology-specific factors such as viruses that do not affect conventional fiat currency. In addition, the Bitcoin network relies on open-source developers to maintain and improve the Bitcoin protocol. Accordingly, Bitcoin may be subject to protocol design changes, governance disputes such as “forked” protocols, competing protocols, and other open source-specific risks that do not affect conventional proprietary software.

Distributed blockchain technology is a decentralized and encrypted ledger that is designed to offer a secure, efficient, verifiable, and permanent way of storing records and other information without the need for intermediaries. Cryptocurrencies serve multiple purposes. They can serve as a medium of exchange, store of value or unit of account. Examples of cryptocurrencies include: Bitcoin, Bitcoin cash, and litecoin. Blockchain technologies are being evaluated for a multitude of industries due to the belief in their ability to have a significant impact in many areas of business, finance, information management, and governance.

Cryptocurrencies are decentralized currencies that enable near instantaneous transfers. Transactions occur via an open source, cryptographic protocol platform which uses peer-to-peer technology to operate with no central authority. The online network hosts the public transaction ledger, known as the blockchain, and each cryptocurrency is associated with a source code that comprises the basis for the cryptographic and algorithmic protocols governing the blockchain. In a cryptocurrency network, every peer has its own copy of the blockchain, which contains records of every historical transaction - effectively containing records of all account balances. Each account is identified solely by its unique public key (making it effectively anonymous) and is secured with its associated private key (kept secret, like a password). The combination of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature, providing strong control of ownership.

No single entity owns or operates the network. The infrastructure is collectively maintained by a decentralized public user base. As the network is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine the value of the currency units. Rather, the value is determined by market factors, supply and demand for the units, the prices being set in transfers by mutual agreement or barter among transacting parties, as well as the number of merchants that may accept the cryptocurrency. Since transfers do not require involvement of intermediaries or third parties, there are currently little to no transaction costs in direct peer-to-peer transactions. Units of cryptocurrency can be converted to fiat currencies, such as the US dollar, at rates determined on various exchanges, such as Cumberland, Coinsquare (in Canada), Coinbase, Bitsquare, Bitstamp, and others. Cryptocurrency prices are quoted on various exchanges and fluctuate with extreme volatility.

We believe cryptocurrencies offer many advantages over traditional, fiat currencies, although many of these factors also present potential disadvantages and may introduce additional risks, including:

	·	acting as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender;

	·	immediate settlement;

	·	elimination of counterparty risk;

	·	no trusted intermediary required;

	·	lower fees;

	·	identity theft prevention;

	·	accessible by everyone;

	·	transactions are verified and protected through a confirmation process, which prevents the problem of double spending;

	·	decentralized – no central authority (government or financial institution); and

	·	recognized universally and not bound by government imposed or market exchange rates.

However, cryptocurrencies may not provide all of the benefits they purport to offer at all or at any time.

As with many new and emerging technologies, there are potentially significant risks. Businesses (including the Company) which are seeking to develop, promote, adopt, transact or rely upon blockchain technologies and cryptocurrencies have a limited track record and operate within an untested new environment. These risks are not only related to the businesses the Company pursues, but the sector and industry as a whole, as well as the entirety of the concept behind blockchain and cryptocurrency as value. Factors such as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and location play an important role in “mining,” which is the term for using the specialized computers in connection with the blockchain for the creation of new units of cryptocurrency.

Digital Asset Mining

Specialized computers, or “miners,” power and secure blockchains by solving complex cryptographic algorithms to validate transactions on specific digital asset networks. In order to add blocks to the blockchain, a miner must map an input data set consisting of the existing blockchain, plus a block of the most recent digital asset transactions and an arbitrary number called a “nonce,” to an output data set of a predetermined length using the SHA256 cryptographic hash algorithm. Solving these algorithms is also known as “solving or completing a block.” Solving a block results in a reward of digital assets, such as Bitcoin, in a process known as “mining.” These rewards of digital assets currently can be sold profitably when the sale price of the digital asset exceeds the cost of “mining,” which generally consists of the cost of mining hardware, the cost of the electrical power to operate the machine, and other facility costs to house and operate the equipment.

Mining processing power is generally referred to as “hashing power.” A “hash” is the computation run by mining hardware in support of the blockchain. A miner’s “hash rate” refers to the rate at which it is capable of solving such computations per second. Miners with higher rated hash rate when operating at maximum efficiency have a higher chance of completing a block in the blockchain and receiving a digital asset reward. Currently, the likelihood that an individual mining participant acting alone will solve a block and be awarded a digital asset is extremely low. As a result, to maximize the opportunities to receive a reward, most large-scale miners have joined with other miners in “mining pools” where the computing power of each pool participant is coordinated to complete the block on the blockchain and mining rewards are distributed to participants in accordance with the rules of the mining pool. Fees payable to the operator of the pool vary but are typically as much as 2% of the reward earned and are deducted from the amounts earned by each pool participant. Mining pools are subject to various risks including connection issues, outages and other disruptions which can impact the quantity of digital assets earned by participants.

Mathematically Controlled Supply

The method for creating new Bitcoins is mathematically controlled in a manner so that the supply of Bitcoins grows at a limited rate pursuant to a pre-set schedule. The number of Bitcoins awarded for solving a new block is automatically halved every 210,000 blocks. This means every block up to and including block 210,000 produced a reward of 50 Bitcoin, while blocks beginning with 210,001 produced a reward of 25 Bitcoin. Since blocks are mined on average every 10 minutes, 144 blocks are mined per day on average. At 144 blocks per day, 210,000 blocks take four years to mine on average. The current fixed reward for solving a new block is 6.25 Bitcoin per block and it is anticipated that the reward will decrease by half to become 3.125 Bitcoin per block in early 2024, according to estimates of the rate of block solution calculated by BitcoinClock.com. This deliberately controlled rate of Bitcoin creation means that the number of Bitcoins in existence will never exceed 21 million and that Bitcoins cannot be devalued through excessive production unless the Bitcoin Network’s source code (and the underlying protocol for Bitcoin issuance) is altered. The Company monitors the Blockchain network and, as of July 16, 2022, based on the information we collected from our network access, more than 19 million Bitcoins have been mined.

Performance Metrics

Hash Rate

Miners perform computational operations in support of digital asset blockchains measured in “hash rate” or “hashes per second.” A “hash” is the computation run by mining hardware in support of the blockchain; therefore, a miner’s “hash rate” refers to the rate at which it is capable of solving such computations. The original equipment used for mining Bitcoin utilized the Central Processing Unit (“CPU”) of a computer to mine various forms of digital assets. Due to performance limitations, CPU mining was rapidly replaced by the Graphics Processing Unit (“GPU”), which offers significant performance advantages over CPUs. General purpose chipsets like CPUs and GPUs have since been replaced as the standard in the mining industry by ASIC chips such as those found in the S17 and S19 miners that we and our customers use to mine Bitcoin. These ASIC chips are designed specifically to maximize the rate of hashing operations.

Network Hash Rate

In digital assets mining, hash rate is a measure of the processing speed by a mining computer for a specific digital asset. A participant in a blockchain network’s mining function has a hash rate total of its miners seeking to mine a specific digital asset and, system-wide, there is a total hash rate of all miners seeking to mine each specific type of digital asset. A higher total hash rate relative to the system-wide total hash rate generally results over time in a corresponding higher success rate in digital asset rewards as compared to mining participants with relatively lower total hash rates.

However, as the relative market price for a digital asset increases, more users are incentivized to mine that digital asset, which increases the network’s overall hash rate. As a result, a mining participant must increase its total hash rate in order to maintain its relative possibility of solving a block on the network blockchain. Achieving greater hash rate power by deploying increasingly sophisticated miners in ever greater quantities has become one of the Bitcoin mining industry’s great sources of competition. Our goal is to deploy a powerful fleet of hosted- and self-miners, while operating as energy-efficiently as possible.

We expect to use miners with a J/TH efficiency of 30-40 based on the current generation of ASIC computers, although we own a small number of less efficient machines. We do not intend to accept anything lower than 82 TH/s machines in the future. Our average efficiency for machines in immersion will be approximately 36 J/TH on the current deployment. The legacy machines have an approximate efficiency of 51.5 J/TH.

Key Factors Affecting Our Performance

Market Price of Digital Assets

Our business is heavily dependent on the spot price of Bitcoin, as well as other digital assets. The prices of digital assets, specifically Bitcoin, have experienced substantial volatility, which may reflect “bubble” type volatility, meaning that high or low prices may have little or no relationship to identifiable market forces, may be subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting. Bitcoin (as well as other digital assets) may have value based on various factors, including their acceptance as a means of exchange by consumers and others, scarcity, and market demand.

Our financial performance and growth depend in large part on our ability to mine for digital assets profitably and to attract customers for our hosting services. Increases in power costs, inability to mine digital assets efficiently and to sell digital assets at favorable prices will reduce our operating margins, impact our ability to attract customers for our services may harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations. Over time, there has been a positive trend in the total market capitalization of digital assets which suggests increased adoption. However, historical trends are not indicative of future adoption, and it is possible that the adoption of digital assets and blockchain technology may slow, take longer to develop, or never be broadly adopted, which would negatively impact our business and operating results.

Network Hash Rate

Our business is not only impacted by the volatility in digital asset prices, but also by increases in cost of mining digital assets, as reflected by the blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. As more and more hash rate is needed to maintain competitiveness on a given coin’s blockchain, miners deploy more and more machines, which require electrical power to operate, both to directly power hash rate production and also to dissipate the significant amount of heat generated by the machines’ operation. Therefore, as more hash rate is generated, more electric power is consumed, which generally increases the cost of mining a given coin. In response, miners have attempted to achieve greater hash rate by deploying increasingly sophisticated miners in ever greater quantities. This has become the cryptocurrency mining industry’s great “arms race.”

Halving

Further affecting the industry, and particularly for the Bitcoin blockchain, the digital asset reward for solving a block is subject to periodic incremental halving. Halving is a process designed to control the overall supply and reduce the risk of inflation in digital assets using a proof of work consensus algorithm. At a predetermined block, the mining reward is reduced by half, hence the term “halving.” For Bitcoin the reward was initially set at 50 Bitcoin currency rewards per block. The Bitcoin blockchain has undergone halvings three times since its inception as follows: (1) on November 28, 2012, at block height 210,000; (2) on July 9, 2016, at block height 420,000; (3) on May 11, 2020, at block height 630,000, when the reward was reduced to its current level of 6.25 Bitcoin per block. The next halving for the Bitcoin blockchain is currently anticipated to occur in April 2024 at block height 840,000. Halvings will continue to occur until the total amount of Bitcoin currency rewards issued reaches approximately 21 million and the theoretical supply of new Bitcoin is exhausted, which is expected to occur around the year 2140. Since the price of Bitcoin is not adjusted proportionally after the halving, that means that each miner will produce exactly half the amount of Bitcoin as it did prior to the halving from the same amount of processing power. This directly impacts the profitability of a miner immediately after the halving. Historically, these halving events have also been the impetus for the next bull market as the reduced rate of growth of Bitcoin increases the perceived scarcity of the asset.

Electricity Costs

Electricity cost is the major operating cost for the mining fleet, both to power miners and to dissipate the heat generated by the miners’ operations, as well as for the hosting services provided to customers and related parties. As a result, our ability to locate and select sites for our hosting centers that are able to supply low-cost electricity for our hosting centers is key to our success.

Equipment Costs

As the market value of digital assets increased in 2020 and 2021, the demand for the newest, most efficient miners also increased, leading to scarcity in the supply of and thereby a resulting increase in the price of miners. When the market value of digital assets declined in 2022, the demand for all types of mines also decreased. As a result, the cost of new machines can be unpredictable. Additionally, the demand for hosting space in 2020 and 2021 increased the demand for the equipment necessary to build and operate hosting centers, which resulted in price increases and long lead times to acquire such equipment from manufacturers. With the decline in digital asset prices in 2022, the market for hosting equipment has shifted back in favor of buyers, although not as much as has been the case with mining equipment. Our ability to secure the necessary equipment in a timely manner, while maintaining proper cost controls, will be key to our success.

Our Customers

In addition to factors underlying our mining business growth and profitability, our success greatly depends on our ability to retain and develop opportunities with our existing customers and to attract new customers. Our business environment is constantly evolving, and digital asset miners can range from individual enthusiasts to professional mining operations with dedicated data centers. We compete with other companies that focus all or a portion of their activities on mining activities at scale. We face significant competition in every aspect of our business, including, but not limited to, the acquisition of new miners, the ability to raise capital, obtaining low-cost electricity, obtaining access to energy sites with reliable sources of power, and evaluating new technology developments in the industry.

At present, the information concerning the activities of these enterprises may not be readily available as the vast majority of the participants in this sector do not publish information publicly or the information may be unreliable. Published sources of information include “Bitcoin.org” and “blockchain.info”; however, the reliability of that information and its continued availability cannot be assured.

From the third fiscal quarter of calendar year 2020 through 2021, the market prices of digital assets increased substantially, which resulted in an increase in the scale and sophistication of competition in the digital asset mining industry, with new entrants and existing competitors gaining access to substantial capital resources to build larger and larger mining operations. This caused many new and existing competitors may be encouraged to build or expand their Bitcoin mining operations. In 2022, as digital asset prices have fallen, the trend has somewhat reversed, but not entirely as a result of projects and commitments made by industry participants before 2022. The market has also been impacted by the trend of some countries (mainly China) that formerly were major hosting centers to outlaw or greatly restrict digital asset mining within their borders.

While we do not believe that we are subject to anti-money laundering laws in the United States as this time, we verify that our customers are not listed on OFAC’s SDN list on a voluntary basis.

Competition

Our business environment is constantly evolving, and cryptocurrency miners can range from individual enthusiasts to professional mining operations with dedicated data centers. We compete with other companies that focus all or a portion of their activities on mining activities at scale. We face significant competition in every aspect of our business, including, but not limited to, the acquisition of new miners, the ability to raise capital, obtaining the lowest cost of electricity, obtaining access to energy sites with reliable sources of power, and evaluating new technology developments in the industry.

We believe, based on available data, that the trend of increasing market prices for Bitcoin and other major cryptocurrencies that began in the third fiscal quarter of calendar year 2020 has resulted in an increase in the scale and sophistication of competition in the cryptocurrency mining industry, with new entrants and existing competitors gaining access to substantial capital resources to build larger and larger mining operations. If this trend of increasing market prices for Bitcoin and other cryptocurrencies continues, which we believe has occurred (though with significant volatility) into calendar year 2021, we believe many new and existing competitors may be encouraged to build or scale Bitcoin mining operations.

Despite this trend, we believe, based on our access to necessary equipment, we will be able to maintain a competitive hash rate capacity among both public and private Bitcoin miners. However, to stay competitive in our evolving industry, both against new entrants into the market and existing competitors, we anticipate that we will have to continue to expand our existing miner fleet by purchasing the latest generation of miners, as well as innovating to develop and implement new technologies and mining solutions.

Regulation

Our financial prospects and continued growth depend in part on our ability to continue to operate in a compliant manner with all rules and regulations. Blockchain and digital currencies are increasingly becoming subject to governmental regulation, both in the U.S. and internationally. State and local regulations also may apply to our activities and other activities in which we may participate in the future. Other governmental or semi-governmental regulatory bodies have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency business. For instance, the Cyber-Digital Task Force of the U.S. Department of Justice (the “DOJ”) published a report entitled “Cryptocurrency: An Enforcement Framework” in October 2020. This report provides a comprehensive overview of the possible threats and enforcement challenges the DOJ views as associated with the use and prevalence of cryptocurrency, as well as the regulatory and investigatory means the DOJ has at its disposal to deal with these possible threats and challenges. Further, in early March 2021, the SEC chairperson nominee expressed an intent to focus on investor protection issues raised by Bitcoin and other cryptocurrencies.

Presently, we do not believe any U.S. or State regulatory body has taken any action or position adverse to our main cryptocurrency, Bitcoin, with respect to its production, sale, and use as a medium of exchange; however, future changes to existing regulations or entirely new regulations may affect our business in ways it is not presently possible for us to predict with any reasonable degree of reliability.

Further, following the appreciation of the market price of Bitcoin in the second half of 2020, we have observed increasing media attention directed at the environmental concerns associated with cryptocurrency mining, particularly its energy-intensive nature. While we do not believe any U.S.-based regulators have taken a position adverse to Bitcoin mining, in March 2021, the governmental authorities for the Chinese province of Inner Mongolia, which represents roughly 8% of the world’s total mining power, implemented an outright ban on Bitcoin mining in the province due to the industry’s intense electrical power demands and its negative environmental impacts (both in terms of the waste produced by mining the rare Earth metals used to manufacture miners and the production of electrical power used in Bitcoin mining). Later, China extended the ban to the entire nation of China, effective as of the end of July 2021. While we have yet to see whether these miners will be able to relocate to another location outside of China and Mongolia to continue mining, this action serves as a stark reminder of the power of national and state governments to affect our industry through regulator action.

As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see the Section entitled “Risk Factors” herein.

Our Facilities

We initially planned to locate our initial facilities in Trinidad, because it has some of the cheapest electricity in the world due to its abundant supplies of oil and gas and because some of our technical staff is located there. We have entered into an agreement with Telecommunications Services of Trinidad & Tobago Limited (“TSTT”), the largest and oldest telecom company in Trinidad, to co-locate up to 125 800 kw containers for hosting digital asset miners. TSTT has up to 93 potential locations for co-location of our containers. Under the agreement, we have the option, but not obligation, to co-locate containers at our own pace. We pay a fixed amount per container, plus the actual electricity costs incurred by our containers in the amount billed to TSTT by the local utility without any markup. The agreement provides that our hosting containers will be billed for electricity usage at the local utility’s standard rates, which is the greater of 3.5 cents per kwh or 75% of the declared reserve capacity, which is equal to the customer’s highest expected monthly kilovolt-ampere demand at $7.40. The term of the agreement expires on October 14, 2031. However, we have the right to terminate our agreement with TSTT at any time that the price for electricity consumption exceeds $0.05 per kwh. Also, both parties have the right to terminate the agreement on one month notice to the other party in either the third or sixth year of the term.

As of December 2021, electricity prices in Trinidad and Tobago averaged 5.2 cents per kilowatt-hour, which is the average price among all households, which ranks it among the lowest rates available in the world. In particular, Trinidad and Tobago ranked 34^th out of 148 countries surveyed in terms of the affordability of its electricity prices. In comparison, the average price in the United States for households was 16.2 cents per kwh, and in Canada was 10.7 cents per kwh. However, wholesale or bulk electricity rates, which are typically negotiated to commercial or industrial users, are typically lower than household rates. Most countries with lower rates have either unstable political environments or inadequate and unstable electrical infrastructure that make then unsuitable for data centers. See https://globalpetrolprices.com/electricity_prices/. The rate that we expect to pay is 3.5 cents per kwh, which is less than the average in Trinidad and Tobago, because electricity to our facilities will be supplied through TSTT’s contract with the local utility.

In October 2022, we completed the installation of initial hosting containers under our agreement with TSTT. However, prior to commencing operations, TSTT advised us that the local utility had refused to honor its existing agreement with TSTT with respect to electricity supplied to our hosting containers, and instead indicated that the rate would be approximately $0.09 per kwh, which TSTT disputed. At this time, we believe that the dispute has been resolved, the site became operational in October 2023, and our rate will be TSTT’s existing rate of 3.5 cents per kwh.

In light of the recent developments in Trinidad, we are focusing our efforts in the near term on developing hosting locations in the United States and Canada. We now have a hosting facility in Pecos, Texas, and have an additional 1,050 miners hosted by a third party in Murray, Kentucky. See “Item 2. Properties” herein. We are exploring additional situations where medium to long-term power agreements may be available at affordable prices, whether using traditional power sources such as coal or natural gas, as well as environmentally friendly sources such as hydroelectric, wind and solar-backed projects, which might allow us to generate collateral revenue from the sale of excess power to the local utility grid and from the generation of saleable carbon credits.

The Company’s president allows the Company to utilize the office space of an affiliated company for its executive offices without charge to the Company.

Hosting Equipment

Our focus is to build data centers using immersion hosting containers. In 2021 and 2022, we purchased a total of ten immersion hosting containers from Submer for an average of approximately $269,000 each. We have deployed or sold the immersion containers as follows:

We installed two of the immersion containers at our initial co-location facility in Trinidad, although operations are the facility are currently delayed pending the resolution of a dispute between TSTT and the local utility regarding the rate that will be charged for electricity supplied to the facility.

In August 2022, we sold two immersion containers to a third party in Trinidad for $960,000, of which $910,000 was payable over twenty five months with interest at 7.5% per annum, for monthly payments of $40,950 per month.

In October 2022, we sold four immersion containers to a joint venture with ROC Digital Mining I, LLC (“ROC Digital”) for $1,200,000, and made an equity contribution of one immersion container. Our equity contribution also included six GE Protec 1500 KVA transformers valued at $125,000 each.

Under our agreement with ROC Digital, we retained the right to install one container at the joint venture’s hosting site, which we are entitled to use for self-mining or hosting third party miners.

Although we originally bought our immersion containers with the intention of using them purely for hosting third party equipment, we elected to sell six of the containers because we were offered an attractive price for them and because we did not a suitable location to install them in the short-term. While we do not have any agreements to purchase additional immersion containers from Submer, we believe that additional immersion containers are available for purchase from Submer or other vendors as we need them for additional hosting facilities.

Mining Equipment

Digital asset mining is dependent on specialized digital asset mining hardware utilizing application-specific integrated circuit (“ASIC”) chips to solve blocks on blockchains using the 256-bit secure hashing algorithm. Almost all of these miners are produced outside of the United States, mostly in China and Southeast Asia, by a few manufacturers, the largest of which is Bitmain Technologies, Ltd (“Bitmain”). Our principal supplier for miners has been Bitmain. Our mining business is highly dependent upon digital asset mining equipment suppliers such as Bitmain providing an adequate supply of new generation digital asset mining machines at economical prices to enable profitable mining by us and by third-party customers intending to purchase our hosting and other solutions.

We do not have any agreements for the acquisition of miners. To date, we have purchased miners opportunistically as they been available for sale in the “spot” market. Based on historical market activity, as the market value of digital assets increases, the demand for the newest, most efficient miners will also increase, leading to scarcity in the supply, and thereby a resulting increase in the price of miners. If we need to purchase miners in larger quantities in order to fill data center capacity, we have to enter into formal agreements with Bitmain or other suppliers. These agreements, like those of other miner manufacturers, generally require significant refundable deposits payable months in advance of delivery and additional advance payments in monthly installments thereafter. These agreements also contain other terms and conditions favorable to the manufacturer.

As of December 1, 2023, we own a total of 1,691 miners, consisting of: 121 Whatsminers, 72 Antminer T-19s, and 1,498 Antminer S-19s (not including retired miners). For our current inventory of miners, we paid an average of approximately $955 per machine, or $9.34 per terahash. The miners that we owned as of December 1, 2023 have an average mining efficiency of 33.92 j/TH.

Due to the significant drop in the price of miners (70-80% since early 2021) relative to the cost of the datacenter and electrical equipment needed to host the miners has led us to focus more on self-mining, since the capital investment needed to self-mine is significantly less than last year.

Patents and Trademarks

We intend to protect our intellectual property rights through a combination of trademark, patent, copyright and trade secrets laws.

Employees and Independent Contractors

As of December 1, 2023, we had six employees and independent contractors, which do not include our officers who are performing services without a contract or compensation until we raise capital.

We have no collective bargaining agreements with our employees, and believe all independent contractor and employment agreements relationships are satisfactory. We hire independent contractors on an as-needed basis, and we may retain additional employees and consultants during the next twelve months, including additional executive management personnel with substantial experience in development business.

Available Information

We make available free of charge on our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission, or (the “SEC”). Our corporate website is bitminetech.io. The information in this website is not a part of this report.

Item 1A. Risk Factors

Ownership of our securities involves a high degree of risk. Holders of our securities should carefully consider the following risk factors and the other information contained in this Form 10-K, including our historical condensed financial statements and related notes included herein. The following discussion highlights some of the risks that may affect future operating results. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or businesses in general, may also impair our businesses operations. If any of the following risks or uncertainties actually occur, our business, financial condition and operating results could be adversely affected in a material way. This could cause the trading prices of our common stock to decline, perhaps significantly, and you may lose part or all of your investment. Please see “Cautionary Notes Regarding Forward-Looking Statements.”

Risks Related to Company’s Business and Industry

We may not be able to obtain new hosting and transaction processing hardware or purchase such hardware at competitive prices during times of high demand, which could have a material adverse effect on our business, financial condition and results of operations.

Historically, an increase in interest and demand for digital assets has led to a shortage of hosting and transaction processing hardware and increased prices. As the price of digital assets increase, the profits that are generated from the mining those assets also increase, which causes more companies to enter the mining industry and existing companies to expand their mining operations. When that occurs, the demand for equipment may outpace supply and create mining machine equipment shortages. Currently, with the drop in digital asset prices from their highs in 2021, there is increased availability, and decreased prices, of new and used mining and hosting equipment. However, these trends may be temporary, particularly the drop in digital asset prices, and a return to higher prices could, once again, lead to shortages of mining and hosting equipment and an increase in prices, which could have a material adverse effect on our business, financial condition and results of operations.

Our business is capital intensive, and failure to obtain the necessary capital when needed may force us to delay, limit or terminate our expansion efforts or other operations, which could have a material adverse effect on our business, financial condition and results of operations.

Our principal plan is to construct, develop and operate digital asset mining facilities, and to mine digital assets for our own account in those facilities by means of a fleet of the latest generation mining equipment. We may also use our mining facilities to host third-party miners. However, the costs of constructing, developing, operating and maintaining digital asset mining and hosting facilities, and owning and operating a large fleet of the latest generation mining equipment, are substantial. We have completed our initial hosting facility in Trinidad which recently became operational. We are also a partner in a joint venture that recently completed a facility with a capacity of 5-6 MW in Texas, which became operational in June 2023. We currently lack the capital to open material additional facilities or materially expand our additional facilities.

We will need to raise additional funds through equity or debt financings in order to meet our capital needs. Additional debt or equity financing may not be available when needed or, if available, may not be available on satisfactory terms. If our stock price declines and/or our trading volume remains low, our ability to raise capital to expand our business will be impaired. We have retained investment bankers to assist in raising the necessary capital to expand our business, but they can provide no assurance that capital is available on attractive terms in the current market environment. An inability to obtain additional debt or equity financing would adversely affect our business, financial condition and results of operations.

If future prices of Bitcoin are not sufficiently high, our business, results of operations and financial condition could be materially and adversely affected, which may have a negative impact on the trading price of our securities.

Our financial condition and results of operations are reliant on our ability to sell the Bitcoin we receive from mining at a price greater than our costs to produce that Bitcoin. To the extent we host third-party miners, where our hosting fees are payable in part or in whole in Bitcoin, our financial condition and results of operations will be reliant on our ability to sell Bitcoin that we receive as a fee for hosting services at price greater than our cost to provide hosting services.

To the extent the cost to purchase new miners or hosting equipment increases or our electricity costs increase, our cost to produce a single Bitcoin also increases, therefore requiring a corresponding increase in the price of Bitcoin for us to maintain profitable operations from mining. If future prices of Bitcoin are not sufficiently high, we may not realize the benefit of the capital expenditures we incur each time we acquire new miners and expand our hosting environment to host those miners. If this occurs, our business, results of operations and financial condition could be materially and adversely affected, which may have a negative impact on the trading price of our securities, which may have a materially adverse impact on investors’ investment in our Company.

We believe that, at the current price of Bitcoin, we are able to mine Bitcoin profitably at our existing locations. However, if the price drops significantly from current levels, or our electricity costs increase materially at any of our sites, the marginal cost of mining Bitcoin could exceed the value of the Bitcoin that is mined, with the result that both we and our hosting clients may be forced to cease mining Bitcoin until it becomes profitable to do so again. The cessation of Bitcoin mining would have a materially adverse impact on our business.

The Bitcoin mining industry may add materially more processing power to the Bitcoin network, which will increase the difficulty index and reduce our revenue from processing transactions, which could have a material adverse effect on our business, financial condition and results of operations.

The Bitcoin network is designed to reduce the awards that are generated from processing transactions as additional computing power is added to the network, and vice versa. As the market price of Bitcoin increases, more companies are encouraged to mine for Bitcoin and as more miners are added to the network, its total hash rate increases. Processing power on networks has been increasing rapidly over time while the rewards and transaction fees available on those networks tend to decline over time. There is currently a substantial amount of processing power in development that may come into the Bitcoin network in the near-term future, and if it does the difficulty index could increase commensurately, which means that we could generate less Bitcoin revenue from the same amount of computing power. In order to grow or maintain the revenue we generate from processing transactions on the Bitcoin networks, we may be required to invest significant capital to acquire new and more efficient computer servers, negotiate more favorable power supply agreements than the industry average and otherwise increase our effective processing power on such networks. One risk is that we invest substantial capital to increase our processing power, but our investments in equipment prove unprofitable as a result substantial increases in the difficulty index causes by third parties investing even more in additional processing power. In the event we are unable to increase our processing power, or reduce our mining costs through improvements to the efficiency of our machines or reductions in our power costs, to match increases in the difficulty index resulting from increased competition, our revenue from mining will decline over time and in turn, it could have a material adverse effect on our business, financial condition and results of operations.

To the extent we host third party miners, our success will depend in large part on our ability to provide a competitive hosting environment, and our inability to attract customers for our hosting services could have a material adverse effect on our business, financial condition and results of operations.

While our primarily plan is to utilize our hosting facilities to mine Bitcoin for our own account, we may utilize our hosting facilities to host third-party miners where we can do so on attractive terms. Our hosting success will depend our ability to attract hosting customers, which will depend our ability to offer competitive hosting terms and capabilities that enable our hosting clients to operate profitably. We may not be able to attract customers to our hosting capabilities for a number of reasons, including if:

	·		we are unable to find suitable locations for hosting facilities which have electricity at competitive rates;
	·		there is a reduction in the demand for our services due to macroeconomic factors in the markets in which we operate;
	·		we fail to provide competitive pricing terms or effectively market them to potential customers;
	·		we provide hosting services that are deemed by existing and potential customers or suppliers to be inferior to those of our competitors, or that fail to meet customers’ or suppliers’ ongoing and evolving program qualification standards, based on a range of factors, including available power, preferred design features, security considerations and connectivity;
	·		mining businesses decide to host internally as an alternative to the use of our services;
	·		we fail to successfully communicate the benefits of our services to potential customers;
	·		we are unable to strengthen awareness of our brand;
	·		we are unable to provide services that our existing and potential customers’ desire;
	·		our customers are unable to secure an adequate supply of new generation digital asset mining equipment to host with us;
	·		we are unable to obtain deliveries of hosting equipment, including immersion containers and transformers, which have recently been in short supply; or
	·		we are unable to find suitable locations for hosting facilities which have electricity at competitive rates.

Furthermore, all of the risks that exist for our mining business would also exist for our third-party hosting clients. The inability of our hosting clients to operate profitably adversely impact on our hosting business, which could have a material adverse effect on our business, financial condition and results of operations.

Adverse developments in the blockchain industry, and in the blockchain hosting market could have a material adverse effect on our business, financial condition and results of operations.

The blockchain industry faces a number of material risks, including those related to:

	·		a decline in the adoption and use of Bitcoin and other similar digital assets within the technology industry or a decline in value of digital assets;
	·		increased costs of complying with existing or new government regulations applicable to digital assets and other factors;
	·		a downturn in the market for blockchain hosting space generally, which could be caused by an oversupply of or reduced demand for blockchain space;
	·		the rapid development of new technologies or the adoption of new industry standards that render the mining of digital assets unprofitable or obsolete, such as widespread adoption of “proof of stake” method of validating blockchain transactions instead of “proof of work;”
	·		a slowdown in the growth of the Internet generally as a medium for commerce and communication;
	·		availability of an adequate supply of new generation digital asset mining equipment to enable us to mine digital assets at scale;
	·		the degree of difficulty in mining digital assets and the trading price of such assets; and
	·		an increase in political opposition to mining digital assets, for example due to concerns about its impact on climate change or its impact on the availability of affordable electricity to other consumers in the local market, the degree of difficulty in mining digital assets and the trading price of such assets.

To the extent that any of these or other adverse conditions exist, they are likely to have an adverse impact on our mining rewards, which could have a material adverse effect on our business, financial condition and results of operations.

Additionally, we are affected by general business and economic conditions in the United States and globally. These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, including the imposition of new tariffs affecting our or our customers’ products and services, fluctuations in both debt and equity capital markets and broad trends in industry and finance, all of which are beyond our control. Macroeconomic conditions that affect the economy and the economic outlook of the United States and the rest of the world could adversely affect our customers and vendors, which could have a material adverse effect on our business, financial condition and results of operations.

We may face several risks due to disruptions in the crypto asset markets, including but not limited to the risk from depreciation in our stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of crypto assets.

In the second half of 2022 and beginning of 2023, some of the well-known crypto asset market participants, including Celsius Network, Voyager Digital Ltd., Three Arrows Capital, and Genesis Global Holdco LLC declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX, the third largest digital asset exchange by volume at the time, halted customer withdrawals, and shortly thereafter, FTX and its subsidiaries filed for bankruptcy.

In response to these and other similar events (including significant activity by various regulators regarding digital asset activities, such as enforcement actions against a variety of digital asset entities, including Coinbase and Binance), the digital asset markets, including the market for bitcoin specifically, have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital assets markets and in bitcoin. These events have also negatively impacted the liquidity of the digital assets markets as certain entities affiliated with FTX engaged in significant trading activity and platforms such as Coinbase and Binance engage in significant trading activity. If the liquidity of the digital assets markets continues to be negatively impacted by these events, digital asset prices (including the price of bitcoin) may continue to experience significant volatility and confidence in the digital asset markets may be further undermined. These events are continuing to develop and it is not possible to predict at this time all of the risks that they may pose to us, our service providers or on the digital asset industry as a whole.

Although we had no direct exposure to FTX or any of the above-mentioned cryptocurrency companies, nor any material assets that may not be recovered or may otherwise be lost or misappropriated due to the bankruptcies, the failure or insolvency of large exchanges like FTX or other significant players in the digital asset space may cause the price of bitcoin to fall and decrease confidence in the ecosystem, which could adversely affect an investment in us. Such market volatility and decrease in bitcoin price could have a material and adverse effect on our results of operations and financial condition and we expect our results of operations to continue to be affected by the bitcoin price as the results of our operations are significantly tied to the price of bitcoin. If we do not continue adjusting our short-term strategy to optimize our operating efficiency in the current dynamic market conditions, such market conditions could have a further negative result on our business, prospects or operations.

Potential that, in the event of a bankruptcy filing by a custodian, bitcoin held in custody could be determined to be property of a bankruptcy estate and we could be considered a general unsecured creditor thereof.

All of the bitcoin we hold is held in either cold storage or hot storage at Gemini. The treatment of bitcoins held by custodians that file for bankruptcy protection is uncharted territory in U.S. Bankruptcy law. We cannot say with certainty whether our bitcoin held in custody by Gemini, should it declare bankruptcy, would be treated as property of the bankruptcy estate and, accordingly, whether we would be treated as a general unsecured creditor with respect of our bitcoin held in custody by Gemini. If we are treated as a general unsecured creditor, we may not be able to recover our bitcoin in the event of a Gemini bankruptcy or a bankruptcy of any other custodian we may use in the future. However, we mitigate our risk of a bankruptcy by Gemini by holding substantially all of our bitcoin in cold storage, and only transfer bitcoin to Gemini in order to liquidate it. When we liquidate bitcoin, we typically have the proceeds wired to our bank account the same day. We believe these factors greatly minimize our exposure to a failure of Gemini. We also seek to minimize the risk of a failure of any bitcoin exchange by opening accounts at more than one exchange, and in that regard have recently opened an account at Bitgo.

Our business is heavily impacted by social, political, economic and other events and circumstances in countries outside of the United States, most particularly China and other non-Western countries.

Our business is heavily impacted by social, political, economic and other events and circumstances in countries outside of the United States, most particularly in China and other non-Western countries. These events and circumstances are largely outside of our influence and control. We are heavily dependent on the Chinese manufacture of equipment. Historically China was a location of significant digital asset mining at low electric power rates. Recently, China and other foreign governments have taken action to prohibit or significantly restrict digital asset mining. For example, in May and June 2021, in their efforts to curb digital asset trading and mining, regulators in several Chinese Provinces, including Qinghai, Inner Mongolia and Sichuan, announced policies to curb or ban local digital asset mining operations. Later, the Chinese government extended the ban on digital asset mining to all Chinese Provinces, effective July 31, 2021. The long-term impact of governmental restrictions on digital asset mining is unknown and could be either beneficial or detrimental to our business and profitability. Currently, the restrictions in China have increased the demand for cost-effective data hosting services outside of China. Whether or not the lack of mining activity in China will negatively impact Chinese miner manufacturing and the development, price, availability of new and enhanced mining equipment is unknown. Should China or other countries that currently restrict digital asset mining eliminate such restrictions or actually seek to enhance such mining activity, the likely increase in mining activity could reduce our revenue and profitability.

Adoption of a different method of validating transactions in bitcoin could materially impair the business of mining firms, and could even make them obsolete.

Transactions in bitcoin are currently validated by a system called “proof of work,” where powerful computers run software that races to solve complex problems, verifying transactions in the process. The system is widely known as “mining” because the computers earn payments in cryptocurrency as rewards for the verification service. The system has been criticized by many because it requires substantial amounts of electricity to validate transactions. Recently, another type of digital currency, Ethereum, implemented a different system of validation called “proof of stake,” which is expected to require 99% less energy consumption. In the event bitcoin adopts a similar system, it could make Bitcoin mining substantially less profitable and could even render the business obsolete.

Where there is no assurance that Bitcoin will not adopt a “proof of stake” system. Even if Bitcoin decided to adopt such a system, we do not believe that the adoption would occur during in the near term, given the number of years it took Ethereum to create and implement its alternative system.

Continuing coronavirus outbreaks may have a material adverse impact on our business, liquidity, financial condition and results of operations.

COVID-19 was first reported in December 2019 in the City of Wuhan, Hubei, China and was recognized as a pandemic by the World Health Organization on March 11, 2020. In response to the pandemic, governmental authorities around the World, including the United States, Canada, China and elsewhere, introduced various measures to limit the spread of the pandemic, including travel restrictions, border closures, business closures, quarantines, self- and forced isolations, shelter-in-place orders and social distancing. COVID-19 reduced the number of new generation machines available for purchase, and delayed the delivery and implementation of new generation mining machines. A resurgence of COVID-19, including the emergence of variant strains of COVID-19, could have a material impact on our business, liquidity, financial condition and results of operations and any such impact will be determined by the severity and duration of the continuing pandemic.

Changes in tariffs or import restrictions could have a material adverse effect on our business, financial condition and results of operations.

Equipment necessary for digital asset mining is almost entirely manufactured outside of the United States. There is currently significant uncertainty about the future relationship between the United States and various other countries, including China, the European Union, Canada, and Mexico, with respect to trade policies, treaties, tariffs and customs duties, and taxes. For example, since 2019, the U.S. government has implemented significant changes to U.S. trade policy with respect to China. These tariffs have subjected certain digital asset mining equipment manufactured overseas to additional import duties of up to 25%. The amount of the additional tariffs and the number of products subject to them has changed numerous times based on action by the U.S. government. These tariffs have increased costs of digital asset mining equipment, and new or additional tariffs or other restrictions on the import of equipment necessary for digital asset mining could have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our assets are pledged to an entity controlled by our chairman and failure to repay obligations to such entity when due will have a material adverse effect on our business and could result in foreclosure on our assets.

As of December 1, 2023, we owed $1,625,000 to an investment fund controlled by our chairman under a line of credit that permits draws by the company of up to $1,750,000. At maturity on December 1, 2024, the amount due under the line of credit along with accrued interest will be payable in full.

It is necessary for us to grow our business in order to generate free cash flow necessary to repay the principal and interest on our indebtedness. If we were to default on the amounts owed or other terms and conditions of the convertible notes, the lender would have the right to exercise rights and remedies to collect, which would include obtaining judgement lien on our assets and selling them to pay the judgment. A default would have a material adverse effect on our business and our stockholders could lose their entire investment in us. We may need to raise capital in order to repay our amounts due under the line of credit at maturity. There is no assurance that we will be able to raise such capital on terms that will be favorable to common stockholders.

Delays in the construction of our hosting facilities or significant cost overruns could present significant risks to our business and could have a material adverse effect on our business, financial condition and results of operations.

The servers used for digital asset transaction processing and colocation hosting require the use of facilities (“hosting facilities”) with a highly specialized infrastructure and considerable, reliable power in order to compete effectively. Our growth strategy is to build mining capacity in locations that have reliable sources of low-cost power, and to utilize that capacity to host third-party miners and to host our own proprietary mining equipment. We have completed our initial hosting facility in Trinidad (which only commenced operations in October 2023 due to delays in the electrification of the facility). We are also a partner in a joint venture that recently completed a facility in Pecos, Texas. We continue to search for new locations for hosting facilities in the United States and Canada. We may face challenges in obtaining suitable land to build new hosting facilities, as we need to work closely with the local power suppliers and local governments of the places where our proposed hosting facilitates are located. Delays in actions that require the assistance of such third parties, in receiving required permits and approvals or in mediations with local communities, if any, may negatively impact our construction timelines and budget or result in any new hosting facilities not being completed at all.

Additional expansion of existing hosting facilities and construction of new hosting require us to rely on the experience of one or more designers, general contractors and subcontractors, and such designers or contractors may experience financial or other problems during the design or construction process. We may also experience quality control issues as we implement any upgrades in our hosting capacity through the installation and maintenance of chipsets and servers or new cooling technologies such as immersion and water curtain cooling. Our business will be negatively impacted if we are unable to run our mining operations in a way that is technologically advanced, economically and energy efficient and temperature controlled. If we are unsuccessful, we will damage our miners and the miners of third parties and the profitability of our mining operations.

If we experience significant delays in the supply of power required to support any hosting facility expansion or new construction, the progress of such projects could deviate from our original plans, which could cause material and negative effects on our revenue growth, profitability and results of operations. Any material delay in completing these projects, or any substantial cost increases or quality issues in connection with these projects, could materially delay our ability to deliver our hosting capacity, cause us to incur penalties under hosting contracts, result in reduced order volume and materially adversely affect our business, financial condition and results of operations.

We have mitigated to risk of delays in completing our hosting facilities by entering into agreements with third parties to host our miners, and we may continue to enter into additional such agreements when we encounter delays at our facilities or we otherwise are able to negotiate favorable terms.

We are subject to risks associated with our need for significant electric power and the limited availability of power resources, which could have a material adverse effect on our business, financial condition and results of operations.

We require a significant electric power supply to conduct our mining activity and to provide many hosting services we offer, such as powering and cooling our and our customers’ servers and network equipment and operating critical mining and hosting facility and equipment infrastructure. The costs of electric power account for a significant portion of our cost of revenue.

The amount of power required by us and our customers will increase commensurate with the demand for our services and the increase in miners we operate for ourselves and our hosting customers. While energy costs are not vulnerable to seasonal factors in Trinidad, in some places that we are evaluating for future hosting facilities energy costs and availability are vulnerable to seasonality, with increased costs primarily in the summer months (in the Northern hemisphere) and risks of outages and power grid damage as a result of inclement weather, animal incursion, sabotage and other events out of our control. Although we aim to build and operate energy efficient hosting facilities, there can be no assurance such facilities will be able to deliver sufficient power to meet the growing needs of our business. The cost of power at some of our hosting facilities may be dependent on our ability to perform under power contracts that we are a party to, which we may be unable to do successfully. Pursuant to these power contracts, if we fail to curtail our power usage when called upon or fail to satisfy certain eligibility requirements for monthly bill credits, our power costs would increase. Any system downtime resulting from insufficient power resources or power outages could have a material adverse effect on our business, financial condition and results of operations. Our operations may not be equipped to run on back-up generators in the event of a power outage. Increased power costs and limited availability and curtailment of power resources could reduce our revenue and have a material and adverse effect on our cost of revenue and results of operations.

Any system downtime resulting from insufficient power resources or power outages could have a material adverse effect on our business, financial condition and results of operations. Because the mining portion of our business consumes a large amount of energy, it is not practical or economical for our operations to run on back-up generators in the event of a power outage.

Governments and government regulators may potentially restrict the ability of electricity suppliers to provide electricity to hosting and transaction processing operations such as ours, which could have a material adverse effect on our business, financial condition and results of operations.

Governments or government regulators may potentially restrict electricity suppliers from providing electricity to hosting facilities and hosting and transaction processing operators in times of electricity shortage or may otherwise potentially restrict or prohibit the provision of electricity to transaction process operators like us. Some governments, such as China, have moved to ban all digital asset mining due to the adverse impact such mining has on the environment and/or to conserve the electricity for use by other businesses and consumers in the market. In the event government regulators issue moratoriums or impose bans or restrictions involving hosting operations or transaction processing in jurisdictions in which we operate, we will not be able to continue our operations in such jurisdictions. A moratorium, ban or restriction could have a material adverse effect our business, financial condition and results of operations.

Power outage in our hosting facilities could have a material adverse effect on our business, financial condition and results of operations.

Although we control, operate and have access to our servers and all of the other components of our network, we are still vulnerable to disruptions and power outages resulting from weather, animal incursions, accidents, equipment failures, curtailments, acts of war, sabotage and other events. We may not have backup power generators for our blockchain operations in the event of a power outage. This could impact our ability to generate and maintain contractually specified power levels to our contractual counterparties, which could have a material adverse effect on our business, financial condition and results of operations.

If we do not accurately predict our hosting facility requirements, it could have a material adverse effect on our business, financial condition and results of operations.

The costs of building out, leasing and maintaining our hosting facilities constitute a significant portion of our capital and operating expenses. In order to manage growth and ensure adequate capacity for our digital mining operations and new and existing hosting customers while minimizing unnecessary excess capacity costs, we continuously evaluate our short- and long-term data center capacity requirements. If we overestimate our business’ capacity requirements or the demand for our services and therefore secure excess data center capacity, our operating margins could be materially reduced. If we underestimate our data center capacity requirements, we may not be able to service the expanding needs of our existing customers and may be required to limit new customer acquisition, which could have a material adverse effect on our business, financial condition and results of operations.

If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for our blockchain hosting services.

New digital asset transaction protocols are continuously being deployed, and existing and new protocols are in a state of constant change and development. While certain validation protocols currently employ a “proof of work” consensus algorithm, whereby transaction processors are required to expend significant amounts of electrical and computing power to solve complex mathematical problems in order to validate transactions and create new blocks in a blockchain, there may be a shift towards adopting alternative validating protocols. These protocols may include a “proof of stake” algorithm or an algorithm based on a protocol other than proof of work, which may decrease the reliance on computing power as an advantage to validating blocks. Our transaction processing operations, and, to our knowledge, the operations of our potential hosting customers, are currently designed to primarily support a proof of work consensus algorithm. Should the algorithm shift from a proof of work validation method to a proof of stake method, mining would require less energy and may render any company that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate or hosting) less competitive. As a result of our efforts to optimize and improve the efficiency of our digital asset mining operations, we may be exposed to the risk in the future of losing the benefit of our capital investments and the competitive advantage we hope to gain from this as a result, and may be negatively impacted if a switch to proof of stake validation were to occur. Any such change to transaction validating protocols could have a material adverse effect on our business, financial condition and results of operations.

If we fail to accurately estimate the factors upon which we base our contract pricing, we may generate less profit than expected or incur losses on those contracts, which could have a material adverse effect on our business, financial condition and results of operations.

Our ability to earn a profit on our hosting contracts requires that we accurately estimate the costs involved and outcomes likely to be achieved and assess the probability of generating sufficient hosting and colocation capacity within the contracted time period. These expenses include electricity, facilities costs, equipment costs, supplies, and personnel. In addition, we may not be able to obtain all expected benefits, including tax abatements or government incentives offered in opportunity zones.

Also, we generally do not charge a fixed sum for hosting, but charge a percentage of the Bitcoin mined by the customer plus reimbursement of the actual costs of electricity used by the customer’s equipment. To the extent the price of Bitcoin falls, our fee for hosting services will fall proportionally, and may fall below the cost to provide the hosting services. The inability to accurately estimate the factors upon which we base our contract pricing could have a material adverse effect on our business, financial condition and results of operations.

Supply chain and shipping disruptions have resulted in shipping delays, a significant increase in shipping costs, and could increase product costs and result in lost sales, which may have a material adverse effect on our business, operating results and financial condition.

Supply chain disruptions, resulting from factors such as the COVID-19 pandemic, labor supply and shipping container shortages, have impacted, and may continue to impact, us and our third-party manufacturers and suppliers. These disruptions have resulted in longer lead times and increased product costs and shipping expenses, including with respect to the delivery of miners that we have purchased. While we have taken steps to minimize the impact of these increased costs by working closely with our suppliers and customers, there can be no assurances that unforeseen events impacting the supply chain will not have a material adverse effect on us in the future. Additionally, the impacts supply chain disruptions have on our third-party manufacturers and suppliers are not within our control. It is not currently possible to predict how long it will take for these supply chain disruptions to cease. Prolonged supply chain disruptions impacting us and our third-party manufacturers and suppliers could interrupt product manufacturing, increased lead times, increased product costs and result in lost sales and bitcoin production, result in a delay in the delivery of miners that we have purchased, and continue to increase shipping costs associated with the delivery of our purchased miners, which may have a material adverse effect on our business, operating results and financial condition.

Banking relationships can be difficult to maintain for companies in the crypto currency space.

A number of companies that engage in Bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions. To the extent that such events may happen to us, they could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account.

Any failure in the critical systems of our hosting facilities or services we provide could lead to disruptions in our and our customers’ businesses and could harm our reputation and result in financial penalty and legal liabilities, which would reduce our revenue and have a material adverse effect on our business, financial condition and results of operations.

The critical systems of the hosting facilities we operate and the services we provide are subject to failure. Any failure in the critical systems of any hosting facility we operate or services that we provide, including a breakdown in critical plant, equipment or services, routers, switches or other equipment, power supplies or network connectivity, whether or not within our control, could result in service interruptions impacting our customers as well as equipment damage, which could significantly disrupt the normal business operations of our customers, harm our reputation and reduce our revenue. Any failure or downtime in one of the facilities that we operate impact mining rewards generated by us and reduce the profitability of our customers. The total destruction or severe impairment of any of the facilities we operate could result in significant downtime of our services and loss of customer data. Since our ability to attract and retain customers depends on our ability to provide highly reliable service, even minor interruptions in our service could harm our reputation and negatively impact our revenue and profitability. The services we provide are subject to failures resulting from numerous factors, including:

	·		power loss;
	·		equipment failure;

	·		human error or accidents;
	·		theft, sabotage and vandalism;
	·		failure by us or our suppliers to provide adequate service or maintain our equipment;
	·		network connectivity downtime and fiber cuts;
	·		service interruptions resulting from server relocation;
	·		security breaches of our infrastructure;
	·		improper building maintenance by us;
	·		physical, electronic and cybersecurity breaches;
	·		animal incursions;
	·		fire, earthquake, hurricane, tornado, flood and other natural disasters;
	·		extreme temperatures;
	·		water damage;
	·		public health emergencies; and
	·		terrorism.

Moreover, service interruptions and equipment failures may expose us to potential legal liability. As our services are critical to our customers’ business operations, any disruption in our services could result in lost profits of or other indirect or consequential damages to our customers. Although our customer contracts typically contain provisions limiting our liability for service outages causes by factors beyond our control, there can be no assurance that a court would enforce any contractual limitations on our liability in the event that one of our customers brings a lawsuit against us as the result of a service interruption that they may ascribe to us. The outcome of any such lawsuit would depend on the specific facts of the case and any legal and policy considerations that we may not be able to mitigate. In such cases, we could be liable for substantial damage awards, which would as a result have a material adverse effect on our business, financial condition and results of operations.

Our success is dependent on the ability of our management team and our ability to attract, develop, motivate and retain other well-qualified employees, which may be more difficult, costly or time-consuming than expected.

Our success depends largely on the development and execution of our business strategy by our senior management team. We cannot assure you that our management will work well together, work well with our other existing employees or successfully execute our business strategy in the near-term or at all, which could have a material adverse effect on our business, financial condition and results of operations.

Our future success also depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled directors and other employees. In particular, it is difficult to locate experienced executives in our industry and offer them competitive salaries at this stage in our development. We may be unable to retain our directors, senior executives and key personnel or attract and retain new directors, senior executives and key personnel in the future, any of which could have a material adverse effect on our business, financial condition and results of operations. At this time, we are not paying any salaries to certain members of our management team, and are not paying market salaries to the remainder. There is no assurance that we will be able to retain any member of management while we are unable to competitive compensation and benefits to management.

Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business, which in turn could have a material adverse effect on our business, financial condition and results of operation.

We believe our success depends on the efforts and talent of our employees, including hosting facility design, construction management, operations, data processing, engineering, IT, risk management and sales and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.

In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve our customers could diminish, resulting in a material adverse effect on our business, financial condition and results of operations. At this time, we lack the resources to hire all of the skilled employees that we need to properly operate our business.

We may be vulnerable to security breaches, which could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations.

A party who is able to compromise the physical security measures protecting our hosting facilities could cause interruptions or malfunctions in our operations and misappropriate our property or the property of our customers. As we provide assurances to our customers that we provide the highest level of security, such a compromise could be particularly harmful to our brand and reputation. We may be required to expend significant capital and resources to protect against such threats or to alleviate problems caused by breaches in security. As techniques used to breach security change frequently and are often not recognized until launched against a target, we may not be able to implement new security measures in a timely manner or, if and when implemented, we may not be certain whether these measures could be circumvented. Any breaches that may occur could expose us to increased risk of lawsuits, regulatory penalties, loss of existing or potential customers, harm to our reputation and increases in our security costs, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, any assertions of alleged security breaches or systems failure made against us, whether true or not, could harm our reputation, cause us to incur substantial legal fees and have a material adverse effect on our business, financial condition and results of operations. Whether or not any such assertion actually develops into litigation, our management may be required to devote significant time and attention to dispute resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business. Any such resolution, including the resources exhausted in connection therewith, could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin exchange market since the launch of the Bitcoin network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm our business operations or result in loss of our assets.

We are subject to litigation risks.

We may be subject to litigation arising out of our operations. Damages claimed under such litigation may be material, and the outcome of such litigation may materially impact our operations, and the value of the common shares. While we will assess the merits of any lawsuits and defend such lawsuits accordingly, we may be required to incur significant expense or devote significant financial resources to such defenses. In addition, the adverse publicity surrounding such claims may have a material adverse effect on our operations.

We may be exposed to cybersecurity threats and hacks, which could have a material adverse effect on our business, financial condition and results of operations.

The threats to network and data security are increasingly diverse and sophisticated. Despite our efforts and processes to prevent breaches, our computer servers and computer systems may be vulnerable to cybersecurity risks, including denial-of-service attacks, physical or electronic break-ins, employee theft or misuse and similar disruptions from unauthorized tampering with our computer servers and computer systems. The preventive actions we take to reduce the risk of cyber incidents and protect our information technology and networks may be insufficient to repel a major cyber-attack in the future. To the extent that any disruption or security breach results in a loss or damage to our network, in unauthorized disclosure of confidential information or in a loss of our digital assets, it could cause significant damage to our reputation, lead to claims against us and ultimately have a material adverse effect on our business, financial condition and results of operations. Additionally, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

Our future success depends on our ability to keep pace with rapid technological changes that could make our current or future technologies less competitive or obsolete.

Rapid, significant and disruptive technological changes continue to impact our industry. The infrastructure at our hosting facilities may become less marketable due to demand for new processes and technologies, including, without limitation: (i) new processes to deliver power to, or eliminate heat from, computer systems; (ii) customer demand for additional redundancy capacity; (iii) new technology that permits higher levels of critical load and heat removal than our hosting facilities are currently designed to provide; (iv) an inability of the power supply to support new, updated or upgraded technology; and (v) a shift to more power-efficient transaction validation protocols. In addition, the systems that connect our hosting facilities to the Internet and other external networks may become insufficient, including with respect to latency, reliability and diversity of connectivity. We may not be able to adapt to changing technologies, identify and implement new alternatives successfully or meet customer demands for new processes or technologies in a timely and cost-effective manner, if at all, which would have a material adverse effect on our business, financial condition and results of operations.

Even if we succeed in adapting to new processes and technologies, there is no assurance that our use of such new processes or technology would have a positive impact on our financial performance. For example, we could incur substantial additional costs if we needed to materially improve our hosting center infrastructure through the implementation of new systems or new server technologies that require levels of critical load and heat removal that our facilities are not currently designed to provide. In addition, if one of our new offerings were competitive to our prior offerings and represented an adequate or superior alternative, customers could decide to abandon prior offerings that produce higher revenue or better margins for the new offering. Therefore, the adaptation to new processes and technologies could result in lower revenue, lower margins and/or higher costs, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, our competitors or others might develop technologies that are more effective than our current or future technologies, or that render our technologies less competitive or obsolete. Further, many of our competitors may have superior financial and human resources deployed toward research and development efforts. We may not be able to effectively keep pace with relevant technological changes. If competitors introduce superior technologies for hosting operations or transaction processing, and we cannot make upgrades to our hardware or software to remain competitive, it could have a material adverse effect on our business, financial condition and results of operations.

Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition.

Our ability to comply with applicable complex and evolving laws, regulations, and rules is largely dependent on the establishment and maintenance of our compliance, audit, and reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. While we plan to devote significant resources to develop policies and procedures to identify, monitor and manage our risks, we cannot assure you that our policies and procedures will always be effective against all types of risks, including unidentified or unanticipated risks, or that we will always be successful in monitoring or evaluating the risks to which we are or may be exposed in all market environments.

We may infringe on third-party intellectual property rights or other proprietary rights, which could have a material adverse effect on our business, financial condition and results of operations.

Our commercial success depends on our ability to operate without infringing third-party intellectual property rights or other proprietary rights. For example, there may be issued patents of which we are not aware that our services or products infringe on. Also, there may be patents we believe we do not infringe on, but that we may ultimately be found to by a court of law or government regulatory agency. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our services or products allegedly infringe on.

If a third party brings any claim against us based on third-party intellectual property rights and/or other proprietary rights, we will be required to spend significant resources to defend and challenge such claim, as well as to invalidate any such rights. Any such claim, if initiated against us, whether or not it is resolved in our favor, could result in significant expense to us, and divert the efforts of our technical and management personnel, which could have a material adverse effect on our business, financial condition and results of operations.

The further development and acceptance of cryptographic and algorithmic protocols governing transaction validation and the issuance of, and transactions in, digital assets are subject to a variety of factors that are difficult to evaluate. The slowing or stoppage of development or acceptance of blockchain networks and digital assets would have an adverse material effect on the successful development of the mining operation and value of mined digital assets.

The use of digital assets to, among other things, buy and sell goods and services, is part of a new and rapidly evolving industry that employs digital assets based upon a computer-generated mathematical and/or cryptographic protocol. The future of this industry is subject to a high degree of uncertainty. The factors affecting the further development of this industry include, but are not limited to:

	·		continued worldwide growth in the adoption and use of digital assets and blockchain technologies;
	·		government and quasi-government regulation of digital assets and their use, or restrictions on or regulation of access to and operations of digital asset transaction processing;
	·		changes in consumer demographics and public tastes and preferences;
	·		the maintenance and development of the open-source software protocols or similar digital asset systems;
	·		the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets including new means of using fiat currencies;
	·		general economic conditions and the regulatory environment relating to digital assets; and
	·		negative consumer perception of digital assets, including digital assets specifically and digital assets generally.
	·		a decline in the popularity or acceptance of digital assets could materially impact us or our potential hosting customers, which could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to adequately protect our intellectual property rights and other proprietary rights, which could have a material adverse effect on business, financial condition and results of operations.

We may not be able to obtain broad protection in the United States or internationally for all of our existing and future intellectual property and other proprietary rights, and we may not be able to obtain effective protection for our intellectual property and other proprietary rights in every country in which we operate. Protecting our intellectual property rights and other proprietary rights may require significant expenditure of our financial, managerial and operational resources. Moreover, the steps that we may take to protect our intellectual property and other proprietary rights may not be adequate to protect such rights or prevent third parties from infringing or misappropriating such rights. Any of our intellectual property rights and other proprietary rights, whether registered, unregistered, issued or unissued, may be challenged by others or invalidated through administrative proceedings and/or litigation.

We may be required to spend significant resources to secure, maintain, monitor and protect our intellectual property rights and other proprietary rights. Despite our efforts, we may not be able to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights and other proprietary rights. We may initiate claims, administrative proceedings and/or litigation against others for infringement, misappropriation or violation of our intellectual property rights or other proprietary rights to enforce and/or maintain the validity of such rights. Any such action, if initiated, whether or not it is resolved in our favor, could result in significant expense to us, and divert the efforts of our technical and management personnel, which may have a material adverse effect on our business, financial condition and results of operations.

We are subject to risk that key counterparties file bankruptcy, enter insolvency proceedings or otherwise default on their obligations to us.

We are subject to the risk that counterparties with whom we do business default on their obligations to us. While we may have rights to recover damages for breach of contract in the event of a default, our contractual remedies may not compensate us for all of our damages, including particularly legal fees or lost opportunity costs. Even if we receive a judgment or aware that covers all of our damages, we may not be able to collect the judgment in full due to the insolvency of the counterparty. Furthermore, the counterparty or its assets may be in a legal system where it is difficult to receive a judgment or collect any judgment. At this time, we have two counterparties whose default could result in material losses for us. One is West Indian Mining Company Limited, which is indebted to us for approximately $731,472 from the sale of two immersion containers and also hosts 158 miners in one of the containers. The other is ROC Digital Mining I, LLC, which owes us approximately $1,029,721 from the sale of equipment, and for which we have also made an equity investment of approximately $987,000 by the contribution of equipment. In both cases, a default could impair our ability to realize our investment in each entity.

Risks Related to Our Limited Operating History and Early Stage of Growth

We operate in a rapidly developing industry and have an evolving business model with no history of generating revenue from our services. In addition, our evolving business model increases the complexity of our business, which makes it difficult to evaluate our future business prospects and could have a material adverse effect on our business, financial condition and results of operations.

We may adjust our business model further from time to time, including trying to offer additional types of products or services, such as a blockchain application designed by us, blockchain services and other related businesses, or entering into strategic partnerships or acquisitions. The evolution of and modifications to our business strategy will continue to increase the complexity of our business and placed significant strain on our management, personnel, operations, systems, technical performance and financial resources. Future additions to or modifications of our business strategy are likely to have similar effects. Further, any new services that we offer that are not favorably received by the market could damage our reputation or our brand. There can be no assurance that we will ever generate sufficient revenues or achieve profitably in the future or that we will have adequate working capital to meet our obligations as they become due.

We cannot be certain that our current business strategy or any new or revised business strategies will be successful or that we will successfully address the risks we face. In the event that we do not effectively evaluate future business prospects, successfully implement new strategies or adapt to our evolving industry, it will have a material adverse effect on our business, financial condition and results of operations.

We may not be able to compete effectively against our current and future competitors, which could have a material adverse effect on our business, financial condition and results of operations.

The digital asset mining industry is highly innovative, rapidly evolving and characterized by healthy competition, experimentation, frequent introductions of new products and services and uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. We compete against a number of companies operating both within the United States and abroad, that have greater financial and other resources and that focus on digital asset mining, including businesses focused on developing substantial Bitcoin mining operations. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results and financial condition could be adversely affected.

We compete with a range of hosting providers and blockchain providers for some or all of the services we offer. We face competition from numerous developers, owners and operators in the blockchain industry, including technology companies, such as hyperscale cloud players, managed service providers and real estate investment trusts (“REITs”), some of which own or lease properties similar to ours, or may do so in the future, in the same submarkets in which our properties are located. Cloud offerings may also influence our customers to move workloads to cloud providers, which may reduce the services they obtain from us. Our current and future competitors may vary from us in size, service offerings and geographic presence.

Competition is primarily centered on reputation and track record; design, size, quality, available power and geographic coverage of hosting space; quality of installation and customer equipment repair services; relationships with equipment manufacturers and ability to obtain replacement parts; technical and software expertise; and financial strength and price. Some of our current and future competitors may have greater brand recognition, longer operating histories, stronger marketing, technical and financial resources and access to greater and less expensive power than we do.

In addition, many companies in the industry are consolidating, which could further increase the market power of our competitors. As a result, some of our competitors may be able to:

	·		identify and acquire desirable properties that we are interested in from developers;
	·		offer hosting services at prices below current market rates or below the prices we currently charge our customers;
	·		bundle colocation services with other services or equipment they provide at reduced prices;
	·		develop superior products or services, gain greater market acceptance and expand their service offerings more efficiently or rapidly;
	·		adapt to new or emerging technologies and changes in customer requirements more quickly;
	·		take advantage of acquisition and other opportunities more readily; and
	·		adopt more aggressive pricing policies and devote greater resources to the promotion, marketing and sales of their services.

We operate in a competitive market, and we face pricing pressure with respect to our hosting services. Prices for our hosting services are affected by a variety of factors, including supply and demand conditions and pricing pressures from our competitors. We may be required to lower our prices to remain competitive, which may decrease our margins and could have a material adverse effect on our business, financial condition and results of operations.

In addition, we also face significant competition from other users and/or companies that are processing transactions on one or more digital asset networks, as well as other potential financial vehicles, including securities, derivatives or futures backed by, or linked to, digital assets through entities similar to us, such as exchange-traded funds. Market and financial conditions, and other conditions beyond our control, may make it more attractive to invest in other financial vehicles, or to invest in digital assets directly. Such events could have a material adverse effect on our business, financial condition and results of operations and potentially the value of any digital assets we hold or expect to acquire for our own account.

Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding the demand for our hosting services and the adoption of Bitcoin and other digital assets. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations in any given quarter or fiscal year.

We operate in a rapidly changing and competitive industry and our projections are subject to the risks and assumptions made by management with respect to our industry. Operating results are difficult to forecast as they generally depend on our assessment of the timing of adoption and use of Bitcoin and other digital assets, which is uncertain. Furthermore, as we invest in the development of our hosting and self-mining business, whether because of competition or otherwise, we may not recover the substantial up-front costs of constructing, developing and maintaining our hosting facilities and purchasing the latest generation of miners or recover the opportunity cost of diverting management and financial resources away from other opportunities. Additionally, our business may be affected by reductions in miner demand for hosting facilities and services and the price of Bitcoin and other digital assets as a result of a number of factors which may be difficult to predict. Similarly, our assumptions and expectations with respect to margins and the pricing of our hosting services and market price of Bitcoin or other digital assets we mine may not prove to be accurate. This may result in decreased revenue, and we may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in revenue. This inability could cause our operating results in a given quarter or year to be higher or lower than expected. If actual results differ from our estimates, analysts or investors may negatively react and our stock price could be materially impacted.

We may experience difficulties in establishing relationships with banks, leasing companies, insurance companies and other financial institutions that are willing to provide us with customary financial products and services, which could have a material adverse effect on our business, financial condition and results of operations.

As an early stage company with operations focused in the digital asset transaction processing industry, we may in the future experience difficulties in establishing relationships with banks, leasing companies, insurance companies and other financial institutions that are willing to provide us with customary leasing and financial products and services, such as bank accounts, lines of credit, insurance and other related services, which are necessary for our operations. To the extent a significant portion of our business consists of digital asset transaction mining, processing or hosting, we may in the future continue to experience difficulty obtaining additional financial products and services on customary terms, which could have a material adverse effect on our business, financial condition and results of operations.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate condensed financial statements or comply with applicable regulations could be impaired.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the applicable listing standards of any exchange on which we list our common stock. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we anticipate that we will have to expend significant resources, including accounting-related costs and significant management oversight.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. In addition, changes in accounting principles or interpretations could also challenge our internal controls and require that we establish new business processes, systems and controls to accommodate such changes. For example, we will need to implement new revenue recognition modules into our existing enterprise resource planning system to facilitate the preparation of our condensed financial statements under Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). We will also be required to adopt Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires, among other things, lessees to recognize most leases on-balance sheet via a right of use asset and lease liability, beginning January 1, 2022. We have limited experience with implementing the systems and controls that will be necessary to operate as a public company, as well as adopting changes in accounting principles or interpretations mandated by the relevant regulatory bodies. Additionally, if these new systems, controls or standards and the associated process changes do not give rise to the benefits that we expect or do not operate as intended, it could adversely affect our financial reporting systems and processes, our ability to produce timely and accurate financial reports or the effectiveness of internal control over financial reporting. Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise.

Further, while we do not believe that we have any weaknesses in disclosure controls or internal controls over financial reporting at this time, we may discover material weaknesses in our disclosure controls and internal control over financial reporting in the future as our business outgrows our current infrastructure. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our business or cause us to fail to meet our reporting obligations and may result in a restatement of our condensed financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting while we are an emerging growth company.

Risks Related to Regulatory Framework

If we were deemed an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

An issuer will generally be deemed to be an “investment company” for purposes of the 1940 Act if:

	·		it is an “orthodox” investment company because it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or
	·		it is an inadvertent investment company because, absent an applicable exemption, it owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

We believe that we are not and will not be primarily engaged in the business of investing, reinvesting or trading in securities, and we do not hold ourselves out as being engaged in those activities. We intend to hold ourselves out as a digital asset mining business. Accordingly, we do not believe that we are an “orthodox” investment company as described in the first bullet point above.

While certain digital assets may be deemed to be securities, we do not believe that certain other digital assets, in particular Bitcoin, are securities; therefore, we believe that less than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis will comprise digital assets that could be considered investment securities. Accordingly, we do not believe that we are an inadvertent investment company by virtue of the 40% inadvertent investment company test as described in the second bullet point above. Although we do not believe any of the digital assets we may own, acquire or mine are securities, there is still some regulatory uncertainty on the subject, see “Risk Factors — There is no one unifying principle governing the regulatory status of digital assets nor whether digital assets are securities in any particular context. Regulatory changes or actions in one or more countries may alter the nature of an investment in us or restrict the use of digital assets in a manner that adversely affects our business, prospects or operations.” If certain digital assets, including Bitcoin, were to be deemed securities, and consequently, investment securities by the SEC, we could be deemed an inadvertent investment company.

If we were to be deemed an inadvertent investment company, we may seek to rely on Rule 3a-2 under the 1940 Act, which allows an inadvertent investment company a grace period of one year from the earlier of (a) the date on which the issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis or (b) the date on which the issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We are putting in place policies that we expect will work to keep the investment securities held by us at less than 40% of our total assets, which may include acquiring assets with our cash, liquidating our investment securities or seeking no-action relief or exemptive relief from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner. As Rule 3a-2 is available to an issuer no more than once every three years, and assuming no other exclusion were available to us, we would have to keep within the 40% limit for at least three years after we cease being an inadvertent investment company. This may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings. In any event, we do not intend to become an investment company engaged in the business of investing and trading securities.

Finally, we believe we are not an investment company under Section 3(b)(1) of the 1940 Act because we are primarily engaged in a non-investment company business.

The 1940 Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies. Among other things, the 1940 Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, prohibit the issuance of stock options, and impose certain governance requirements. We intend to continue to conduct our operations so that we will not be deemed to be an investment company under the 1940 Act. However, if anything were to happen that would cause us to be deemed to be an investment company under the 1940 Act, requirements imposed by the 1940 Act, including limitations on our capital structure, ability to transact business with affiliates and ability to compensate key employees, could make it impractical for us to continue our business as currently conducted, impair the agreements and arrangements between and among us and our senior management team and materially and adversely affect our business, financial condition and results of operations.

Any change in the interpretive positions of the SEC or its staff with respect to digital asset mining firms could have a material adverse effect on us.

We intend to conduct our operations so that we are not required to register as an investment company under the 1940 Act. Specifically, we do not believe that digital assets, are securities. The SEC Staff has not provided guidance with respect to the treatment of these assets under the 1940 Act. To the extent the SEC Staff publishes new guidance with respect to these matters, we may be required to adjust our strategy or assets accordingly. There can be no assurance that we will be able to maintain our exclusion from registration as an investment company under the 1940 Act. In addition, as a consequence of our seeking to avoid the need to register under the 1940 Act on an ongoing basis, we may be limited in our ability to engage in digital asset mining operations or otherwise make certain investments, and these limitations could result in our holding assets we may wish to sell or selling assets we may wish to hold, which could materially and adversely affect our business, financial condition and results of operations.

If regulatory changes or interpretations of our activities require our registration as a money services business (“MSB”) under the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”) under the authority of the U.S. Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive. If we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operations.

To the extent that our activities cause us to be deemed an MSB under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.

To the extent that our activities would cause us to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any state in which we may operate, we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other operational requirements. For example, in August 2015, the New York State Department of Financial Services enacted the first U.S. regulatory framework for licensing participants in “virtual currency business activity.” The regulations, known as the “BitLicense,” are intended to focus on consumer protection and regulate the conduct of businesses that are involved in “virtual currencies” in New York or with New York customers and prohibit any person or entity involved in such activity to conduct activities without a license.

Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses. Furthermore, we may not be capable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs. If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate.

There is no one unifying principle governing the regulatory status of digital assets nor whether digital assets are securities in any particular context. Regulatory changes or actions in one or more countries may alter the nature of an investment in us or restrict the use of digital assets in a manner that adversely affects our business, prospects or operations.

As digital assets have grown in both popularity and market size, governments around the world have reacted differently, with certain governments deeming digital assets illegal, and others allowing their use and trade without restriction. In some jurisdictions, such as in the U.S., digital assets are subject to extensive, and in some cases overlapping, unclear and evolving regulatory requirements. Bitcoin is the oldest and most well-known form of digital asset. Bitcoin and other forms of digital assets have been the source of much regulatory consternation, resulting in differing definitional outcomes without a single unifying statement. Bitcoin and other digital assets are viewed differently by different regulatory and standards setting organizations globally as well as in the United States on the federal and state levels. For example, the Financial Action Task Force considers a digital asset as currency or an asset, and the Internal Revenue Service (“IRS”) considers a digital asset as property and not currency. Further, the IRS applies general tax principles that apply to property transactions to transactions involving virtual currency.

Furthermore, in the several applications to establish an exchange traded fund (“ETF”) of digital assets, and in the questions raised by the Staff under the 1940 Act, no clear principles emerge from the regulators as to how they view these issues and how to regulate digital assets under the applicable securities acts. It has been widely reported that the SEC has recently issued letters and requested various ETF applications be withdrawn because of concerns over liquidity and valuation and unanswered questions about absence of reporting and compliance procedures capable of being implemented under the current state of the markets for exchange traded funds. On April 20, 2021, the U.S. House of Representatives passed a bipartisan bill titled “Eliminate Barriers to Innovation Act of 2021” (H.R. 1602). If passed by the Senate and enacted into law, the bipartisan bill would create a digital assets working group to evaluate the current legal and regulatory framework around digital assets in the United States and define when the SEC may have jurisdiction over a particular token or digital asset (i.e., when it is a security) and when the CFTC may have jurisdiction (i.e., when it is a commodity).

If regulatory changes or interpretations require the regulation of Bitcoin or other digital assets under the securities laws of the United States or elsewhere, including the Securities Act, the Exchange Act and the 1940 Act or similar laws of other jurisdictions and interpretations by the SEC, the CFTC, the IRS, Department of Treasury or other agencies or authorities, we may be required to register and comply with such regulations, including at a state or local level. To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary expense or burdens to us. We may also decide to cease certain operations and change our business model. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to us.

Current and future legislation and SEC-rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Bitcoin or other digital assets are viewed or treated for classification and clearing purposes. In particular, Bitcoin and other digital assets may not be excluded from the definition of “security” by SEC rulemaking or interpretation requiring registration of all transactions unless another exemption is available, including transacting in Bitcoin or digital assets among owners and require registration of trading platforms as “exchanges.”

Furthermore, the SEC may determine that certain digital assets or interests may constitute securities under the “Howey” test as stated by the United States Supreme Court. We do not believe our planned mining activities would require registration for us to conduct such activities and accumulate digital assets. However, the SEC, CFTC, IRS, stock exchanges, or other governmental or quasi-governmental agency or organization may conclude that our activities involve the offer or sale of “securities,” or ownership of “investment securities,” and we may be subject to regulation or registration requirements under various federal laws and related rules. Such regulation or the inability to meet the requirements to continue operations, would have a material adverse effect on our business and operations. We may also face similar issues with various state securities regulators who may interpret our actions as subjecting us to regulation, or requiring registration, under state securities laws, banking laws, or money transmitter and similar laws, which are also an unsettled area or regulation that exposes us to risks. In light of such certainty, any determination that we make regarding the applicability of any law or regulation to our activities would be a risk-based assessment, and would not be binding on any regulatory body or court, and would not preclude legal or regulatory action against us.

Regulatory changes or actions may restrict the use of digital assets or the operation of digital asset networks in a manner that may require us to cease certain or all operations, which could have a material adverse effect on our business, financial condition and results of operations.

Recently, there has been a significant amount of regulatory attention directed toward digital assets, digital asset networks and other industry participants by United States federal and state governments, foreign governments and self-regulatory agencies. For example, as digital assets such as Bitcoin have grown in popularity and in market size, the Federal Reserve Board, U.S. Congress and certain U.S. agencies (e.g., FinCEN, the SEC, the CFTC and the Federal Bureau of Investigation) have begun to examine the operations of the Bitcoin network, Bitcoin users and Bitcoin exchange markets.

In addition, local state regulators such as the Texas State Securities Board, the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth, the New Jersey Bureau of Securities, the North Carolina Secretary of State’s Securities Division and the Vermont Department of Financial Regulation have initiated actions against, and investigations of, individuals and companies involved in digital assets.

Also, in March 2018, the South Carolina Attorney General Office’s Security Division issued a cease-and-desist order against Genesis Mining and Swiss Gold Global, Inc., stating that both companies were to stop doing business in South Carolina and are permanently barred from offering securities in the state in the future since they offered unregistered securities via cloud mining contracts under the South Carolina Uniformed Securities Act of 2005, S.C. Code Ann. § 35-1-101, et seq. (the order against Genesis Mining was subsequently withdrawn).

Further, the North Carolina Secretary of State’s Securities Division issued in March 2018 a Temporary Cease and Desist Order against Power Mining Pool (made permanent pursuant to a Final Order on April 19, 2018), ordering it to cease and desist, among other things, offering “mining pool shares,” which were deemed “securities” under N.C. Gen. Stat. 78A-2(11), in North Carolina until they are registered with the North Carolina Secretary of State or are offered for sale pursuant to an exemption from registration under the North Carolina Securities Act, N.C. Gen. Stat. Chapter 78A.

Additionally, we rely on third-party mining pool service providers for mining revenue payouts from our mining operation, and certain of our potential hosting customers could be involved in, or could issue, cloud mining contracts or mining pool shares, and any regulatory restrictions on their practices could significantly reduce demand for our hosting services. Furthermore, it is possible that laws, regulations or directives that affect digital assets, digital asset transaction processing or blockchain server hosting may change in a manner that may adversely affect our ability to conduct our business and operations in the relevant jurisdiction.

In addition, various foreign jurisdictions either have adopted or may adopt laws, regulations or directives that affect digital assets, digital asset networks and their users and hosting service providers that fall within such jurisdictions’ regulatory scope. Such laws, regulations or directives may conflict with those of the United States, may negatively impact the acceptance of digital assets by users, merchants and service providers outside of the United States and may therefore impede the growth of digital asset use. A number of countries, including India, China, South Korea and Russia, among others, currently have a more restrictive stance toward digital assets and, thereby, have reduced the rate of expansion of digital asset use, as well as digital asset transaction processing, in each of those countries. For example, in January 2018, several media publications reported that a Chinese multiagency government task force overseeing risk in Internet finance issued a notice ordering local authorities to guide the shutdown of digital asset transaction processing in China. However, the People’s Bank of China immediately refuted such reports, indicating that digital asset transaction processing is still permitted in China. As a result of such conflicting positions taken within the Chinese government, a number of digital asset transaction processing operators have moved their operations from China to other jurisdictions in order to build in more regulatory certainty in their operations.

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade digital assets or to exchange digital assets for fiat currency. Ownership of, holding or trading in digital assets may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject digital asset mining companies to additional regulation.

By extension, similar actions by governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the capital stock of digital asset mining companies, including our common stock. Such a restriction could result in us liquidating our digital asset inventory at unfavorable prices and may adversely affect our shareholders. The effect of any regulatory change, either by federal, state, local or foreign governments or any self-regulatory agencies, on us or our potential hosting customers is impossible to predict, but such change could be substantial and may require us or our potential hosting customers to cease certain or all operations and could have a material adverse effect on our business, financial condition and results of operations.

Current and future legislation and rulemaking regarding digital assets may result in extraordinary, non-recurring expenses and could have a material adverse effect on our business, financial condition and results of operations.

Current and future legislation and rulemaking by the CFTC and SEC or other regulators, including interpretations released by a regulatory authority, may impact the manner in which digital assets are treated. For example, digital assets derivatives are not excluded from the definition of “commodity future” by the CFTC. Furthermore, according to the CFTC, digital assets fall within the definition of a commodity under the Commodities Exchange Act (the “CEA”) and as a result, we may be required to register and comply with additional regulations under the CEA, including additional periodic reporting and disclosure standards and requirements. We may also be required to register as a commodity pool operator and to register as a commodity pool with the CFTC through the National Futures Association. If we are required to register with the CFTC or another governmental or self-regulatory authority, the scope of our business and operations may be constrained by the rules of such authority and we may be forced to incur additional expenses in the form of licensing fees, professional fees and other costs of compliance.

The SEC has issued guidance and made numerous statements regarding the application of securities laws to digital assets. For example, on July 25, 2017, the SEC issued a Report of Investigation (the “Report”) which concluded that tokens offered and sold by the Decentralized Autonomous Organization (“DAO”), a digital decentralized autonomous organization and investor-directed venture capital fund for digital assets, were issued for the purpose of raising funds. The Report concluded that these tokens were “investment contracts” within the meaning of Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act, and therefore securities subject to the federal securities laws. In December 2017, the SEC issued a cease-and-desist letter to Munchee Inc., ordering that the company stop its initial coin offering of MUN Tokens on the grounds that it failed to file a registration statement or qualify for an exemption from registration. Similar to the tokens issued by the DAO, the SEC found that the MUN Tokens satisfied the definition of an “investment contract,” and were therefore subject to the federal securities laws. In February 2018, both the SEC and CFTC further reiterated their concerns regarding digital assets in written testimony to the Senate Banking, Housing and Urban Affairs Committee. On March 7, 2018, the SEC released a “Statement on Potentially Unlawful Online Platforms for Trading Digital Assets,” and reiterated that, if a platform “offers trading of digital assets that are securities” and “operates as ‘exchange,’ as defined by the federal securities laws,” the platform must register with the SEC as a national securities exchange or be exempt from registration. The SEC’s statement serves as a notice to operators of any platforms, including secondary market trading platforms, which the SEC is actively monitoring for potentially fraudulent or manipulative behavior in the market for security tokens, as the SEC has cautioned recently in the context of ICOs. On November 16, 2018, the SEC released a “Statement on Digital Asset Securities Issuance and Trading,” and emphasized that market participants must adhere to the SEC’s well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated form or using new technologies, such as blockchain. This has all been followed by additional statements and guidance form the SEC including no-action letters relating to specific blockchain-based projects, and a Framework for “Investment Contract” Analysis of Digital Assets published by the Division of Corporation Finance on April 3, 2019. In an August 2021 interview, SEC Chairman Gensler signaled the SEC is contemplating a robust regulatory regime for digital assets and reiterated the SEC’s position that many digital assets are unregulated securities.

The SEC has been active in asserting its jurisdiction over ICOs and digital assets and in bringing enforcement cases. The SEC has directed enforcement activity toward digital assets, and more specifically, ICOs. In September 2017, the SEC created a new division known as the “Cyber Unit” to address, among other things, violations involving distributed ledger technology and ICOs, and filed a civil complaint in the Eastern District of New York charging a businessman and two companies with defrauding investors in a pair of so-called ICOs purportedly backed by investments in real estate and diamonds (see Securities and Exchange Commission v. REcoin Group Foundation, LLC, et al., Civil Action NO. 17-cv-05725 (E.D.N.Y, filed Sept. 29, 2017)). Subsequently, the SEC has filed several orders instituting cease-and-desist proceedings against (i) Carrier EQ, Inc., d/b/a AirFox and Paragon Coin, Inc. in connection with their unregistered offerings of tokens (see CarrierEQ, Inc., Rel. No. 33-10575 (Nov. 16, 2018) and Paragon Coin, Inc., Rel. No. 33-10574 (Nov. 16, 2018), respectively), (ii) Crypto Asset Management, LP for failing to register a hedge fund formed for the purpose of investing in digital assets as an investment company (see Crypto Asset Management, LP and Timothy Enneking, Rel. No. 33-10544 (Sept. 11, 2018)), (iii) TokenLot LLC for failing to register as a broker-dealer, even though it did not meet the definition of an exchange (see Tokenlot LLC, Lenny Kugel, and EliL. Lewitt, Rel. No. 33-10543 (Sept. 11, 2018)) and (iv) EtherDelta’s founder for failing either to register as a national securities exchange or to operate pursuant to an exemption from registration as an exchange after creating a platform that clearly fell within the definition of an exchange (see Zachary Coburn, Rel. No. 34-84553 (Nov. 8, 2018)).

On June 4, 2019, the SEC filed a complaint in the U.S. District Court for the Southern District of New York against Kik Interactive, Inc. with respect to its September 2017 offering of Kin. According to articles published by various news outlets, the SEC has allegedly issued numerous subpoenas and information requests to technology companies, advisers and individuals involved in the digital asset space and ICOs, as part of a broad inquiry into the digital asset market.

In addition, a number of proposed ICOs have sought to rely on Regulation A and have filed with the SEC a Form 1-A covering a distribution of a digital token. Two such offerings were qualified in July 2019. In addition, some token offerings have been commenced as private securities offerings intended to be exempt from SEC registration. Further, the SEC has yet to approve for listing and trading any exchange-traded products (such as ETFs) holding digital assets. The SEC has taken various actions against persons or entities that have allegedly misused digital assets, engaged in fraudulent schemes (i.e., Ponzi scheme) and/or engaged in the sale of tokens that were deemed securities by the SEC.

Although our activities are not focused on raising capital or assisting others that do so, the federal securities laws are very broad. We cannot provide assurance as to whether the SEC will continue or increase its enforcement with respect to digital assets or ICOs, including taking enforcement action against any person engaged in the sale of unregistered securities in violation of the Securities Act or any person acting as an unregistered investment company in violation of the 1940 Act. Because the SEC has held that certain digital assets are securities based on the current rules and law, we may be required to register and comply with the rules and regulations under federal securities laws. On March 9, 2022, President Biden signed an executive order on cryptocurrencies. While the executive order did not mandate any specific regulations, it instructs various federal agencies to consider potential regulatory measures, including the evaluation of the creation of a U.S. Central Bank digital currency. We cannot be certain as to how future regulatory developments will impact the treatment of digital assets under the law, including, but not limited to, whether digital assets will be classified as a security, commodity, currency and/or new or other existing classification. Such additional regulations may result in extraordinary, non- recurring expenses, thereby materially and adversely affecting an investment in us. Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain or all of our operations. Any such action could have a material adverse effect on our business, financial condition and results of operations.

Federal or state agencies may impose additional regulatory burdens on our business. Changing laws and regulations and changing enforcement policies and priorities have the potential to cause additional expenditures, restrictions, and delays in connection with our business operations.

Federal and state laws and regulations may be subject to change or changes in enforcement policies or priorities, including changes that may result from changes in the political landscape and changing technologies. Future legislation and regulations, changes to existing laws and regulations, or interpretations thereof, or changes in enforcement policies or priorities, could require significant management attention and cause additional expenditures, restrictions, and delays in connection with our business operations.

Increasing scrutiny and changing expectations from investors, lenders, customers, government regulators and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.

Companies across all industries and around the globe are facing increasing scrutiny relating to their ESG policies. Investors, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. In February 2021, the Acting Chair of the SEC issued a statement directing the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings and in March 2021 the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement. The increased focus and activism related to ESG may hinder our access to capital, as investors and lenders may reconsider their capital investment allocation as a result of their assessment of our ESG practices. If we do not adapt to or comply with investor, lender or other industry shareholder expectations and standards and potential government regulations, which are evolving but may relate to the suitable deployment of electric power, or which are perceived to have not responded appropriately to the growing concern for ESG issues, our reputation may suffer, which would have a material adverse effect on our business, financial condition and results of operations.

We may be subject to risks associated with misleading and/or fraudulent disclosure or use by the creators of digital assets.

Generally, we rely primarily on a combination of white papers and other disclosure documents prepared by the creators of applicable digital assets, as well as on our management’s ability to obtain adequate information to evaluate the potential implications of transacting in these digital assets. However, such white papers and other disclosure documents and information may contain misleading and/or fraudulent statements (which may include statements concerning the creators’ ability to deliver in a timely fashion the product and/or service disclosed in their white papers and other disclosure documents) and/or may not reveal any unlawful activities by the creators. Recently, there has been an increasing number of investigations and lawsuits by the SEC and the CFTC involving digital asset creators for fraud and misappropriation, among other charges. Additionally, FinCEN has increased its enforcement efforts involving digital asset creators regarding compliance with anti-money laundering and Know-Your-Customer laws.

To the extent that any of these creators make misleading and/or fraudulent disclosures or do not comply with federal, state or foreign laws, or if we are unable to uncover all material information about these digital assets and/or their creators, we may not be able to make a fully informed business decision relating to our transacting in or otherwise involving such digital assets, which could have a material adverse effect on our business, financial condition and results of operations.

Our interactions with a blockchain may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.

The Office of Financial Assets Control of the U.S. Department of Treasury (“OFAC”) requires us to comply with its sanction program and not conduct business with persons named on its specially designated nationals (“SDN”) list. However, because of the pseudonymous nature of blockchain transactions, we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. Our internal policies prohibit any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling digital assets. In addition, in the future, OFAC or another regulator, may require us to screen transactions for OFAC addresses or other bad actors before including such transactions in a block, which may increase our compliance costs, decrease our anticipated transaction fees and lead to decreased traffic on our network. Any of these factors, consequently, could have a material adverse effect on our business, prospects, financial condition, and operating results.

Moreover, federal law prohibits any U.S. person from knowingly or unknowingly possessing any visual depiction commonly known as child pornography. Recent media reports have suggested that persons have imbedded such depictions on one or more blockchains. Because our business requires us to download and retain one or more blockchains to effectuate our ongoing business, it is possible that such digital ledgers contain prohibited depictions without our knowledge or consent. To the extent government enforcement authorities literally enforce these and other laws and regulations that are impacted by decentralized distributed ledger technology, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all of which could harm our reputation and could have a material adverse effect on our business, prospects, financial condition, and operating results.

Risks Related to Digital Assets

Digital assets exchanges and other trading venues are relatively new and, in some cases, partially unregulated and may therefore be more exposed to fraud and failure.

To the extent that digital asset exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, a reduction in digital asset prices could occur. Digital asset market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, during the past three years, a number of Bitcoin exchanges have been closed due to fraud, business failure or security breaches. Failures of digital asset companies have accelerated in 2022 with the substantial drop in digital assets prices. In many of these instances, the customers of the closed Bitcoin exchanges were not compensated or made whole for the partial or complete losses of their account balances in such Bitcoin exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action. Continued failures of digital asset companies, and resulting customer losses, could create a crisis of confidence in digital assets that jeopardizes the future of the industry, and by extension our business.

Many digital asset exchanges currently do not provide the public with significant information regarding their ownership structure, management teams, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, digital asset exchanges, which may cause the price of bitcoin to decline. For example, in the first half of 2022, each of Celsius, Voyager, and Three Arrows declared bankruptcy, resulting in a loss of confidence among participants in the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, BlockFi Inc. and FTX Trading Ltd (“FTX”), the third largest digital asset exchange by volume at the time, halted customer withdrawals, and, shortly thereafter, FTX and its subsidiaries filed for bankruptcy. Most recently, in January 2023, Genesis Global and certain affiliates filed for bankruptcy.

In response to these events, the digital asset markets, including the market for bitcoin specifically, have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital asset market and in bitcoin. These events have also negatively impacted the liquidity of the digital asset market as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset market continues to be negatively impacted by these events, digital asset prices, including the price of bitcoin, may continue to experience significant volatility and confidence in the digital asset markets may be further undermined. A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce confidence at least in part in digital asset networks and result in greater volatility in bitcoin’s value. Because the value of bitcoin is derived from the continued willingness of market participants to exchange government-issued currency that is designated as legal tender in its country of issuance through government decree, regulation, or law (“fiat” currency) for bitcoin, should the marketplace for bitcoin be jeopardized or disappear entirely, permanent and total loss of the value of bitcoin may result.

We are dependent on the sale of bitcoin that we generate from our self-mining operations to pay any of our expenses that are payable in U.S. Dollars. In that regard, our business is dependent on the existence of bitcoin exchanges, our ability to maintain accounts at those exchanges and the continuation of a liquid market for bitcoin. Our inability to liquidate the bitcoin that we generate would have a material, adverse impact on our liquidity and our business.

Digital asset transactions are irrevocable and, if stolen or incorrectly transferred, digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could have a material adverse effect on our business, financial condition and results of operations.

Typically, digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, control or consent of a majority of the processing power on the applicable network. Once a transaction has been confirmed and verified in a block that is added to the network blockchain, an incorrect transfer of a digital asset or a theft of a digital asset generally will not be reversible and we may not be capable of seeking compensation for any such transfer or theft. Although transfers of any digital assets we hold will regularly be made to or from vendors, consultants, services providers, etc., it is possible that, through computer or human error, or through theft or criminal action, our digital assets could be transferred from us in incorrect amounts or to unauthorized third parties. To the extent that we are unable to seek a corrective transaction with such third party or are incapable of identifying the third party that has received our digital assets through error or theft, we will be unable to revert or otherwise recover our incorrectly transferred digital assets. To the extent that we are unable to seek redress for such error or theft, such loss could have a material adverse effect on our business, financial condition and results of operations.

We may not have adequate sources of recovery if the digital assets held by us are lost, stolen or destroyed due to third-party digital asset services, which could have a material adverse effect on our business, financial condition and results of operations.

Certain digital assets held by us may be a third-party digital asset service. We intend to evaluate the security procedures of any third party service to ensure that its dual authentication security, secured facilities, segregated accounts and cold storage are reasonably designed to safeguard our Bitcoin from theft, loss, destruction or other issues relating to hackers and technological attack. Nevertheless, the security procedures cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by us. In addition, our service providers may have limited liability under their services agreement, which may limit our ability to recover losses relating to our Bitcoin. If such digital assets are lost, stolen or destroyed under circumstances rendering a third party liable to us, it is possible that the responsible third party may not have the financial resources or insurance sufficient to satisfy any or all of our claims against the third party, or have the ability to retrieve, restore or replace the lost, stolen or destroyed digital assets due to governing network protocols and the strength of the cryptographic systems associated with such digital assets. To the extent that we are unable to recover on any of our claims against any such third party, such loss could have a material adverse effect on our business, financial condition and results of operations.

Losses relating to our business may be uninsured, or insurance may be limited.

Our hosting and colocation operations are subject to hazards and risks normally associated with the daily operations of hosting facilities. Currently, we do not have any insurance, except for insurance covering loss of equipment while in transit. Once our operations become more significant, we plan to obtain insurance that is standard for businesses of our nature, including insurance covering business interruption for lost profits, property and casualty, public liability, commercial employee, workers’ compensation, personal property and auto liability. However, until we procure such insurance, we are subject to wide variety of business risks without any insurance to reimburse us for any damages we suffer. However, it may not be possible, either because of a lack of available policies, limits on coverage or prohibitive cost, for us to obtain insurance of any type that would cover losses associated with our digital asset portfolio. In general, we anticipate that certain losses related to our business may be uninsurable, or the cost of insuring against these losses may not be economically justifiable.

Additionally, it may not be possible, either because of a lack of available policies, limits on coverage or prohibitive cost, for us to obtain insurance of any type that would cover losses associated with our digital asset portfolio. In general, we anticipate that certain losses related to our business may be uninsurable, or the cost of insuring against these losses may not be economically justifiable. We have obtained some limited coverage regarding our business, but if an uninsured loss occurs or a loss exceeds policy limits, it could have a material adverse effect on our business, financial condition and results of operations.

The digital assets held by us are not insured. Therefore, a loss may be suffered with respect to our digital assets which is not covered by insurance and for which no person is liable in damages which could adversely affect our operations and, consequently, an investment in us.

The impact of geopolitical, economic or other events on the supply of and demand for digital assets is uncertain, but could motivate large-scale sales of digital assets, which could result in a reduction in the price of such digital asset and could have a material adverse effect on our business, financial condition and results of operations.

As an alternative to fiat currencies that are backed by central governments, digital assets, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services. It is unclear how this supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of digital assets either globally or locally. Large-scale sales of digital assets likely would result in a reduction in the price of the subject digital asset and could have a material adverse effect on our business, financial condition and results of operations.

Digital assets, such as Bitcoin, face significant scaling obstacles that can lead to high fees or slow transaction settlement times and any mechanisms of increasing the scale of digital asset settlement may significantly alter the competitive dynamics in the market.

Digital assets face significant scaling obstacles that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective. Scaling digital assets, and particularly Bitcoin, is essential to the widespread acceptance of digital assets as a means of payment, which is necessary to the growth and development of our business.

Many digital asset networks face significant scaling challenges. For example, digital assets are limited with respect to how many transactions can occur per second. In this respect, Bitcoin may be particularly affected as it relies on the “proof of work” validation, which due to its inherent characteristics may be particularly hard to scale to allow simultaneous processing of multiple daily transactions by users. Participants in the digital asset ecosystem debate potential approaches to increasing the average number of transactions per second that the network can handle and have implemented mechanisms or are researching ways to increase scale, such as “sharding,” which is a term for a horizontal partition of data in a database or search engine, which would not require every single transaction to be included in every single miner’s or validator’s block.

There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of digital asset transactions will be effective, how long they will take to become effective or whether such mechanisms will be effective for all digital assets. There is also a risk that any mechanisms of increasing the scale of digital asset settlements may significantly alter the competitive dynamics in the digital asset market and may adversely affect the value of Bitcoin and the price of our common stock. Any of which could have a material adverse effect on our business, prospects, financial condition, and operating results.

The IRS and certain states have taken the position that digital assets are property for income tax purposes.

In early 2014, the IRS issued basic guidance on the tax treatment of digital assets. The IRS has taken the position that a digital asset is “property” rather than “currency” for tax purposes. Thus, general tax principles applicable to property transactions apply to the acquisition, ownership, use or disposition of digital assets. This overall treatment creates a potential tax liability for, and potential tax reporting requirements applicable to us in any circumstance where we mine or otherwise acquire, own or dispose of a digital asset. In 2019, the IRS issued additional guidance specifically relating to the taxation consequences that could arise from a digital asset hard fork event in which a new unit of digital asset may or may not be received, and released frequently asked questions to address certain digital asset topics such as basis, gain or loss on the sale or exchange of certain kinds of digital assets and how to determine the fair market value of such digital assets. The IRS’s treatment of digital assets as “property” may prevent the widespread adoption of digital assets in retail transactions, due to the need to report each transaction as a separate taxable event and track the tax basis of all digital assets used in a transaction.

There is no guarantee that the IRS will not alter its position with respect to the taxation of digital assets, or that legislation or judicial determinations in the future will not result in a tax treatment of digital assets and transactions in digital assets for U.S. federal and state tax purposes that differs from the treatment described above. You are urged to consult your own tax advisor as to the tax implications of our acquisition, ownership, use and disposition of digital assets. The taxation of digital assets for state, local or foreign tax purposes may not be the same as the taxation of digital assets for U.S. federal income tax purposes.

In addition, under the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”), as of January 1, 2018, “like-kind exchange” treatment does not apply to digital assets. This means that gain from the sale or exchange of digital assets cannot be deferred by undertaking an exchange of one type of virtual currency for another.

Certain states, including New York and New Jersey, generally follow IRS guidance with respect to the treatment of digital assets for state income tax purposes, but it is unclear if other states will do so. Transactions involving digital assets for other goods and services also may be subject to sales and use or similar taxes under barter transaction treatment or otherwise. The treatment of digital assets for state income tax and sales tax purposes may have negative consequences, including the imposition of a greater tax burden on investors in digital assets or a higher cost with respect to the acquisition, ownership and disposition of digital assets generally. In either case, this could have a negative effect on prices in the relevant digital asset exchange market and could have a material adverse effect on our business, financial condition and results of operations.

Foreign jurisdictions also may elect to treat digital assets in a manner that results in adverse tax consequences. To the extent that a foreign jurisdiction with a significant share of the market of digital asset owners or users imposes onerous tax burdens on such owners or users, or imposes sales, use or value added tax on purchases and sales of digital assets for fiat currency, such actions could result in decreased demand for digital assets in such jurisdiction, which could impact the price of digital assets and could have a material adverse effect on our business, financial condition and results of operations.

Changes to, or changes to interpretations of, the U.S. federal, state, local or other jurisdictional tax laws could have a material adverse effect on our business, financial condition and results of operations.

All statements contained herein concerning U.S. federal income tax (or other tax) consequences are based on existing law and interpretations thereof. The tax regimes to which we are subject or under which we operate, including income and non-income taxes, are unsettled and may be subject to significant change. While some of these changes could be beneficial, others could negatively affect our after-tax returns. Accordingly, no assurance can be given that the currently anticipated tax treatment will not be modified by legislative, judicial or administrative changes, possibly with retroactive effect. In addition, no assurance can be given that any tax authority or court will agree with any particular interpretation of the relevant laws.

In 2022, significant changes to U.S. federal income tax laws were proposed, including increasing the U.S. income tax rate applicable to corporations from 21% to 28% and changes implicating information reporting with respect to digital assets. Congress may include some or all of these proposals in future legislation. There is uncertainty regarding whether these proposals will be enacted and, if enacted, their scope, when they would take effect, and whether they would have retroactive effect.

State, local or other jurisdictions could impose, levy or otherwise enforce tax laws against us. Tax laws and regulations at the state and local levels frequently change, especially in relation to the interpretation of existing tax laws for new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future taxes, which could have a material adverse effect on our business, financial condition and results of operations.

Concerns about greenhouse gas emissions and global climate change may result in environmental taxes, charges, assessments or penalties and could have a material adverse effect on our business, financial condition and results of operations.

The effects of human activity on global climate change have attracted considerable public and scientific attention, as well as the attention of the United States and other foreign governments. Efforts are being made to reduce greenhouse gas emissions, particularly those from coal combustion power plants, some of which plants we may rely upon for power. The added cost of any environmental taxes, charges, assessments or penalties levied on such power plants could be passed on to us, increasing the cost to run our hosting facilities. Any enactment of laws or promulgations of regulations regarding greenhouse gas emissions by the United States, or any domestic or foreign jurisdiction in which we conduct business, could have a material adverse effect on our business, financial condition or results of operations.

Latency in confirming transactions on a network could result in a loss of confidence in the network, which could have a material adverse effect on our business, financial condition and results of operations.

Latency in confirming transactions on a network can be caused by a number of factors, such as transaction processors ceasing to support the network and/or supporting a different network. To the extent that any transaction processors cease to record transactions on a network, such transactions will not be recorded on the blockchain of the network until a block is solved by a transaction processor that does not require the payment of transaction fees or other incentives. Currently, there are no known incentives for transaction processors to elect to exclude the recording of transactions in solved blocks. However, to the extent that any such incentives arise (for example, with respect to Bitcoin, a collective movement among transaction processors or one or more transaction processing pools forcing Bitcoin users to pay transaction fees as a substitute for, or in addition to, the award of new Bitcoin upon the solving of a block), transaction processors could delay the recording and verification of a significant number of transactions on a network’s blockchain. If such latency became systemic, and sustained, it could result in greater exposure to double-spending transactions and a loss of confidence in the applicable network, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, increasing growth and popularity of digital assets, as well as non-digital asset related applications that utilize blockchain technology on certain networks, can cause congestion and backlog, and as result, increase latency on such networks. An increase in congestion and backlogs could result in longer transaction confirmation times, an increase in unconfirmed transactions (that is, transactions that have yet to be included in a block on a network and therefore are not yet completed transactions), higher transaction fees and an overall decrease in confidence in a particular network, which could ultimately affect our ability to transact on that particular network and, in turn, could have a material adverse effect on our business, financial condition and results of operations.

Significant or unexpected changes to our transaction processing operations may have a material adverse effect on our business, financial condition and results of operations.

We and our potential customers are engaged in the business of verifying and confirming transactions on a blockchain, also known as transaction processing, or “mining.” We may have to make changes to the specifications of our transaction processing operations for any number of reasons beyond our control (e.g., increased governmental and quasi-governmental regulation of blockchain-related digital assets; changes in methods of validating digital asset transactions; creation of new digital assets; general economic conditions; changes in consumer demographics and public tastes and preferences; and rising energy costs, among other reasons), or we may be unable to develop our transaction processing operations in a manner that realizes those specifications or any form of functioning and profitable transaction processing operations. Furthermore, it is still possible that our transaction processing operations may experience malfunctions, electrical power failure, hacking, cybersecurity breaches or otherwise fail to be adequately developed or maintained. Any of the above risks, which could also impact our potential hosting customers, may have a material adverse effect on our business, financial condition and results of operations.

Currently, we believe there is relatively limited use of digital assets in the retail and commercial marketplace in comparison to relatively sizable use by speculators, thus contributing to price volatility that could adversely affect an investment in our stock.

We believe digital assets have not yet gained widespread acceptance as a means of payment for goods and services by any major retail or commercial outlets. We believe a significant portion of the demand for digital assets is generated by speculators and investors, some of whom may have no knowledge of the inner workings of those assets. Certain of these investors may seek to profit from the short-term or long-term holding of digital assets, and thus, may contribute to digital asset price volatility. A lack of expansion in the use of digital assets in retail and commercial markets, or a contraction of such use, may result in increased price volatility of digital assets or a reduction in the market price of digital assets or in the demand for digital assets which would reduce the demand of our hosting and colocation services or in the value of the digital assets held by us, any of which could have a material adverse effect on our business, financial condition and results of operations.

If the transaction fees for recording digital assets in a blockchain increase, demand for digital assets may be reduced and prevent the expansion of the networks to retail merchants and commercial business, resulting in a reduction in the acceptance or price of digital assets.

As the number of digital assets awarded for solving a block in a blockchain decreases, the incentive for mining participants to contribute processing power to networks will transition from a set reward to transaction fees. In order to incentivize mining participants to continue to contribute processing power to the networks, the network may transition from a set reward to transaction fees earned upon solving for a block. If mining participants demand higher transaction fees to record transactions in a blockchain or a software upgrade automatically charges fees for all transactions, the cost of using digital assets may increase and the marketplace may be reluctant to accept digital assets as a means of payment. Existing users may be motivated to switch from one digital asset to another or back to fiat currency. Decreased use and demand for digital assets may adversely affect their value and result in a reduction in the value of our common stock.

We may diversify our business by mining or investing in additional digital assets which could require significant investment or expose us to trading risks.

The field of digital assets is constantly expanding with over 4,000 digital assets in existence as of January 2021. We intend to evaluate the potential for mining or investing in existing, new and alternative digital assets. To the extent we elect to commence activities to generate digital assets, we would be required to invest our assets either to obtain mining equipment configured to generate digital assets based on a “proof of work” protocol or to post “stakes” to generate digital assets based on a “proof of stake” protocol. In addition, or in the alternative, we may trade our digital assets for other digital assets on centralized or decentralized exchanges. Optimization of such trades may vary depending on the exchange on which the trade is conducted because we may not have access to all exchanges on which such trades are available. Further, trading on centralized and decentralized exchanges may expose us to additional risks if such exchanges experience breaches of security measures, system errors or vulnerabilities, software corruption, hacking or other irregularities. Any new digital asset obtained through generation or trading may be more volatile or fail to increase in value compared to digital assets we currently hold. As a result, any investment in different digital assets may not achieve our goals, may be viewed negatively by analysts or investors and may negatively affect our revenues and results of operations.

If the award of new digital assets and/or transaction fees for solving blocks is not sufficiently high to incentivize transaction processors, such processors may reduce or cease expending processing power on a particular network, which could negatively impact the utility of the network, reduce the value of its digital assets and have a material adverse effect on our business, financial condition and results of operations.

As the number of digital assets rewarded to transaction processors for validating blocks in a network decreases, the incentive for transaction processors to continue contributing processing power to the network may shift toward transaction fees. Such a shift may increase the transaction fees on a network. Higher transaction fees may reduce the utility of a network for an end user, which may cause end users to reduce or stop their use of that network. In such case, the price of the relevant digital asset may decline substantially and could go to zero. Such reduced price and demand for, and use of, the relevant digital asset and network, either as it applies to our transaction processing services or to those of our potential hosting customers, may have a material adverse effect on our business, financial condition and results of operations.

As more processing power is added to a network, our relative percentage of total processing power on that network is expected to decline absent significant capital investment, which has an adverse impact on our ability to generate revenue from processing transactions on that network and could have a material adverse effect on our business, financial condition and results of operations.

Processing power on networks has been increasing rapidly over time while the rewards and transaction fees available on those networks tends to decline over time. In order to grow or maintain the revenue we generate from processing transactions on such networks, we are required to invest significant capital to acquire new computer servers, expand our power capacity and otherwise increase our effective processing power on such networks. In the event we are unable to invest sufficient capital to grow or maintain the level of our processing power on a network relative to the total processing power of such network, our revenue from the applicable network will decline over time and as a result, it could have a material adverse effect on our business, financial condition and results of operations.

In addition, a decrease in the price of computer servers may result in an increase in transaction processors, which may lead to more competition for fees in a particular network. In the event we are unable to realize adequate fees on a network due to increased competition, our revenue from the applicable network will decline over time and in turn, it could have a material adverse effect on our business, financial condition and results of operations.

We may only have limited control over our mining operation.

Our mining operation comprises blockchain mining technologies that depend on a network of computers to run certain software programs to solve complex transactions in competition with other mining operations and to process transactions. Because of this less centralized model and the complexity of our mining operation, we have limited control over the success of our mining operations. While we participate in mining pools to combine our mining operations with other mining participants to increase processing power to solve blocks, there can be no assurance that such pools will adequately address this risk.

Our reliance on third-party mining pool service providers for our mining revenue payouts may have a negative impact on our operations.

We may utilize third party mining pools to receive our mining rewards from a given network. Mining pools allow mining participants to combine their processing power, which increases the 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. 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 or other digital asset 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 power 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 a 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.

Malicious actors or botnet may obtain control of more than 50% of the processing power on the Bitcoin or other network.

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 on the Bitcoin or other network, it may be able to alter the blockchain on which the Bitcoin or other network and most Bitcoin or other digital asset transactions 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 could not generate new Bitcoin or digital assets or transactions using such control. The malicious actor could “double-spend” its own Bitcoin or digital assets (i.e., spend the same Bitcoin or digital assets in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin or other network, or the Bitcoin or other community did not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible.

Although there are no known reports of malicious activity or control of the Bitcoin blockchain achieved through controlling over 50% of the processing power on the network, it is believed that certain mining pools may have exceeded the 50% threshold. The possible crossing of the 50% threshold indicates a greater risk in that a single mining pool could exert authority over the validation of Bitcoin transactions. To the extent that the Bitcoin or other digital asset ecosystems, including developers and administrators of mining pools, do not act to ensure greater decentralization of Bitcoin or other digital asset mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin or other network will increase, which may adversely affect an investment us.

Transaction processing operators may sell a substantial amount of digital assets into the market, which may exert downward pressure on the price of the applicable digital asset and, in turn, could have a material adverse effect on our business, financial condition and results of operations.

Transaction processing requires the investment of significant capital for the acquisition of hardware, leasing or purchasing space, involves substantial electricity costs and requires the employment of personnel to operate the data facilities, which may lead transaction processing operators to liquidate their positions in digital assets to fund these capital requirements. In addition, if the reward of new digital assets for transaction processing declines, and/or if transaction fees are not sufficiently high, profit margins for transaction processing operators may be reduced, and such operators may be more likely to sell a higher percentage of their digital assets. Whereas it is believed that individual operators in past years were more likely to hold digital assets for more extended periods, the immediate selling of newly transacted digital assets by operators may increase the supply of such digital assets on the applicable exchange market, which could create downward pressure on the price of the digital assets and, in turn, could have a material adverse effect on our business, financial condition and results of operations.

To the extent that the profit margins of digital asset mining operations are not high, mining participants are more likely to sell their earned Bitcoin, which could constrain Bitcoin prices.

Over the past few years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation application-specific integrated circuit (“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 to acquire this hardware, to lease operating space (often in data centers or warehousing facilities), and to pay the costs of electricity and labor to operate the mining farms. As a result, professionalized mining operations are of a greater scale than prior mining operations 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 digital assets. To the extent the price of digital assets decline and such profit margin is constrained, professionalized mining participants are incentivized to more immediately sell digital assets earned from mining operations, whereas it is believed that individual mining participants in past years were more likely to hold newly mined digital assets for more extended periods. The immediate selling of newly mined digital assets greatly increases the trading volume of the digital assets, creating downward pressure on the market price of digital asset rewards. The extent to which the value of digital assets 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 digital assets 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 digital asset prices. Lower digital asset prices could result in further tightening of profit margins for professionalized mining operations creating a network effect that may further reduce the price of digital assets until mining operations with higher operating costs become unprofitable forcing them to reduce mining power or cease mining operations temporarily. Such circumstances could have a material adverse effect on our business, prospects or operations and potentially the value of Bitcoin and any other digital assets we mine or otherwise acquire or hold for our own account.

The “halving” of rewards available on the Bitcoin network, or the reduction of rewards on other networks, has had and in the future could have a negative impact on our ability to generate revenue as our customers may not have an adequate incentive to continue transaction processing and customers may cease transaction processing operations altogether, which could have a material adverse effect on our business, financial condition and results of operations.

Under the current protocols governing the Bitcoin network, the reward for validating a new block on that network is cut in half from time to time, which has been referred to in our industry as the “halving.” When the Bitcoin network was first launched, the reward for validating a new block was 50 Bitcoin. In 2012, the reward for validating a new block was reduced to 25 Bitcoin. In July 2016, the reward for validating a new block was reduced to 12.5 Bitcoin, and in May 2020, the reward was further reduced to 6.25 Bitcoin. The next halving for the Bitcoin blockchain is currently anticipated to occur in April 2024 at block height 840,000. In addition, other networks may operate under rules that, or may alter their rules to, limit the distribution of new digital assets. We, and to our knowledge, our potential hosting customers, currently rely on these rewards to generate a significant portion of our total revenue. If the award of digital assets for solving blocks and transaction fees are not sufficiently high, neither we nor our customers may have an adequate incentive to continue transaction processing and may cease transaction processing operations altogether, which as a result may significantly reduce demand for our hosting services. As a result, the halving of available rewards on the Bitcoin network, or any reduction of rewards on other networks, would have a negative impact on our revenues and may have a material adverse effect on our business, financial condition and results of operations.

While Bitcoin prices have historically increased around these halving events, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining rewards. If a corresponding and proportionate increase in the price of Bitcoin does not follow future halving events, the revenue we earn from our mining operations would see a decrease, which could have a material adverse effect on our results of operations and financial condition.

We expect to sell most or all of our digital assets to pay for costs and expenses, which will reduce the amount of digital assets we hold, thus preventing us from recognizing any gain from the appreciation in value of the digital assets we have sold and may sell in the future.

We expect to sell most or all of the digital assets that we earn from mining or hosting to pay for costs and expenses we incur, capital expenditures and other working capital, irrespective of then-current digital asset prices. When we sell a digital asset, we are unable to benefit from any future appreciation in the underlying value of that digital asset. However, we also avoid a loss on the digital asset to the extent it declines in price after the sale. Consequently, our digital assets may be sold at a time when the price is lower than it otherwise might be in the future, which could reduce the gain we might have realized on the sale of that digital asset at a different time.

Digital assets are subject to extreme price volatility. The value of digital assets is dependent on a number of factors, any of which could have a material adverse effect on our business, financial condition and results of operations.

We expect that a large portion of our revenue will come from processing blockchain transactions in the form of Bitcoin. We believe the value of digital assets related to our business is dependent on a number of factors, including, but not limited to:

	·		global digital asset supply;
	·		global digital asset demand, which can be influenced by the growth of retail merchants’ and commercial businesses’ acceptance of digital assets as payment for goods and services, the security of online digital asset exchanges and digital wallets that hold digital assets, the perception that the use and holding of digital assets is safe and secure, and the regulatory restrictions on their use;
	·		investors’ expectations with respect to the rate of inflation of fiat currencies;
	·		investors’ expectations with respect to the rate of deflation of digital assets;
	·		cyber theft of digital assets from online wallet providers, or news of such theft from such providers or from individuals’ online wallets;
	·		the availability and popularity of businesses that provide digital asset-related services;
	•		fees associated with processing a digital asset transaction;
	·		changes in the software, software requirements or hardware requirements underlying digital assets;
	·		changes in the rights, obligations, incentives, or rewards for the various participants in digital asset mining;
	·		interest rates;
	·		currency exchange rates, including the rates at which digital assets may be exchanged for fiat currencies;
	·		fiat currency withdrawal and deposit policies on digital asset exchanges and liquidity on such exchanges;
	·		interruptions in service or failures of major digital asset exchanges;
	·		investment and trading activities of large investors, including private and registered funds, that may directly or indirectly invest in digital assets;
	·		momentum pricing;
	·		monetary policies of governments, trade restrictions, currency devaluations and revaluations;
	·		regulatory measures, if any, that affect the use of digital assets, restrict digital assets as a form of payment, or limit the purchase of digital assets;
	·		global or regional political, economic or financial events and conditions;

	·		expectations that the value of digital assets will change in the near or long term. A decrease in the price of a single digital asset may cause volatility in the entire digital asset industry and may affect other digital assets. For example, a security breach that affects investor or user confidence in Bitcoin or another digital asset may affect the industry as a whole and may also cause the price of other digital assets to fluctuate; or
	·		with respect to Bitcoin, increased competition from other forms of digital assets or payments services.

We are dependent on the sale of bitcoin that we generate from our self-mining operations to pay any of our expenses that are payable in U.S. Dollars. We generally liquidate our bitcoin within 2-3 weeks of receipt in order to pay operational expenses. Therefore, we do not expect to incur material losses on bitcoin that we hold due to the short holding period. However, the volatility of bitcoin prices makes it more likely that we experience losses from holding bitcoin, which could have a material, adverse impact on our liquidity and our business.

Even if shareholders are able to hold their common stock for the long-term, their common stock may never generate a profit, since digital asset markets have historically experienced extended periods of flat or declining prices, in addition to sharp fluctuations. Investors should be aware that there is no assurance that Bitcoin or other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of digital asset payments by mainstream retail merchants and commercial businesses will continue to grow. If the price of Bitcoin or other digital assets declines, we expect our profitability to decline.

Any loss or destruction of a private key required to access a digital asset of ours is irreversible. We also may temporarily lose access to our digital assets.

Digital assets are each accessible and controllable only by the possessor of both the unique public key and private key associated with the digital asset, wherein the public and private keys are held in an offline or online digital wallet. To the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is available, we will be unable to access the applicable digital asset associated with that private key and the private key cannot be restored. As a result, any digital assets associated with such key could be irretrievably lost. Any loss of private keys relating to digital wallets used to store the applicable digital assets could have a material adverse effect on our business, financial condition and results of operations.

Currently, we hold the majority of our digital currencies in cold storage to reduce the risk of malfeasance, but this risk cannot be eliminated. In order to minimize risk, we have established processes to manage wallets that are associated with our digital currency holdings. We utilize several layers of threat reduction techniques, including: (i) the use of hardware wallets to store sensitive private key information; (ii) performance of transactions offline; and (iii) offline generation storage and use of private keys. There can be no assurances that any processes we have adopted or will adopt in the future are or will be secure or effective, and we would suffer significant and immediate adverse effects if we suffered a loss of our digital currency due to an adverse software or cybersecurity event.

We are presently evaluating several third-party custodial wallet alternatives with multi-signature enterprise storage solution to safeguard our digital assets from theft, loss, destruction or other issues relating to hackers and technological attack. There can be no assurance that we will utilize such services, as other new options may develop in the future, and if a custodial wallet is used there can be no assurance that such services will be more secure than those that we presently employ.

Intellectual property rights claims may adversely affect the operation of any or all of the networks.

Third parties may assert intellectual property rights claims relating to the operation of digital assets and the holding and transfer of such assets. Regardless of the merit of any intellectual property rights claims or other legal action, any threatened action that reduces confidence in the long-term viability of any or all of the networks or other similar peer-to-peer networks, or in the ability of end-users to hold and transfer digital assets, may have a material adverse effect on our business, results of operations and financial condition. Additionally, a meritorious intellectual property rights claim could prevent us and other end-users from holding or transferring the digital assets, which could have a material adverse effect on our business, financial condition and results of operations.

A soft or hard fork on a network could have a material adverse effect on our business, financial condition and results of operations.

The rules governing a network’s protocol are subject to constant change and, at any given time, there may be different groups of developers that can modify a network’s protocol. As network protocols are not sold and their use does not generate revenues for their development teams, the core developers are generally not compensated for maintaining and updating the network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop networks and the core developers may lack the resources to adequately address emerging issues with network protocols. Although the Bitcoin and other leading networks are currently supported by core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the Bitcoin or another network protocol and the core developers and open-source contributors are unable to address the issues adequately or in a timely manner, the networks may be adversely affected.

Any individual can download the applicable network software and make any desired modifications that alter the protocols and software of the network, which are proposed to developers, users and transaction processors on the applicable network through software downloads and upgrades, typically posted to development forums such as GitHub.com. Such proposed modifications can be agreed upon, developed, adopted and implemented by a substantial majority of developers, transaction processors and users, which, in such event, results in a “soft fork” or “hard fork” on the relevant network. A “soft fork” occurs when an updated version of the validating protocol is still “backwards compatible” with previous versions of the protocol. As a result, non-upgraded network participants with an older version of the validating protocol will still recognize new blocks or transactions and may be able to confirm and validate a transaction; however, the functionality of the non-upgraded network participant may be limited. Thus, non-upgraded network participants are incentivized to adopt the updated version of the protocol. The occurrence of a soft fork could potentially destabilize transaction processing and increase transaction and development costs and decrease trustworthiness of a network.

A “hard fork” occurs when the updated version of the validating protocol is not “backwards compatible” with previous versions of the protocol, and therefore, requires forward adoption by network participants in order to recognize new blocks, validate and verify transactions and maintain consensus on the relevant blockchain. Since the updated version of the protocol is not backwards compatible, a hard fork can cause the relevant blockchain to permanently diverge into two separate blockchains on a network. For example, in the case of Bitcoin, a hard fork created two new digital assets: Bitcoin Cash and Bitcoin Gold. The value of a newly created digital asset from a hard fork (“forked digital asset”) may or may not have value in the long-run and may affect the price of other digital assets if interest and resources are shifted away from previously existing digital assets to the forked digital asset. The value of a previously existing digital asset after a hard fork is subject to many factors, including the market reaction and value of the forked digital asset and the occurrence of other soft or hard forks in the future. As such, the value of certain digital assets could be materially reduced if existing and future hard forks have a negative effect on their value.

If a soft fork or hard fork occurs on a network, which we or our hosting customers are processing transactions or hold digital assets in, we may be required to upgrade our hardware or software in order to continue our transaction processing operations, and there can be no assurance that we may be able to make such upgrades. A soft fork or hard fork in a particular digital asset that we process could have a negative effect on the value of that digital asset and could have a material adverse effect on our business, financial condition and results of operations.

The digital assets held by us may be subject to loss, damage, theft or restriction on access, which could have a material adverse effect on our business, financial condition or results of operations.

There is a risk that some or all of the digital assets held or hosted by us could be lost, stolen or destroyed. We believe that the digital assets held or hosted by us and our mining operation will be an appealing target to hackers or malware distributors seeking to destroy, damage or steal our digital assets. Our security procedures and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of one of our employees, or otherwise, and, as a result, an unauthorized party may obtain access to our digital asset accounts, private keys, data or digital assets. Although we implement a number of security procedures with various elements such as two-factor verification, segregated accounts and secured facilities and plan to implement the maintenance of data on computers and/or storage media that is not directly connected to, or accessible from, the internet and/or networked with other computers, or (“cold storage”), to minimize the risk of loss, damage and theft, and we update such security procedures whenever reasonably practicable, we cannot guarantee the prevention of such loss, damage or theft, whether caused intentionally, accidentally or by an act of God.

Additionally, outside parties may attempt to fraudulently induce our employees to disclose sensitive information in order to gain access to our infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. As technological change occurs, the security threats to our Bitcoin will likely adapt and previously unknown threats may emerge. Our ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of our digital assets. To the extent we are unable to identify and mitigate or stop new security threats, our digital assets may be subject to theft, loss, destruction or other attack.

Any of these events could expose us to liability, damage our reputation, reduce customer confidence in our services and otherwise have a material adverse effect on our business, financial condition and results of operations. Furthermore, we believe that as our assets grow, we may become a more appealing target for security threats, such as hackers and malware. If an actual or perceived breach of our digital asset accounts occurs, the market perception of our effectiveness could be harmed.

Our ability to adopt technology in response to changing security needs or trends poses a challenge to the safekeeping of our digital assets.

The history of digital asset exchanges has shown that exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard their digital assets. We currently keep all of our digital assets in a cold storage wallet in our name to reduce the risk of malfeasance, but this risk cannot be eliminated. In order to minimize risk, we have established processes to manage wallets that are associated with our digital currency holdings. We utilize several layers of threat reduction techniques, including: (i) the use of hardware wallets to store sensitive private key information; (ii) performance of transactions offline; and (iii) offline generation storage and use of private keys. There can be no assurances that any processes we have adopted or will adopt in the future are or will be secure or effective, and we would suffer significant and immediate adverse effects if we suffered a loss of our digital currency due to an adverse software or cybersecurity event.

The digital assets held by us are not subject to FDIC or SIPC protections; cash we maintain at financial institutions may exceed deposit insurance limits.

We do not hold our digital assets with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”), and to date, neither the FDIC nor the SIPC has extended any such protections to depositors of digital assets. Accordingly, our digital assets are not subject to the protections by FDIC or SIPC member institutions and any loss of our digital assets could have a material adverse effect on our business, financial condition and results of operations.

We maintain our cash at financial institutions, often in balances that exceed federally insured limits. We maintain the majority of our cash and cash equivalents in accounts at banking institutions in the United States that we believe are of high quality. Cash held in these accounts sometimes exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we could lose all or a portion of amounts held in excess of such insurance limitations. The FDIC recently took control of three such banking institutions, Silicon Valley Bank on March 10, 2023, Signature Bank on March 12, 2023 and First Republic Bank on May 1, 2023. While we did not have an account at any of these three banks, in the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position. Our ability to open accounts at certain financial institutions is limited by the policies of such financial institutions to not accept clients that are in the crypto industry.

We may not be able to maintain our competitive position as digital asset networks experience increases in total network hash rate.

As the relative market prices of a digital asset, such as Bitcoin, increases, more companies are encouraged to mine for that digital asset and as more miners are added to the network, its total hash rate increases. In order for us to maintain its competitive position under such circumstances, we must increase our total hash rate by acquiring and deploying more mining machines, including new miners with higher hash rates. There are currently only a few companies capable of producing a sufficient number of machines with adequate quality to address the increased demand. If we are not able to acquire and deploy additional miners on a timely basis, our proportion of the overall network hash rate will decrease and we will have a lower chance of solving new blocks which will have an adverse effect on our business and results of operations.

To the extent that any miners cease to record transactions in solved blocks, transactions that do not include the payment of a transaction fee will not be recorded on the blockchain until a block is solved by a miner who does not require the payment of transaction fees. Any widespread delays in the recording of transactions could result in a loss of confidence in that digital asset network, which could adversely impact an investment in us.

To the extent that any miners cease to record transactions in solved blocks, such transactions will not be recorded on the blockchain. Currently, there are no known incentives for miners to elect to exclude the recording of transactions in solved blocks; however, to the extent that any such incentives arise (e.g., a collective movement among miners or one or more mining pools forcing Bitcoin users to pay transaction fees as a substitute for or in addition to the award of new Bitcoins upon the solving of a block), actions of miners solving a significant number of blocks could delay the recording and confirmation of transactions on the blockchain.

Any systemic delays in the recording and confirmation of transactions on the blockchain could result in greater exposure to double-spending transactions and a loss of confidence in certain or all digital asset networks, which could have a material adverse effect on our business, prospects, financial condition, and operating results.

Our interactions with a blockchain may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distribute ledger technology.

Risks Related to Ownership of Our Common Stock

An active trading market for our common stock may never develop or be sustained.

Our common stock is quoted on the Pink OTC Market under the symbol “BMNR.” However, despite being quoted, there is currently no established market for our common stock. We cannot assure you that an active trading market for our common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our common stock will develop or be maintained, your ability to sell your shares of our common stock when desired or the prices that you may obtain for your shares.

The trading price of our common stock may be volatile, and you could lose all or part of your investment.

The trading price of our common stock is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our common stock as you might be unable to sell your shares at or above the price you paid for those shares. Factors that could cause fluctuations in the trading price of our common stock include the following:

	·		price and volume fluctuations in the overall stock market from time to time;
	·		volatility in the trading prices and trading volumes of technology stocks;
	·		volatility in the price of Bitcoin and other digital assets;
	·		changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
	·		sales of shares of our common stock by us or our stockholders;
	·		failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
	·		the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections;
	·		announcements by us or our competitors of new products, features, or services;
	·		the public’s reaction to our press releases, other public announcements and filings with the SEC;
	·		rumors and market speculation involving us or other companies in our industry;
	·		actual or anticipated changes in our results of operations or fluctuations in our results of operations;
	·		actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
	·		litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
	·		developments or disputes concerning our intellectual property or other proprietary rights;
	·		announced or completed acquisitions of businesses, products, services or technologies by us or our competitors;
	·		new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
	·		changes in accounting standards, policies, guidelines, interpretations or principles;
	·		any significant change in our management; and
	·		general economic conditions and slow or negative growth of our markets.

In addition, in the past, following periods of volatility in the overall market and in the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters.

As of December 1, 2023, our executive officers, directors, significant shareholders and affiliated persons and entities collectively, beneficially owned approximately 56.5% of our outstanding common stock and 100% of our Series A Convertible Preferred Stock, and as a result control 62.4% of the votes on any matter submitted to a vote of shareholders. As a result, these persons and entities have the ability to exercise control over most matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other stockholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change in control of our company that other stockholders may view as beneficial.

Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and, if and when we are no longer a “smaller reporting company,” will require that we have such a system of internal controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities.

Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline.

We expect to raise capital to fund our business by issuing additional shares of common stock and/or securities convertible into common stock. Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders. We may sell common stock, convertible securities and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted. New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of our common stock.

We depend on key personnel and could be harmed by the loss of their services because of the limited number of qualified people in our industry.

Because of our small size, we require the continued service and performance of our management team, all of whom we consider to be key employees. Competition for highly qualified employees in the data storage industry is intense. Our success will depend to a significant degree upon our ability to attract, train, and retain highly skilled directors, officers, management, business, financial, legal, marketing, sales, and technical personnel and upon the continued contributions of such people. In addition, we may not be able to retain our current key employees. The loss of the services of one or more of our key personnel and our failure to attract additional highly qualified personnel could impair our ability to expand our operations and provide service to our customers.

We currently do not have employment agreements with most of our management and are not currently paying them any compensation. As a result, management’s only incentive for continuing to work for us is due to their stock ownership in us. Our management will not be able to work for us indefinitely without being paid. We plan to enter into employment contracts with management, and begin paying them compensation, once we are able to raise capital to fund our business.

Substantial future sales of shares of our common stock could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market following the completion of the merger, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. Many of our existing equity holders have substantial unrecognized gains on the value of the equity they hold, and therefore they may take steps to sell their shares or otherwise secure the unrecognized gains on those shares.

Our common stock market price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business.

The trading market for our common stock may depend in part on the research and reports that securities or industry analysts publish about us or our business. Currently, no analysts cover our common stock. A failure to obtain analyst coverage of our common stock may mean that our price may never achieve levels that we think are fair and that our trading volume never achieves levels that are sufficient to attract additional investor interest.

Even if one or more analysts begin to cover our common stock, analysts’ estimates are based upon their own opinions and are often different from the estimates or expectations of management. Analysts could downgrade our common stock or publish inaccurate or unfavorable research about our business, which would likely cause the price of our securities to decline. If few securities analysts commence coverage of us, or if one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our securities could decrease, which might cause the price and trading volume of our common stock to decline.

An inability to obtain analyst coverage for our common stock, and expected gains in our stock price and trading volume, will impair our ability to raise capital to finance the growth of our business, which could have a material adverse effect on or business and stock price.

We will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.

As a public company quoted in the United States, we will incur significant additional legal, accounting and other expenses. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and any exchange on which we list our shares, may increase legal and financial compliance costs and make some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts, we fail to comply with new laws, regulations and standards, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.

Failure to comply with these rules might also make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events would also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management.

We do not intend to pay dividends for the foreseeable future.

We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment.

Item 1B. Unresolved Staff Comments

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Properties

We have entered into an agreement with Telecommunications Services of Trinidad & Tobago Limited (“TSTT”), the largest and oldest telecom company in Trinidad, to co-locate up to 125 800 kw containers for hosting digital asset miners. TSTT has up to 93 potential locations for co-location of our containers. Under the agreement, we have the option, but not obligation, to co-locate containers at our own pace. We pay a fixed amount per container, plus the actual electricity costs incurred by our containers in the amount billed to TSTT by the local utility without any markup. The agreement provides that our hosting containers will be billed for electricity usage at the local utility’s standard rates, which is the greater of 3.5 cents per kwh or 75% of the declared reserve capacity, which is equal to the customer’s highest expected monthly kilovolt-ampere demand at $7.40. The term of the agreement expires on October 14, 2031. However, we have the right to terminate our agreement with TSTT at any time that the price for electricity consumption exceeds $0.05 per kwh. Also, both parties have the right to terminate the agreement on one month notice to the other party in either the third or sixth year of the term.

We have entered into a hosting agreement with West Indian Mining Company Limited (“WIMCO”) to lease one hosting container, with a capacity for 192 miners, until August 31, 2024. The Company reimburses WIMCO for its actual cost of electricity, but does not pay a hosting fee.

We have entered into an oral agreement with a third party in Trinidad to host 56 miners at their location on an at will basis. We pay a flat rate of $0.06 per kwh for the electricity used by our miners.

We entered into a hosting agreement with ROC Digital Mining I LLC (“ROC”) dated April 7, 2023, under which we have the right to locate a hosting container on ROC’s property in Pecos, Texas. The initial term of the agreement is from May 1, 2023 to April 30, 2024, and we have the option to extend the term of the agreement for two additional one year terms after seeing the terms of the power agreement available to the property for the next year. Under the agreement, we pay ROC $500 per month, plus our pro rata share of internet service to the property and insurance, plus the cost of any electricity used by our hosting container at the rate of $0.03991 per kwh for the first year of the agreement.

We entered into a hosting agreement with Soluna SW, LLC (“Soluna”) to host 1,050 miners at its hosting facility in Murray, Kentucky. Under the agreement, we are obligated to reimburse Soluna for the actual cost of the electricity used by the Company’s machines and pay a hosting fee equal to 50% of the net profit generated by the machines each month. The hosting fee is payable in bitcoin. The hosting facility has an electricity cost of $0.025 per kwh and guarantees uptime of 83% per week. The agreement has a term of 18 months.

The Company’s president allows the Company to utilize the office space of an affiliated company for its executive offices without charge to the Company.

Item 3. Legal Proceedings

The Company is subject to litigation claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters in accordance with the requirements of GAAP. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.

The Company is not a party to any legal proceedings at this time.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Price for Equity Securities

Our common stock is quoted on the OTCQX under the symbol “BMNR” The following table sets forth the quarterly high and low daily close for our common stock for the two years ended August 31, 2023. The bids reflect inter dealer prices without adjustments for retail mark-ups, mark-downs or commissions and may not represent actual transactions. There is a very limited market for the Company’s common stock.

	Price Range
	High		Low
Year ended August 31, 2023
First Quarter	$	1.30	$	0.70
Second Quarter	$	1.20	$	0.00
Third Quarter	$	1.15	$	0.45
Fourth Quarter	$	3.19	$	0.22
Year ended August 31, 2022
First Quarter	$	5.49	$	2.22
Second Quarter	$	3.85	$	0.41
Third Quarter	$	3.74	$	1.34
Fourth Quarter	$	2.70	$	0.71

The over the counter market does not impose listing standards or requirements, does not provide automatic trade executions and does not maintain relationships with quoted issuers. A company traded on the over the counter market may face loss of market makers and lack of readily available bid and ask prices for its stock and may experience a greater spread between the bid and ask price of its stock and a general loss of liquidity with its stock. In addition, certain investors have policies against purchasing or holding over the counter market. Both trading volume and the market value of our securities have been, and will continue to be, materially affected by the trading on the over the counter market.

Holders

At November 30, 2023, the Company had 49,665,649 outstanding shares of common stock and 160 shareholders of record.

Dividends

Holders of common stock are entitled to receive dividends as may be declared by the Company’s Board. The Company’s Board is not restricted from paying any dividends but is not obligated to declare a dividend. No dividends have ever been declared, and it is not anticipated that dividends will be paid in the foreseeable future. Any indebtedness the Company incurs in the future may also limit its ability to pay dividends. Investors should not purchase the Company’s common stock with the expectation of receiving cash dividends.

Recent Sales of Unregistered Securities

During the fourth quarter of the fiscal year covered by this report we issued shares of common stock in the following unregistered transactions:

	·	In August 2023, the Company issued 150,000 shares of restricted common stock to Lori Love. The shares were issued as compensation for her services as a director. These shares vest pro rata over a fifteen month period commencing on August 31, 2023. As of August 31, 2023, 10,000 shares had vested.

	·	On August 31, 2023, the Company issued 71,429 shares of common stock to Chris Moses, our Executive Vice President for Client Relations and Power Acquisitions, for executive compensation.

Other than the securities issued in the Unit Offering, all of the securities were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

We did not repurchase any securities in the fourth quarter of the fiscal year covered by this report.

Item 6. Selected Financial Data

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the condensed financial statements and notes thereto included elsewhere in this Form 10-K. All information presented herein is based on the Company’s fiscal year, which ends August 31. Unless otherwise stated, references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.

Overview

Since July 2021, our business has been as a blockchain technology company that is building out industrial scale digital asset mining, equipment sales and hosting operations. The Company’s primary business is hosting third-party equipment used in mining of digital asset coins and tokens, specifically Bitcoin, as well as self-mining for its own account. Our state-of-the-art facilities will be specifically designed and constructed for housing advanced mining equipment. Our data centers will provide power, racks, proprietary thermodynamic management (heat dissipation and airflow management), redundant connectivity, 24/7 security, as well as software which provide infrastructure management and custom firmware that boost performance and energy efficiency.

Our digital asset mining operation is focused on the generation of digital assets by solving complex cryptographic algorithms to validate transactions on specific digital asset network blockchains, which is commonly referred to as “mining.” Mining requires the use of specialized computers equipped with application-specific integrated circuit (ASIC) chips (known as “miners”) to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) in exchange for digital asset rewards (to date, only bitcoin). Whether we are hosting our client’s computers or mining for our own account with our own computers, the miners participate in “mining pools” organized by “mining pool operators” in which we or our clients share mining power (known as “hash rate”) with the hash rate generated by other miners participating in the pool to earn digital asset rewards. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool. Fees are paid to the mining pool operator to cover the costs of maintaining the pool. The pool uses software that coordinates the pool members’ mining power, identifies new block rewards, and records how much hash rate each participant contributes to the pool. Pools typically pay rewards in two different ways: as a percentage of the total reward received by the mining pool each day based on each pool participant’s proportionate share of hashing power provided that day (the “Actual Reward Method”); or based on the theoretical reward the pool participant should have received each day based on its hashing power contributed to the pool each day times the difficulty index (the “Expected Reward Method”). We only use mining pools that pay rewards under the Expected Reward Method. Even though we plan to effect our self-mining operations in data centers that we own, we reserve the right to operate miners in third-party data centers when we receive advantageous terms and/or do not have sufficient capacity in our own data centers.

Our digital asset self-mining activity competes with a myriad of mining operations throughout the world to complete new blocks in the blockchain and earn the reward in the form of an established unit of a digital asset. Revenue from digital asset mining and hosting third party digital asset miners are impacted by volatility in bitcoin prices, as well as increases in the Bitcoin blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Gross profits from digital asset mining are primarily impacted by the cost of electricity to operate the miners and to a lesser extent by other operating costs. While we expect to sell or exchange a portion of the digital assets we mine to fund our growth strategies or for general corporate purposes, we reserve the right to hold our digital assets as a long-term investment.

The primary factors that will impact future hosting revenues include: (i) the price of bitcoin, since hosting revenues are primarily a percentage of bitcoin mined by clients; (ii) the completion of operational hosting facilities, as potential hosting clients have been reluctant to sign contracts prior to the date the Company has a fully operational hosting facility; and (iii) the availability of attractive electricity prices, since power usage is the primary marginal cost for any mining operation.

The primary factors that will impact proprietary mining revenues include: (i) the price of bitcoin; (ii) the completion of operational facilities to provide us with a cost-effective facility to operate in; (iii) the availability of attractive electricity prices, since power usage is the primary marginal cost for any mining operation; and (iv) the availability of mining equipment suitable for the Company’s immersion hosting environment at attractive prices and available capacity in the Company’s hosting facilities.

Revenues from cryptocurrency mining, whether derived from hosting clients or from proprietary mining, are impacted significantly by volatility in Bitcoin prices, as well as increases in the Bitcoin blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Below are changes in key metrics effecting the profitability of mining Bitcoin during the year ended August 31, 2023:

	As of August 31, 2023	As of August 31, 2022	Percent Change

Network hash rate	368.924 EH/s	219.86 EH/s	67.80%
Difficulty index	55.61 trillion	30.98 trillion	79.54%
Bitcoin market price	$25,931.47	$20,049.76	29.33%

The primary factors that will impact resales of mining equipment include the availability of equipment at attractive prices and the number of participants willing to enter the mining business or expand their existing operations, which is highly correlated to the margin from mining, as determined by the market price of bitcoin and prevailing energy costs. Also, our resales of mining equipment will be impacted by the existence of hosting capacity with attractive electricity rates in our hosting operations.

Results of Operations

Comparison of Results of Operations for Years Ended August 31, 2023 and 2022.

Revenues

During the year ended August 31, 2023, the Company generated $645,278 in revenue, compared to $427,669 of revenue in the year ended August 31, 2022.

During the year ended August 31, 2023, the Company generated $389,222 in Bitcoin revenue from self-mining digital assets, compared to $9,325 revenue in the year ended August 31, 2022. At August 31, 2023, the Company owned 472 miners, of which only 280 were deployed for self-mining. The number of undeployed miners was higher than normal at the end of the period as a result of miners that were being transitioned to new hosting locations, miners that were being transitioned from air-cooled to immersion cooled environment, and miners that were offline due to maintenance issues. Mining revenue should be higher in future periods as many of the undeployed miners are deployed into new hosting environments. Mining revenues in the year ended August 31, 2023 were adversely impacted by delays in opening the Company’s first hosting facilities in Trinidad and Pecos, Texas. The Trinidad facility was completed in October 2022, but its opening was delayed pending resolution of a dispute between our co-location partner in Trinidad and the electricity company in Trinidad over the price that will be charged for electricity provided to our hosting operations. The dispute has been resolved and the site became operational in October 2023. In the interim, the Company entered into a hosting agreement with a third party in Trinidad to host 192 machines until August 31, 2024, and is hosting an additional 56 machines with another party in Trinidad on an at will basis, both of which provide competitive electricity rates.

The Company also entered into a joint venture with a third party to open a hosting facility in Pecos, Texas, which was expected to open by December 31, 2022. Under the joint venture, the Company has the right to locate one immersion container at the site for its proprietary use. However, the opening was delayed as a result of a request from the utility provider for a substantial additional retainer. In April 2023, the joint venture entered into a new agreement with the utility that resolved the dispute, and the site became fully operational in June 2023. The Company has located 96 machines at the site, of which 75 were fully operational as of October 31, 2023.

During the year ended August 31, 2023, the Company generated $244,036 in revenue from equipment sales, compared to $394,700 in revenue in the year ended August 31, 2022. The revenue from equipment sales in the year ended August 31, 2023 were primarily derived from the following transactions:

	·	In October 2022, the Company sold four hosting containers to a joint venture that is constructing a hosting facility in Texas for $1,200,000. The purchase price is payable pursuant to a promissory note bearing interest at 5% per annum, and is paid by 41 equal monthly payments of $31,204 commencing December 30, 2022.

	·	In August 2022, the Company sold two hosting containers to a private party in Trinidad for $960,000. After a down payment of $50,000, the balance of the purchase price is payable pursuant to a promissory note bearing interest at 7.5% per annum, and is paid by 24 equal monthly payments of $40,949.62 commencing September 30, 2022. On February 1, 2023, the Company modified this agreement in conjunction with its entry into a new hosting agreement with the party, under which the Company agreed that the remaining principal balance of the note was $731,472, and that the note would be converted into an interest only note until August 31, 2024, at which time all principal and interest due is payable in full. In addition, the Company agreed to allow the note obligor to repay the note principal at a 10% discount.

	·	In June 2023, the Company sold a total of 34 Antminer S-19 miners in two transactions for gross proceeds of $70,000 cash or bitcoin.

Under the guidelines of ASC 606, the Company reported revenue from equipment sales on October 2022 and August 2022, which were vendor financed by the Company, under the installment sale method, under which the Company reports its gross profit on the sales as payments are received from the purchaser. As of February 1, 2023, the Company reached an agreement with the obligor under the $910,000 note to convert the note into an interest only note commencing as of February 1, 2023, with a balloon payment being due at maturity on August 31, 2024, an agreement that the principal balance on the note was $731,472, and an agreement to offset note payments due for December 2022, January 2023 and the interest only payment due for February 2023 against amounts due the obligor under a separate hosting agreement. The Company received all payments due on this note during the period. One effect of the agreement with the obligor is to materially reduce any deferred revenue associated with the sale, as the note is scheduled to receive interest only payments until August 31, 2024. As a result, the Company expects revenue from these two equipment sales to be lower in future periods.

Under the guidelines of ASC 606, the Company reported revenue from the June 2023 equipment sales under the completed sale method.

See Note 5. to the financial statement for further detail on both notes.

During the year ended August 31, 2022, the revenue from equipment sales was generated from a sale to the Company’s first hosting client of 72 Antminer T-17's and 25 Whatsminer M31S. The terms of the sale were a cash payment of $168,750 and the execution of a note by the purchaser for $168,750, payable with interest at 10% in two installments, one in the amount of $84,375 due on April 15, 2022 and a second installment of $84,375 in principal and all accrued interest due on May 15, 2022. Under the guidelines of ASC 606, the Company reported revenue from this equipment sale under the completed sale method.

In future periods, the Company expects to generate additional revenues from the resale of certain hosting equipment, primarily containers and transformers, and of miners in “buy/host” transactions, in which the Company sells miners already installed in its hosting facilities to buyers that simultaneously execute a hosting agreement for the purchased miners, and in some cases additional miners.

During the year ended August 31, 2023, the Company generated $12,022 in revenue from hosting, compared to $23,644 in revenue from hosting in the year ended August 31, 2022. In October 2022, the Company reached an agreement to terminate its only hosting client at the time and repurchased the miners which it had previously sold to the hosting client. In June 2023, the Company signed two new hosting clients. In the current market environment, the price of ASIC miners has fallen to the point that we believe self-mining is more profitable than hosting third party miners, however we will pursue hosting opportunities on a selective basis. While the Company still sees good opportunities to acquire mining equipment at attractive prices, the price of mining equipment has recently increased with the recent increase in the price of Bitcoin.

The primary factors that will impact our revenues in subsequent periods are described in the “—Overview” above.

Cost of Sales

Cost of sales related to Bitcoin hosting and mining revenue was $9,098 for hosting and $326,630 for mining, respectively in the year ended August 31, 2023, compared to $6,527 for hosting and $194,765 for mining, respectively, in the year ended August 31, 2022. Cost of sales normally includes electricity, utilities, facilities costs, depreciation and supplies. Major components of cost of sales include rent to house mining and hosting equipment in temporary facilities, electricity, and supplies. The Company believes that cost of sales as a percentage of revenues were greater in the year ended August 31, 2023 than what it expects to incur in future periods. Cost of sales in the year ended August 31, 2023 were inflated by costs associated with the setup and maintenance of temporary hosting facilities while our permanent hosting facility was being completed that we determined not to capitalize. Furthermore, our temporary hosting facilities carried electricity costs that were somewhat higher than the costs that we expect to incur in our permanent facilities.

The table below describes the average cost of mining each bitcoin for the years ended August 31, 2023 and 2022, and the total energy usage and cost per each kilowatt hour ("KWH") utilized within both our facilities.

	For the Year Ended
Cost of Revenues - Analysis of costs to mine one bitcoin (per bitcoin amounts are actual)	August 31, 2023		August 31, 2022
Cost of Mining
Cost of energy per bitcoin mined	$	17,243.32	$	19,517.97
Other direct costs of mining - non energy utilities per bitcoin mined		1,733.86		–
Cost to mine one bitcoin	$	18,977.18	$	19,517.97

Average revenue of each bitcoin mined	$	24,626.13	$	28,458.06
Cost of mining one bitcoin as % of average bitcoin mining revenue		77.06%		68.59%

Statistics
Total bitcoin mined		15.44066548		0.32856039
Bitcoin mining revenue	$	380,243.84	$	9,350.19
Total miners - as of the periods ended		472		23
Total MWHs utilized		4.59		0.10
Total energy expense -	$	266,248.34	$	6,412.83
Cost per KWH	$	0.0580	$	0.0613
Energy expense as % of bitcoin mining revenue, net		70.02%		68.59%
Other direct costs of mining - non energy utilities - ($ in thousands)	$	26,772.00	$	–

Power prices are the most significant cost driver for our locations, and energy costs represented 70.02% and 68.59% as expressed as a percentage of bitcoin mining revenues during the years ended August 31, 2023 and 2022, respectively.

Energy prices can be highly volatile and global events (including the war in Ukraine and the resulting natural gas shortage) have caused fuel prices, and to a lesser extent power prices, to fluctuate widely over the past year. All of our sites are currently subject to variable prices and market rate fluctuations with respect to wholesale power costs over the long-term. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates. The average power prices we paid in our facilities for the years ended August 31, 2023 and 2022 was $0.0580 and $0.0613 per kilowatt hour, respectively.

Cost of sales related to sales of mining equipment was $87,080 for the year ended August 31, 2023, compared to $355,407 for the year ended August 31, 2022. Cost of sales during the year ended August 31, 2022 consisted of the purchase price of equipment sold, plus shipping and value added tax on the equipment. Cost of sales from equipment sales in the year ended August 31, 2023 were materially lower as a result of the fact that most of the equipment sales in that period were reported under the installment sales method under the guidelines of ASC 606.

Since we are in the early stages of setting up our infrastructure to generate higher levels of revenues, we expect that our cost of sales as a percentage of revenue from hosting or mining for our own account will be higher than we expect to incur when we achieve sufficient economies of scale by deploying more miners. In future periods, the largest component of our cost of sales will consist of electricity costs.

Operating Expenses

During the year ended August 31, 2023, the Company incurred $2,657,152 in operating expenses, compared to $1,585,154 in operating expenses during the year ended August 31, 2022. Major components of operating expenses for the 2023 period as compared to the 2022 period were:

	Year ended			Year ended		Percentage
	August 31, 2023			August 31, 2022		Change %

General and administrative expenses	$	293,989		$	227,597		29.2%
Depreciation		470,705			–		N/A
Professional fees		456,322			856,925		-46.7%
Related party compensation		1,309,663			489,096		167.8%
Impairment of fixed assets		122,950			–		N/A
Gain from sale of digital currencies		(21,682	)		–		N/A
Impairment of cryptocurrency		3,523			11,535		-69.5%
Total operating expenses	$	2,635,470		$	1,585,154		66.2%

The increase in operating expenses in the fiscal year ended August 31, 2023 as compared to the fiscal year ended August 31, 2022 is primarily attributable to increased general and administrative expenses, depreciation, and related party compensation in 2023 as compared to 2022, partially offset by a decrease in professional fees over the 2022 period. Included in operating expenses in the year ended August 31, 2023 was $1,309,663 in non-cash expenses due to the issuance of common stock for professional services and to related parties as compensation, as compared to $856,724 in the year ended August 31, 2022. We also incurred $122,950 in impairment expenses in the year ended August 31, 2023 to write-down certain mining equipment to current market prices. Additionally, we incurred $3,523 in impairment expenses in the year ended August 31, 2023 on our cryptocurrency holdings due to the temporary decline in the price of Bitcoin we were holding, as compared to an impairment expense of $11,535 in the year ended August 31, 2022, which was offset by gains from the sale of digital currencies of $21,682 in the year ended August 31, 2023, as compared to $-0- in the year ended August 31, 2022. The Company expects that operating expenses will trend materially higher in future periods as the Company begins paying regular compensation to existing officers and directors, hires additional employees, and incurs other costs associated with the commencement of operations.

Other Income (Expense)

During the year ended August 31, 2023, the Company incurred ($51,801) in other expenses, as compared to other expenses of ($297,049) in the year ended August 31, 2022. Other income (expense) in the year ended August 31, 2023 was comprised of interest expense of ($97,460), other income of $16,939 and interest income of $28,720, as compared to ($291,048) of interest expenses during the year ended August 31, 2022. The decrease in interest expense in fiscal 2023 is due to a decrease in the average amount borrowed by the Company under its line of credit in fiscal 2023 compared to fiscal 2022.

Net Income (Loss)

As a result of the foregoing, during the year ended August 31, 2023, the Company incurred a net loss of ($2,464,801), or ($0.05) per share, as compared to a net loss of ($2,005,233) or ($0.05) per share during the year ended August 31, 2022. The increase in the Company’s net loss in the year ended August 31, 2023, compared to the year ended August 31, 2022, is attributable to the factors discussed above.

Liquidity and Capital Resources

As of August 31, 2023, the Company had $270,547 in cash on hand. During the year ended August 31, 2023 the Company had a net loss of $2,464,801.

Cash flows used in operating activities were $809,715 for the year ended August 31, 2023 compared to cash flows used of $1,629,243 for the year ended August 31, 2022. The decrease in cash used in operating activities for fiscal 2023 compared to fiscal 2022 is primarily attributable to a material decrease in the operating loss in 2023 compared to 2022 after excluding non-cash items in both periods, which include depreciation, stock based compensation and impairment of fixed assets and changes in balance sheet accounts.

Cash flows used in investing activities were $612,288 for the year ended August 31, 2023 compared to cash flows used in investing activities of $2,767,306 for the year ended August 31, 2022. The decrease in net cash used during fiscal 2023 period compared to the same period in 2022 is solely due to a decrease in cash used to purchase equipment.

Cash flows provided by financing activities were $1,300,000 for the year ended August 31, 2023 compared to cash flows provided by financing activities of $4,570,363 for the year ended August 31, 2022. The decrease in cash flows provided by financing activities in fiscal 2023 is attributable to $1,812,500 received from the sale of equity securities during the period ended August 31, 2022 compared to $-0- in 2023, as well as a reduction in 2023 in net amounts received under related party loans, which decreased from $2,757,861 in the year ended August 31, 2022 to $1,300,000 in the year ended August 31, 2023.

Through August 31, 2022, a significant component of the Company’s current liquidity was derived from the LOC Agreement with IDI. The LOC Agreement was initially entered into on July 22, 2021, and was amended and restated in its entirety on August 4, 2021, September 29, 2021, March 30, 2022 and June 24, 2022. On August 31, 2022, the Company and IDI agreed to convert all amounts then due under the LOC Agreement into shares of Series A Convertible Preferred Stock with a stated value equal to the principal and interest due under the LOC Agreement, which resulted in the issuance of 303,966 shares of Series A Preferred Stock for $3,039,662 due thereunder

On October 19, 2022, the Company entered into a new Line of Credit Agreement with IDI (the “2022 LOC Agreement”), under which the Company has the right to borrow up to $1,000,000 to finance the purchase of equipment necessary for the operation of the Company’s business, and related working capital. Loans under the 2022 LOC Agreement accrue interest at twelve percent (12%) per annum, compounded on a 30/360 monthly basis until the loans have been repaid in full. Effective May 13, 2023, the Company and IDI amended the 2022 LOC Agreement. As amended, the 2022 LOC Agreement allows the Company to up to $1,750,000 thereunder until December 1, 2023. Each draw request is subject to the approval of IDI in its sole discretion. As amended, all principal and interest due under the 2022 LOC Agreement are due and payable on December 1, 2024. As of December 1, 2023, the amount borrowed under the 2022 LOC Agreement was $1,625,000.

The Company believes that cash on hand, amounts that may borrow under the 2022 LOC Agreement, and expected receipts from the sale of equipment, and revenue from self-mining and hosting will provide it with sufficient liquidity to fund its operations for the next 12 months. The Company expects to receive approximately $4,572 in interest payments monthly from the sale of two immersion containers in August 2022, and approximately $31,000 per month from the sale of four immersion containers to a joint venture in which the Company will be both lender to and equity investor. As of August 31, 2023 the Company owned 472 miners, most of which the Company intends to use for self-mining. Other sources of revenue that the Company expects to receive include equity distributions from the ROC Digital joint venture, and self-mining revenue from an additional 1,194 miners purchased after the end of the fiscal year. The Company does not budget to include any proceeds from the exercise of its outstanding warrants because it is not able to predict when or if the market price of its common stock will exceed the exercise price of its warrants.

Nevertheless, while the Company does not need additional capital to maintain operations, it will need additional capital to expand its digital asset hosting and mining business, and take advantage of opportunities in the marketplace that currently exist due to the recent decline in digital asset prices. Therefore, the Company has engaged an investment banker and is pursuing additional capital-raising alternatives, including the potential issuance of common stock in a private placement, or the issuance of convertible notes or preferred stock. There is no assurance that the Company will be able to raise additional capital or that the terms of any capital raise are not dilutive to current shareholders or carry other terms that are unfavorable to the Company and its shareholders.

Bitcoin Holdings

At August 31, 2023, we held approximately 4.99 Bitcoin with a fair market value of $129,469 on the balance sheet. All of the Bitcoin were classified as “Cryptocurrencies” on the balance sheet. The quoted market value of a single Bitcoin as of August 31, 2023 was approximately $25,931.47. During the year ended August 31, 2023 we incurred an impairment charge on cryptocurrency of $3,523 due to the decline in the market price of cryptocurrency.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Company’s financial condition, changes in financial condition, and results of operations, liquidity or capital resources.

Related Party Transactions

Starting in 2020, Coral Investment Partners, LP, a partnership controlled by Erik Nelson, agreed to make loans to the Company from time to time pursuant to a demand promissory note that bore interest at 24% per annum. The amount due at August 31, 2020 was principal of $50,447 and interest of $1,558. The amount due of principal of $87,447 and interest of $19,476. Was repaid in full in the quarter ended August 31, 2021.

On July 22, 2021, the Company entered into a LOC Agreement with Innovative Digital Investors Emerging Technology, L.P., a limited partnership controlled by Jonathan Bates, our Chairman, and Raymond Mow, our chief financial officer and a director. The LOC Agreement was amended and restated in its entirety on August 4, 2021, September 29, 2021, March 30, 2022 and June 24, 2022 (as amended and restated, the “LOC Agreement”). On August 31, 2022, the Company and IDI agreed to convert all amounts then due under the LOC Agreement into shares of Series A Convertible Preferred Stock with a stated value equal to the principal and interest due under the LOC Agreement, which resulted in the issuance of 303,966 shares of Series A Preferred Stock for $3,039,662 due thereunder.

On October 19, 2022, the Company entered into a new Line of Credit Agreement (the “2022 LOC Agreement”) with IDI. The 2022 LOC Agreement provides for loans of up to $1,000,000 at the request of the Company to finance the purchase of equipment necessary for the operation of the Company’s business, and related working capital. Loans under the 2022 LOC Agreement accrue interest at twelve percent (12%) per annum, compounded on a 30/360 monthly basis until the loans have been repaid in full. Effective May 13, 2023, the Company and IDI amended the 2022 LOC Agreement. As amended, the 2022 LOC Agreement allows the Company to up to $1,750,000 thereunder until December 1, 2023. Each draw request is subject to the approval of IDI in its sole discretion. As amended, all principal and interest due under the 2022 LOC Agreement are due and payable on December 1, 2024. As of December 1, 2023, the amount borrowed under the 2022 LOC Agreement was $1,625,000.

Critical Accounting Policies

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our condensed financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We describe in this section certain critical accounting policies that require us to make significant estimates, assumptions and judgments. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the condensed financial statements. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the preparation of the condensed financial statements. For further information on the critical accounting policies, see Note 1 of the Condensed Financial Statements.

Basis of Presentation

The accompanying condensed financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of condensed financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.

Use of Estimates

The preparation of condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements. The most significant estimates relate to the calculation of stock-based compensation, collectability of notes receivable, useful lives and recoverability of long-lived assets, depreciation methods, income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these condensed financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. There have been no material changes to the Company’s accounting estimates since the Company’s condensed financial statements for the fiscal year ended August 31, 2022.

Revenue Recognition

On July 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Results for reporting periods beginning after January 1, 2018, are presented under ASC 606.

Revenues from digital currency mining – General

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

	·	Step 1: Identify the contract with the customer;
	·	Step 2: Identify the performance obligations in the contract;
	·	Step 3: Determine the transaction price;
	·	Step 4: Allocate the transaction price to the performance obligations in the contract; and
	·	Step 5: Recognize revenue when the Company satisfies a performance obligation.

Step 1: The Company enters into a contract with a bitcoin mining pool operator (i.e., the customer) to provide computing power to the mining pools. The Company only utilizes pool operators that determine awards under the Full Pay-Per-Share method. The contracts are terminable at any time by either party without penalty and the Company’s enforceable right to compensation only begins when the Company starts providing computing power to the mining pool operator (which occurs daily at midnight Universal Time Coordinated (UTC)). Mining revenue generally consists of two parts, (1) the block reward (current bitcoin block reward is 6.25 bitcoin) paid by the network to the miner and (2) the transaction fees paid by the users to the miner. When a mining pool successfully finds a block, it is awarded all of the transaction fees in that block and the reward from the network. In exchange for providing computing power to the pool, the Company is entitled to an award of bitcoin equal to the expected reward per block over the measurement period of midnight-to-midnight UTC time. The Company is also entitled to an aware of transaction fees per block based on the average of the transaction fees over the latest 144 blocks, each of which is about 10 minutes, and the total of 144 blocks equals one day. At the end of each day that runs from midnight-to-midnight UTC time, the pool operator calculates the pool participant’s expected block reward and transaction fees for the day based on the computing power provided by the pool participant that day, less net digital asset fees due to the mining pool operator over the measurement period. Applying the criteria per ASC 606-10-25-1, the contract arises at the point that the Company provides computing power to the mining pool operator, which is the beginning of each contract day at midnight UTC (contract inception), because customer consumption is in tandem with daily delivery of the computing power.

Step 2: In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

	·	The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

	·	The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Based on these criteria, the Company has a single performance obligation in providing computing power (i.e., hashrate) to the mining pool operator (i.e., customer). The performance obligation of computing power is fulfilled daily over-time, as opposed to a point in time, because the Company provides the hashrate throughout the day and the customer simultaneously obtains control of it and uses the asset to produce bitcoin. The Company has full control of the mining equipment utilized in the mining pool and if the Company determines it will increase or decrease the processing power of its machines and/or fleet (i.e., for repairs or when power costs are excessive) the computing power provided to the customer will be reduced.

Step 3: The transaction consideration the Company earns is non-cash digital consideration in the form of bitcoin, which the Company measures at fair value on the date earned at the daily closing price, which is not materially different from the fair value at contract inception, which is the daily opening price. According to the customer contract, daily earnings are calculated from midnight-to-midnight UTC time, and the sub-account balance is credited to the Company’s account shortly thereafter.

The transaction consideration the Company earns is all variable since it is dependent on the daily computing power provided by the Company, as well as other factors outside the control of the Company, such as the difficulty index of the bitcoin network. The Company’s bitcoins earned through the contractual payout formula is not known until the Company’s computational hashrate contributed over the daily measurement period is fulfilled over-time daily between midnight-to-midnight UTC time. The Company’s expected amount of the global network transaction fee rewards earned are calculated at the end of each transactional day (midnight to midnight UTC time). There are no other forms of variable considerations, such as discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items.

The Company fully constrains all variable consideration as a result of ASC 606-10-32-11 and 12 because the amount of consideration is highly susceptible to factors outside of our control as defined by the Company’s customer’s payout methodology. The variable consideration is constrained until the Company receives confirmation of the amount, usually via settlement of the fractional share of block reward and transaction fee in the Company’s digital wallet (i.e., at that point, the variability is resolved and there is no longer the reasonable possibility of significant reversal of revenue). Before settlement occurs, estimation of the variable consideration to which the Company is entitled, which depends on inputs unknowable to the Company, carries the risk of a significant revenue reversal from mis-estimation. Settlement of consideration typically occurs within 24 hours after the end of each day.

Step 4: The transaction price is allocated to the single performance obligation upon verification for the provision of computing power to the mining pool operator. There is a single performance obligation (i.e., computing power or hashrate) for the contract; therefore, all consideration from the mining pool operator is allocated to this single performance obligation.

Step 5: The Company’s performance is complete in transferring the computing power over-time (midnight to midnight UTC) to the customer and the customer obtains control of that asset.

In exchange for providing computing power, the Company is entitled to the expected bitcoin awards earned over the measurement period, plus the expected global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The transaction consideration the Company receives is non-cash consideration in the form of bitcoin. The Company measures the bitcoin at the closing U.S. dollar spot rate at the end of the date earned (midnight UTC). However, this accounting convention does not result in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently applied in all periods presented.

There are no deferred revenues or other liability obligations recorded by the Company since there are no payments in advance of the performance. At the end of the 24 hour “midnight-to-midnight” period, there are no remaining performance obligations.

During the period ending August 31, 2023, the Company utilized one mining pool for its self-mining operations.

Revenues from Hosting

The Company provides energized space to customers who locate their equipment within the Company’s co-hosting facility. The equipment generating the hosting revenue is owned by the customer. The Company gives hosting customers the option of having all mining proceeds paid into a cold wallet address in the Company’s name, which case the Company pays the hosting client its share of mining awards on a daily basis, or having all mining awards sent to an account of the customer, in which case the Company bills the customer monthly for any hosting fee that is contingent on the amount of the client’s award. All performance obligations are achieved simultaneously by providing the hosting environment for the customers’ operations. Hosting revenues consist of amounts billed in U.S. dollars for electricity and other fees, and a percentage of cryptocurrency generated by the client’s hosting activities. With regard to hosting revenues that are billed in U.S. dollars, revenues are recorded at the time of invoicing. With regard to hosting revenues that are based on a percentage of cryptocurrency generated by the customer, revenues are recorded based on the Company’s share of cryptocurrency received from the mining pool on the date of receipt or invoicing.

During the period ending August 31, 2023, the Company’s hosting revenue was derived from two hosting customers.

Revenues from the sale of mining equipment

The Company records revenue from the resale of mining equipment it has purchased. Revenue for the sale of mining equipment is recognized under the guidelines of ASC 606.

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On August 31, 2023, and August 31, 2022, the Company’s cash equivalents totaled $270,547 and $392,550, respectively.

Cryptocurrency

Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses, if the price of cryptocurrency increases is not permitted. During the year ended August 31, 2023, the Company recorded an impairment charge of $3,523 due to a reduction in the quoted price of cryptocurrency.

Cryptocurrency earned by the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of digital currencies are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting.

The Company holds its cryptocurrencies in a cold storage wallet account in its name, and not with a custodian or other intermediary. The Company has an account with Gemini Trust Company, LLC, which is a qualified custodian regulated by the New York Department of Financial Services. Currently, the Company does not store cryptocurrencies at Gemini, and only transfers cryptocurrencies that it desires to liquidate to its account at Gemini immediately prior to the liquidation. The Company uses Gemini’s multi-signature feature for account access. We do not store any digital assets at Gemini. The Company also seeks to minimize the risk of a failure of any bitcoin exchange by opening accounts at more than one exchange. In July 2023, the Company established a relationship with BitGo Trust, a well-known Bitcoin Custodian. The Company intends to use BitGo for a significant amount of custody moving forward.

Stock-based Compensation

The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB ASC for disclosure about stock-based compensation. This section requires a public entity to measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which service is provided. No compensation cost is recognized for equity instruments for which service is not provided or rendered.

Related party transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. In accordance with ASC 850, the Company’s condensed financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of the condensed financial statements.

Net Loss per Share

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by ASC Topic 260, “Earnings per Share.” Basic earnings per common share calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. As of August 31, 2023 there were no common stock equivalents that were dilutive.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the condensed financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between depreciation which is deductible for tax purposes prior to being deductible for book purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future taxable income.

From time to time, the Company may have differences in computing the book and tax bases of property and equipment; reserves for bad debts; capitalized overhead included in inventories; bonus plan payables, and accrued wages to shareholders/employees. Deferred tax expense or benefit is the result of the changes in the deferred tax assets, net of the valuation reserve, and liabilities.

The Company accounts for income taxes in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 740 (“FASB ASC 740”), Income Taxes, which clarifies the accounting and disclosure requirements for uncertainty in tax positions. It requires a two-step approach to evaluate tax positions and determine if they should be recognized in the condensed financial statements. The two-step approach involves recognizing any tax positions that are “more likely than not” to occur and then measuring those positions to determine if they are recognizable in the condensed financial statements. Management regularly reviews and analyzes all tax positions and has determined that no uncertain tax positions requiring recognition have occurred.

In general, the Company’s income tax returns are subject to examination by the taxing authorities for three years after they were filed. The Company has not filed any tax returns.

Recent Accounting Pronouncements

All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 8. Condensed Financial Statements and Supplementary Data

Our condensed financial statements and related notes required by this item are set forth as a separate section of this Report. See Part V, Item 15 of this Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer, with the assistance of management, conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of August 31, 2023. These controls are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such information is accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.

(b)

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of August 31, 2023 based on the framework in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of August 31, 2023 based on those criteria.

Our internal control over financial reporting is a process designed under the supervision of our Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our condensed financial statements for external reporting purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of condensed financial statements in accordance with GAAP, and that receipts and expenditure are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the condensed financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim condensed financial statements will not be prevented or detected on a timely basis.

(c)

Changes in Internal Control Over Financial Reporting

During the fourth quarter of 2023, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations Over Internal Controls

Management, including our Principal Executive Officer and Principal Financial Officer, does not expect that disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are no resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance Directors and Executive Officers

Our directors and executive officers and their ages at November 30, 2023, are listed in the following table:

Name	Age	Title
Jonathan Bates	53	Chairman of the Board and Chief Executive Officer
Erik S. Nelson	56	President and Director
Raymond Mow	57	Chief Financial Officer and Director
Seth Bayles	43	Corporate Secretary and Director
Michael Maloney	38	Director
Ryan Ramnath	30	Chief Operating Officer
Lori Love		Director

Jonathan Bates has served as our Chairman of the Board since July 2021. With more than 25 years of financial industry experience, Mr. Bates has spent his career analyzing the interrelations of a vast number of different markets. He has developed a deep understanding of institutional trading environments and multi-asset portfolios is a critical resource to the operations he oversees. In addition to his role as chairman of the Company, Mr. Bates is also the Chief Investment Officer and General Partner of Progression Asset Management (an affiliate of Integrated Advisors Network, LLC) since January 2019, and its subsidiary, Innovative Digital Investors, LLC, which is the general partner of Innovative Digital Investors Emerging Technology L.P., a private investment fund. From November 2017 to January 2019, Mr. Bates served as a Managing Partner of Boustead Capital Partners, LLC, registered broker dealer. Mr. Bates has twice served as a Managing Director of J.P. Morgan Securities, LLC, from 2009 to July 2012 and from July 2015 to November 2017. In between his stints at J.P. Morgan, from July 2012 to July 2015, Mr. Bates served as a Director at Barclays Wealth U.S. Over the course of his career, Mr. Bates has, at different times, held the Series 7, 9, 10 and 65 licenses. At Innovative Digital, Mr. Bates has helped drive several private companies from early stages to public markets in both the U.S. and Canada. We believe that Mr. Bates is highly qualified to serve on our board due to his knowledge and experience technology startups, which should be instrumental as the Company grows its business and pursues a listing of its common stock on the NASDAQ Capital Market or the NYSE. Mr. Bates graduated from the University of Texas at Austin in 1992 with a degree in Business Finance.

Erik S. Nelson has served as our Chief Executive Officer and a director since July 2020. In addition to his role as Chief Executive Officer of the Company, Mr. Nelson is also the Corporate Secretary and a member of the Board of Nocera, Inc. since 2011, and was previously its President from 2017 to 2019. Mr. Nelson was the sole officer (CEO, President, and CFO) and sole Director of Vinings Holdings, Inc. (October 2019 – February 2021) Mr. Nelson is also the President of Coral Capital Advisors, LLC. An advisory services firm founded in 1995 that provides services to privately held and publicly traded companies. Since September 2012, Mr. Nelson has been President of Mountain Share Transfer, LLC, an SEC registered stock transfer agent. Mr. Nelson is a graduate of the University of Colorado (1989) with a Bachelor of Science in Business Administration degree, with an emphasis in Finance. We believe that Mr. Nelson is highly qualified to serve on our board due to his extensive experience with the public markets and companies.

Mountain Share Transfer and Erik Nelson consented to an SEC Order in 2015 related to failure to file an updated correct TA-1 Form and other administrative violations and disclosure matters of the Transfer Agent, Mountain Share Transfer (Administrative Proceeding file no. 3-16378, 34 Act Rel. no. 74226).

Raymond Mow has served as our Chief Financial Officer and a director since July 2021. With more than 30 years of financial industry experience, Mr. Mow has spent his career managing and analyzing fixed income mutual funds and institutional portfolios. He has developed a broad knowledge of various asset classes as well as interpreting and forecasting domestic and international economic measures. In addition to his role as Chief Financial Officer of the Company, Mr. Mow also serves as Chief Investment Officer and Chief Compliance Officer of Progression Asset Management, as position he has held since January 2020, and Portfolio Manager of its subsidiary, Innovative Digital Investors, LLC, which is the general partner of Innovative Digital Investors Emerging Technology L.P., a private investment fund specializing in equity investments in cutting edge technology companies. From March 2018 to March 2019, Mr. Mow held the position of Managing Director of Fixed Income at First Foundation Advisers overseeing $2.3 billion. As a member of the investment policy committee, Mr. Mow collaborated on asset allocation policy and portfolio construction. From 1995-2018, Mr. Mow was Senior Portfolio Manager at Highmark Capital Management, overseeing $2 billion in fixed income assets. Mr. Mow currently holds a Series 65 license. Mr. Mow graduated in 1989 from University of Hawaii, Manoa with a BBA-Finance degree. We believe that Mr. Mow is highly qualified to serve on our board due to his extensive experience financial analysis and reporting.

Michael Maloney has served as a director since July 2021. Mr. Maloney is digital currency and blockchain technology expert who has been active in the space since 2011. He serves as an advisor to several industry leading companies, and is regularly featured as an industry commentator and educator at public events.

Mr. Maloney most recently served as the CFO for Coinmint, LLC from July 2019 to October 2021. At Coinmint, he developed partnerships with several large public companies and high-net worth private institutions that made Coinmint one of the largest cryptocurrency mining operations in North America. Under his tenure, hashrate increased from 1.3EH to over 7EH (~5% of the Bitcoin network), all from increased co-hosting contracts. He was able to grow revenues by over 600% over this same period. Since August 2019, Mr. Maloney has also served as an Adjunct Professor at Fordham Law School and Fordham Gabelli Business, teaching "Blockchain, Virtual Currencies, and Tokens: Business and Legal Issues." Mr. Maloney helps coordinate the Fordham Law Blockchain Regulatory Symposium which draws US and international regulators and financial experts together to discuss industry trends.

From November 2017 to September 2018, Mr. Maloney co-founded Galaxy Digital, the first merchant bank to serve the blockchain space, as the Managing Director. In this position, he directed both the Digital Strategy and Transaction Advisory practices to assist clients in the build and financing of blockchain technologies. Mr. Maloney also supported the development of trade and compliance technologies and provided technical critiques for the venture group.

Mr. Maloney co-founded Themys, a blockchain insurance and risk management protocol in October 2018. There he wrote and patented the first Blockchain Derived Hashrate Bond developed to assist cryptocurrency miners finance ASIC purchases. He left in July 2019 to join Coinmint. Mr. Maloney was a founding member of Ernst & Young’s (EY) Distributed Ledger Technology group, and led global blockchain development for the firm. From June 2013 to September 2017, he assisted in the development of numerous blockchain applications for clients across a variety of industries, including: digital goods and games trading, supply chain management, anti-money laundering and KYC regulatory compliance, and language processing and machine learning marketplaces.

Since September 2016, Mr. Maloney has also served as CTO for a blockchain based non-profit organization, eduDAO. eduDAO currently assists non-profits in exploring blockchain and assessing the viability of DAOs for the funding needs. Mr. Maloney has a B.A. degree from Fordham University.

We believe that Mr. Maloney is highly qualified to serve on our board due to his extensive experience in the blockchain and bitcoin mining operations.

Seth Bayles has served as our Corporate Secretary and a director since July 2021. Mr. Bayles is a Corporate Attorney with over 15 years of experience practicing in the areas of entertainment, finance, technology, and commercial contracts. He has negotiated and drafted complex commercial agreements including multimedia, vendor, union, talent, channel, and technology-related agreements. Since 2017, he has served as the general counsel of Hospitality International Group, Inc. From 2016 to 2021, he served as general counsel and chief compliance officer of Credit Key, Inc. From 2015 to 2016, he served as director, legal affairs and business development, with ZestFinance, Inc. Prior to joining the corporate world, he worked as an associate at Weil, Gotshal & Manges, LLC in its Washington, DC office, and King & Spalding, LLP in its Washington, DC’s office. He has his B.A. in Economics and History from Brandeis University, a J.D. from the Emory University School of Law, and an L.L.M. from the Georgetown University Law Center. We believe that Mr. Bayles is highly qualified to serve on our board due to his extensive experience as a corporate attorney and in regulatory affairs.

Ryan Ramnath has served as our Chief Operating Officer since July 2021. Ryan Ramnath currently holds the role as Chief Executive Officer (CEO) of Bitflair Mining Corp. (“Bitfair”), a Canadian owned Trinidad-operated liquid cooled bitcoin mine. Mr. Ramnath co-founded Bitflair in 2017 and was instrumental in navigating the local Trinidad environment to successfully launch the first liquid-cooled bitcoin mine in the Caribbean. Since 2014, Mr. Ramnath has worked in various engineering capacities in the upstream and downstream energy sectors. Mr. Ramnath worked for the National Gas Company of Trinidad and Tobago from June 2014 to August 2014 as reliability engineer intern. Mr. Ramnath worked for Imperial Oil Company as a pipeline engineer from September 2015 to April 2016. Mr. Ramnath worked for BHP Billiton has a drilling engineering Intern from June 2016 to August 2016. Mr. Ramnath has worked for Royal Dutch Shell since January 2018 to the present, first as a wellsite operations engineer from until July 2019, and thereafter as drilling engineer. As the CEO of Bitflair Mining Corp, Mr. Ramnath has developed special skills in the design, engineering and implementation of solutions in the liquid-cooled hosting business. Mr. Ramnath was appointed as the Chief Operating Officer (COO) of Bitmine Immersion Technologies in 2021 due to his comprehensive understanding of the liquid-cooled bitcoin mining infrastructure and ability to build, fix and repair any mechanical issues which may arise. Mr. Ramnath graduated from the University of Toronto with a Mechanical Engineering – High 5 Distinction.

Lori Love has served as a director since August 2023. Lori Love is a licensed CPA and an experienced finance professional with 20+ years of experience in accounting, finance and risk management, both in public accounting and in the private sector. Her experience includes “C” level positions in cryptocurrency, energy, healthcare technology, financial services and consulting services. Since June 2022 to the present, Ms. Love has served as a Senior Manager for Eide Bailly’s outsourced managed services group. From October 2019 to December 2021, Ms. Love served as chief financial officer of CleanSpark, Inc., a NASDAQ listed company, where she was responsible for financial strategy, SEC financial reporting, and internal controls. From July 2015 to September 2019, Ms. Love was self-employed as a consultant where she provided out-sourced accounting services to various companies, including acting as chief financial officer for P2K Labs, LLC. Prior to 2015, Ms. Love served in the role of Senior Vice President of Finance at Provident Trust Group for over two years and as Vice President of Finance and Operations at WorldDoc, Inc. where she also served as a director. Prior to her work in the private sector, Ms. Love was an auditor with RSM McGladrey, where she focused primarily on financial services engagements. Ms. Love obtained her Bachelor of Business Administration (BBA) in Accounting from University of Nevada, Las Vegas and carries the CPA designation.

None of the directors and executive officers share any familial relationship with any other executive officers or key employees.

None of the directors and executive officers has been involved in any legal proceedings as listed in Regulation S-K, Item 401(f), except as disclosed above.

Director Nomination Process

Our board has not formed separate nominating committee; instead, our full board is responsible for overseeing the selection of persons to be nominated to serve on our board. The board believes that nominating decisions are best determined by the entire board. The board does not have a formal policy on board candidate qualifications. The board may consider those factors it deems appropriate in evaluating director nominees made either by the board or stockholders, including judgment, skill, strength of character, experience with businesses and organizations comparable in size or scope to the Company, experience and skill relative to other board members, and specialized knowledge or experience. Depending upon the current needs of the board, certain factors may be weighed more or less heavily. In considering candidates for the board, the directors evaluate the entirety of each candidate’s credentials and do not have any specific minimum qualifications that must be met. “Diversity,” as such, is not a criterion that the board considers. The directors will consider candidates from any reasonable source, including current board members, stockholders, professional search firms or other persons. The directors will not evaluate candidates differently based on who has made the recommendation.

The board nomination process is designed to ensure that the board fulfills its responsibility to recommend candidates who are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established by the board under our corporate governance principles. There have been no material changes to the procedures by which shareholders may recommend nominees to our board of directors.

Audit Committee Functions

The Company has an Audit Committee established in accordance with Section 3(a)(58)(a) of the Exchange Act because not all of its members are disinterested. The members of the audit committee are Jonathan Bates, Lori Love and Michael Maloney. The Audit Committee is responsible for oversight of the quality and integrity of the accounting, auditing and reporting practices of the Company. More specifically, it assists the board of directors in fulfilling its oversight responsibilities relating to (i) the quality and integrity of our condensed financial statements, reports and related information provided to stockholders, regulators and others, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered public accounting firm, (iv) the internal control over financial reporting that management and the board have established, and (v) the audit, accounting and financial reporting processes generally. The Audit Committee is also responsible for the review and approval of related-party transactions. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties. During periods in which the Company does not have an active Audit Committee, the entire board performs the functions of the Audit Committee.

Audit Committee Financial Expert

The board has determined that Lori Love qualifies as an “audit committee financial expert” within the meaning of SEC rules.

Code of Ethics

The Company has adopted a Code of Ethics applicable to its principal executive, financial and accounting officers and persons performing similar functions, as well as all directors and employees of the Company. A copy of the Code of Ethics is filed as an exhibit to this report, and posted on the Company’s website, bitminetech.io. In addition, the Company will provide a copy of the Code of Ethics to any shareholder who submits a written request in writing to our chief executive officer at Bitmine Immersion Technologies, Inc., 2030 Powers Ferry Road, SE, Suite 212, Atlanta, Georgia 30339; e-mail: enelson@bitminetech.io.

Communication with the Board of Directors

Our stockholders and other interested parties may send written communications directly to the board or to specified individual directors, including the Chairman or any other non-management directors, by sending such communications to our corporate headquarters. Such communications will be reviewed by our outside legal counsel and, depending on the content, will be:

forwarded to the addressees or distributed at the next scheduled board meeting;

if they relate to financial or accounting matters, forwarded to the audit committee or distributed at the next scheduled audit committee meeting;

if they relate to executive officer compensation matters, forwarded to the compensation committee or discussed at the next scheduled compensation committee meeting;

if they relate to the recommendation of the nomination of an individual, forwarded to the full board or discussed at the next scheduled board meeting; or

if they relate to our operations, forwarded to the appropriate officers of our company, and the response or other handling of such communications reported to the board at the next scheduled board meeting.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires directors, executive officer and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports or changes in ownership of such equity securities. Such persons are also required to furnish us with copies of all Section 16(a) forms that they file. Based upon a review of the copies of the forms furnished to us and written representations from certain reporting persons, we believe that, during the year ended August 31, 2023, none of our executive officers, directors or beneficial owners of more than 10% of any class of registered equity security failed to file on a timely basis any such report

Item 11. Executive Compensation

The following identifies the elements of compensation for fiscal years 2023 and 2022 with respect to our “named executive officers,” which term is defined by Item 402 of the SEC’s Regulation S-K to include (i) all individuals serving as our principal executive officer at any time during fiscal year 2023, (ii) our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers at August 31, 2023 and whose total compensation (excluding nonqualified deferred compensation earnings) exceeded $100,000, and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to the foregoing item (ii) but for the fact that the individual was not serving as an executive officer of the Company at August 31, 2023.

Based on our compensation for the fiscal year ended August 31, 2023, Jonathan Bates and Raymond Mow constitute our only “named executive officers” pursuant to Item 402 of Regulation S-K.

Summary Compensation Table

	Fiscal			Stock			All Other
Name and Principal Position	Year	Salary		Compensation		(a)	Compensation		Total
Jonathan Bates (1)	2023	$	–	$	622,120		$	–	$	622,120
Chief Executive Officer	2022	$	–	$	–		$	–	$	–

Raymond Mow (1)	2023	$	–	$	155,115		$	–	$	155,115
Chief Financial Officer	2022	$	–	$	–		$	–	$	–

(1)

Mr. Bates has served as our chief executive officer from May 2022 to the present. Mr. Bates did not receive any cash compensation for his service. On August 31, 2022 Mr. Bates was awarded 150,000 Series A Preferred Shares, which vest on January 15, 2025 if Mr. Bates is employed by the Company at that time. Each Preferred Share was valued at its liquidation preference of $10 per share for a total value of $1,500,000, and will be amortized to expense by the Company pro rata from the period from September 1, 2022 through January 15, 2025.

(2)

Mr. Mow has served our chief financial officer from July 16, 2020 to the present. Mr. Mow did not receive any cash compensation for his services for either the 2022 or 2023 fiscal years. On August 31, 2022 Mr. Mow was awarded 850,000 shares of common stock, which vest on January 15, 2025 if Mr. Mow is employed by the Company at the time. These shares were valued at $0.44 for a total value of $374,000, and will be amortized to expense by the Company pro rata from the period from September 1, 2022 through January 15, 2025.

(a) The assumptions used to value the stock compensation is as follows:

	·	The Company’s common stock is very thinly traded and not indicative of the fair market value of the common stock;

	·	During the fiscal year ended August 31, 2022 the Company conducted a Unit Offering of common stock and two warrants and sold $5,152,500 worth of the Unit Offering at a price of $1.25 per Unit;

The Company used this offering as an indication of the fair market value of its common stock and performed a Black Scholes analysis to determine the respective values of the common stock and warrants included in the Unit Offering. The Black Scholes analysis yield a value of $0.44 per share for the common stock.

The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans. The Company does not have a defined benefit, pension, profit sharing plan, or a 401(k) plan. We did not grant any stock options or stock appreciation rights to our named executive officers in the last fiscal year. We did not reprice any options or stock appreciation rights during the last fiscal year. We did not waive or modify any specified performance target, goal or condition to payout with respect to any amount included in any incentive plan compensation included in the summary compensation table.

Compensation Philosophy

The board is responsible for creating and reviewing the compensation of our executive officers, as well as overseeing our compensation and benefit plans and policies and administering our equity incentive plans. We believe in providing a competitive total compensation package to its executives through a combination of base salary, annual performance bonuses, and long-term equity awards. The executive compensation program is designed to achieve the following objectives:

provide competitive compensation that will help attract, retain and reward qualified executives;

align executives’ interests with our success by making a portion of the executive’s compensation dependent upon corporate performance; and

align executives’ interests with the interests of stockholders by including long-term equity incentives.

The board believes that our executive compensation program should include annual and long-term components, including cash and equity-based compensation, and should reward consistent performance that meets or exceeds expectations. The board evaluates both performance and compensation to make sure that the compensation provided to executives remains competitive relative to compensation paid by companies of similar size and stage of development operating in the payment processing industry and taking into account our relative performance and its own strategic objectives.

Notwithstanding the above, the Company is not currently paying any compensation to its executive officers until it raises additional capital to fund its business and capital expenditure needs.

Outstanding Equity Awards At Fiscal Year-End

The following table sets forth information regarding all outstanding equity awards held by the named executive officers at August 31, 2023. There are no outstanding option awards. Outstanding restricted stock grants have been approved by our Board.

Stock Awards

Name
(a)

Number of Shares or Units of Stock that have not Vested
(#)
(g)

Market Value of Shares of Units of
Stock that Have not Vested
($)
(h)

Equity Incentive
Plan Awards:
Number of Unearned Shares, Units or Other Rights that have not Vested
(#)
(i)

Equity Incentive
Plan Awards:
Market or Payout Value of Unearned
Shares, Units or other Rights that have not Vested
($)
(j) (1)

Jonathan Bates (2)

–

150,000

1,500,000

Raymond Mow (3)

–

850,000

374,000

(1)

The value of the unearned awards of common stock is based upon the estimated value of our common stock on August 31, 2023, which was $0.44 per share, based on the value estimated for the common stock in a $1.25 Unit offering completed shortly before the issuance of the awards. The value of the unearned awards of Series A Preferred Stock is based upon the liquidation preference of $10 for each share of Series A Preferred Stock

(2)

The restricted stock grant consisted of 150,000 shares of Series A Preferred Stock issued as of August 31, 2022, which vest on January 15, 2025 in the event the executive is still employed by us as of that date. The Series A Preferred Shares are convertible into 2,608,696 shares of common stock. None of the shares had vested as of August 31, 2022.

(3)

The restricted stock grant consisted of 850,000 shares of common stock issued as of August 23, 2022, which vest on January 15, 2025 in the event the executive is still employed by us as of that date. None of the shares had vested as of August 31, 2023.

Employment Agreements

The Company does not have any employment agreements with any of its executive officers, except for Ryan Ramnath, the Company’s chief operating officer. Mr. Ramnath and the Company are party to an employment agreement dated July 19, 2021, under which Mr. Ramnath is employed for three year as chief operating officer, and is entitled to compensation of $4,000 per month effective September 1, 2021 with no benefits.

Severance and Change of Control Benefits

The Company does not currently have any agreements with its named executive officers or directors which provide for severance or change of control benefits.

Employee Benefit Plans and Pension Benefits

Nonqualified Deferred Compensation

None of our NEOs are covered by a deferred contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.

Director Compensation

The following table details the total compensation earned by our non-employee directors during the year ended August 31, 2023.

Name	Fee Earned or Paid in Cash ($) (1)		Restricted Stock Awards ($) (2)		All Other Compensation ($)		Total ($)
Michael Maloney	$	–	$	–	$	–	$	–
Seth Bayles	$	–	$	–	$	–	$	–
Erik Nelson (2)	$	–	$	63,870	$	–	$	63,870
Lori Love (3)	$	–	$	4,400	$	–	$	4,400

(1)	Excludes travel expense reimbursements.

(2)	Includes 350,000 shares of restricted issued to Mr. Nelson. The shares were valued at $154,000, or $0.44 per share, which is the price at which the Company sold shares for cash in a contemporaneous offering to third parties as described in the Summary Compensation Table above for Executive Officers. These shares vest on January 15, 2025 if Mr. Nelson is employed by the Company at that time and are amortized to expense by the Company pro rata for the period from September 1, 2022 through January 15, 2025.

(3)	Ms. Love was issued 150,000 shares of common stock which vest at the rate of 10,000 shares per month as of the last day of each calendar month beginning on August 31, 2023. As of August 31, 2023, 10,000 shares had vested.

There were no options outstanding to directors as of August 31, 2023.

Our board does not have a current compensation policy for its directors. However, we reimburse our directors for reasonable travel and other related expenses. Once we raise capital, we intend to develop a board compensation plan that is consistent with market norms for similar sized companies.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of November 30, 2023, certain information concerning the beneficial ownership of our common stock by (i) each person known by us to own beneficially five percent (5%) or more of the outstanding shares of each class, (ii) each of our directors and named executive officers, and (iii) all of our executive officers and directors as a group.

The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities & Exchange Commission, or SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that the individual or entity has the right to acquire within 60 days after December 1, 2023 through the exercise of any stock option, warrant or other right, or the conversion of any security. As of December 1, 2023 there were 49,665,649 shares outstanding. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

Name	Shares Beneficially Owned	Percent of Common Stock (1)
5% Stockholders
Jonathan Bates (2)	23,595,583	41.0%
Innovative Digital Investors Emerging Technology, LP (2)	16,786,887	30.5%
Rykor Energy Solutions, LLC (3)	8,016,000	14.6%
Sam Jorgensen (4)	6,887,754	13.9%
BFAM Partners, LLC (2)	4,200,000	8.5%
Michael Maloney	4,000,000	8.1%
Abed Equities (5)	3,650,000	7.3%
BitFlair Mining Corp. (6)	3,443,877	6.9%
Erik S. Nelson (7)	3,255,000	6.4%
Directors and Named Executive Officers
Jonathan Bates (2)	23,595,583	41.0%
Michael Maloney	4,000,000	8.1%
Ryan Ramnath (8)	3,443,877	6.9%
Erik S. Nelson (7)	3,255,000	6.4%
Raymond Mow	1,250,000	4.2%
Seth Bayles	500,000	1.0%
Lori Love	150,000	0.3%
Officers and Directors as a Group	35,594,730	63.1%

(1)	Based on 49,665,649 shares of common stock issued and outstanding as of December 1, 2023.

(2)	Includes (i) 11,500,000 shares owned by Innovative Digital Investors Emerging Technology, LP (“Innovative”), (ii) 5,286,887 shares that Innovative has the right to acquire upon the conversion of 303,966 shares of Series A Convertible Preferred Stock, (iii) 4,200,000 shares owned by BFAM Partners, LLC (“BFAM”), of which Mr. Bates is the 100% owner, and (iv) 2,608,696 shares that Mr. Bates has the right to acquire upon the conversion of 150,000 shares of Series A Convertible Preferred Stock. Mr. Bates has sole voting and investment power of any shares owned by Innovative by virtue of his ownership of its general partner. Mr. Bates has sole voting and investment power of any shares owned by BFAM. BFAM and an individual retirement account established by Mr. Bates own approximately 10.03% of Innovative. Mr. Bates owns 90% of BFAM, and a trust established for his children on the remaining 10%. Mr. Bates disclaims beneficial ownership of any shares owned by Innovative beyond his percentage interest in such entity.

(3)	Includes (i) 2,672,000 shares held outright, (ii) 2,672,000 Class C-1 Warrants which are exercisable immediately, and (iii) 2,672,000 Class C-2 Warrants which are exercisable immediately. John Kelly and Nick Marrocco have shared voting and investment power over the securities owned by Rykor Energy Solutions, LLC.

(4)	Includes (i) 3,443,877 shares owned by Mr. Jorgensen and (ii) 3,443,877 shares owned by BitFlair Mining Corp. (“BitFlair”), of which Mr. Jorgensen has shared voting and investment power. Mr. Jorgenson disclaims beneficial ownership of shares held by BitFlair beyond his 40% percentage interest therein.

(5)	Gabriel Abed sole voting and investment power over any shares owned by Abed Equities.

(6)	Ryan Ramnath and Sam Jorgenson have shared voting and investment power over any shares owned by Bitflair Mining Corp.

(7)	Includes (i) 600,000 shares owned by Mr. Nelson, (ii) 2,505,000 shares beneficially owned by Coral Investment Partners, LP (“Coral”), as to which Mr. Nelson, in his capacity as owner of the general partner, has sole voting and investment power, consisting of (A) 1,505,000 shares owned by Coral, (B) 500,000 Class A Warrants owned by Coral which are immediately exercisable, and (C) 500,000 Class B Warrants owned by Coral which are immediately exercisable, (iii) 150,000 shares beneficially owned by Sterling Acquisitions 1, Inc. (“Sterling”), consisting of (X) 50,000 shares owned by Sterling, (Y) 50,000 Class A Warrants owned by Sterling, and (Z) 50,000 Class B Warrants owned by Sterling. Mr. Nelson disclaims beneficial ownership of shares held by Coral beyond his 40% ownership interest therein. Mr. Nelson does not have an interest in Sterling, but his spouse and children own 80% of Sterling, and Mr. Nelson’s spouse shares the power to vote and dispose of any shares owned by Sterling.

(8)	Includes 3,443,877 shares owned by BitFlair Mining Corp. (“BitFlair”), of which Mr. Ramnath has shared voting and investment power. Mr. Ramnath disclaims beneficial ownership of shares held by BitFlair beyond his percentage interest in Bitflair of 40%.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of August 31, 2023 about the securities issued, or authorized for future issuance, under our equity compensation plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance (c)
Equity compensation plans approved by security holders		–		–		–
Equity compensation plans not approved by security holders		–		–		–
2023 Restricted Common Stock Grant to Director (1)		150,000	$	0.44		–
2022 Restricted Common Stock Grants to Officers (2)		3,550,000	$	0.44		–
2022 Restricted Common Stock Bonus Grants to Officer (3)		101,516	$	0.44		–
2023 Restricted Common Stock Bonus Grants to Officer (3)		258,735	$	0.44		–
2022 Restricted Preferred Stock Grant to Officer (4)		2,608,696	$	0.44		–
2021 Restricted Common Stock Grant to Officer (5)		4,500,000	$	0.015		–
Total		11,168,947	$	0.27		–

(1)

In August 2023, we granted 150,000 shares of restricted common stock to Lori Love. The shares were valued at $66,000 on the date of the award, based on a value of $0.44 per share. The shares vest at the rate of 10,000 shares per month, beginning on August 31, 2023.

(2)

Consists of the following transactions:

	a.	In February 2022, we granted 2,100,000 shares of restricted common stock to Chris Moses. The shares were valued at $924,000 on the date of the award, based on a value of $0.44 per share. The shares vest on January 15, 2027.
	b.	In August 2022, we granted 850,000 shares of restricted common stock to Raymond Mow. The shares were valued at $374,00 on the date of the award, based on a value of $0.44 per share. The shares vest on January 15, 2025.
	c.	In August 2022, we granted 600,000 shares of restricted common stock to Erik S. Nelson. The shares were valued at $264,000 on the date of the award, based on a value of $0.44 per share. 250,000 of the shares were for past services and vested immediately. The remaining 350,000 shares vest on January 15, 2025.

	(3)	In February 2022, we entered into an employment agreement with Chris Moses, under which we are obligated to issue quarterly bonuses payable in shares of common stock equal to $50,000 divided by the closing price on the last day of each calendar quarter. During the fiscal year ended August 31, 2022, we issued Mr. Moses 101,516 shares of common stock as quarterly bonuses, which we valued at $0.44 per share rather than the closing price for common stock. During the fiscal year ended August 31, 2023, we issued Mr. Moses 258,735 shares of common stock as quarterly bonuses, which we valued at $0.44 per share rather than the closing price for common stock.
	(4)	In August 2022, we granted 150,000 shares of restricted Series A Convertible Preferred Stock to Jonathan Bates. The shares were valued at $1,500,000 on the date of the award. The shares vest on January 15, 2025. The shares are convertible into common stock at the stated value of $10 per share divided by $0.575, which would result in the issuance of 2,608,696 shares of common stock on conversion.
	(5)	In August 2021, we granted 4,000,000 shares to Michael Maloney and 500,000 shares issued to Seth Bayles as compensation for agreeing to join the board of directors. The shares were valued at $0.015, which is the price at which the Company sold shares for cash in a contemporaneous offering to third parties.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

Starting in 2020, Coral Investment Partners, LP, a partnership controlled by Erik Nelson, agreed to make loans to the Company from time to time pursuant to a demand promissory note that bore interest at 24% per annum. The amount due at August 31, 2020 was principal of $50,447 and interest of $1,558. The amount due of principal of $87,447 and interest of $19,476. was repaid in full in the quarter ended August 31, 2021.

On July 22, 2021, the Company entered into the LOC Agreement with Innovative Digital Investors Emerging Technology, L.P. (“IDI”), a limited partnership controlled by Jonathan Bates, our Chairman, and Raymond Mow, our chief financial officer and a director. The LOC Agreement was amended and restated in its entirety on August 4, 2021, September 29, 2021, March 30, 2022 and June 24, 2022. On August 31, 2022, the Company and IDI agreed to convert all amounts then due under the LOC Agreement into shares of Series A Convertible Preferred Stock with a stated value equal to the principal and interest due under the LOC Agreement, which resulted in the issuance of 303,966 shares of Series A Preferred Stock for $3,039,662 due thereunder.

Director Independence

Our current board consists of Erik Nelson, Jonathan Bates, Raymond Mow, Seth Bayles, Michael Maloney, and Lori Love. Our common stock is currently quoted on the over the counter market. Since the over the counter market does not have its own rules for director independence, we use the definition of independence established by the NASDAQ Stock Market. Under applicable NASDAQ Stock Market rules, a director will only qualify as an “independent director” if the director has not, at any time in the past three years, (a) been employed by us, (b) received more than $120,000 in compensation from us, other than for board services, (c) had a family member who was employed as an executive officer of us, (d) been, or had a family member that was, a partner, controlling shareholder or executive officer of any organization that received payments for property or services that exceeded the greater of 5% of the recipient’s gross revenues or $200,000, (e) been, or had a family member that was, employed as an executive officer of another entity during the past three years where any of the executive officers of us serve on the compensation committee, or (f) been, or had a family member that was, a partner in our auditor at any time in the past three years. At this time, we have determined that we have one independent director: Michael Maloney.

The only committee of the board is an Audit Committee.

Policies with Respect to Transactions with Related Persons

The board has adopted a Code of Ethics, which is available at bitminetech.io, that sets forth various policies and procedures intended to promote the ethical behavior of the Company’s employees, officers and directors. The Code of Ethics describes our policy on conflicts of interest.

The executive officers and the board are also required to complete a questionnaire on an annual basis which requires them to disclose any related person transactions and potential conflicts of interest. The responses to these questionnaires are reviewed by outside corporate counsel, and, if a transaction is reported by an independent director or executive officer, the questionnaire is submitted to the Audit Committee, or the independent directors if there is no Audit Committee. If necessary, the Audit Committee or the independent directors, as applicable, will determine whether the relationship is material and will have any effect on the director’s independence. After making such determination, the Audit Committee or independent directors, as applicable, will report its recommendation on whether the transaction should be approved or ratified by the entire board.

Item 14. Principal Accountant Fees and Services.

The following table presents fees for professional services provided by BF Borgers CPA PC for the years ended August 31, 2023 and 2022, respectively:

The following table shows the fees billed aggregate to the Company for the periods shown:

	Fiscal Year 2022		Fiscal Year 2022
Audit Fees (1)	$	154,500	$	129,680
Total Fees	$	154,500	$	129,680

(1)

Audit Fees. Audit services include work performed for the audit of our condensed financial statements and the review of financial statements included in our condensed quarterly reports, as well as work that is normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings.

Audit fees represent amounts invoiced for professional services rendered for the audit of the Company’s annual condensed financial statements, including the Form 10-K report, and the reviews of the quarter ending condensed financial statements included in the Company’s Form 10-Q reports.

Pre-Approval Policy and Procedures

We do not have an Audit Committee, and have not adopted an Audit Committee Charter. Instead, the duties that the Audit Committee would ordinarily perform are performed by the entire board. The board’s unwritten policy is to require pre-approval of the terms and fees of the annual audit services engagement, as well as any changes in terms and fees resulting from changes in audit scope or other items. The board also pre-approves, on an annual basis, other audit services, and audit-related and tax services set forth in the policy, subject to estimated fee levels, on a project basis and aggregate annual basis, which have been pre-approved by the board.

All other services performed by the auditor that are not prohibited non-audit services under SEC or other regulatory authority rules must be separately pre-approved by the board. Amounts in excess of pre-approved limits for audit services, audit-related services and tax services require separate pre-approval of the board.

All of the services reflected in the above table were approved by the board. We have not engaged our auditor to perform any services other than audit services.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

The following documents are filed as part of this report:

(1)

Condensed Financial Statements

Report of Independent Registered Public Accounting Firms;

Condensed Balance Sheets as of August 31, 2022 and August 31, 2023;

Condensed Statements of Operations for the Years Ended August 31, 2022 and 2023;

Condensed Statements of Stockholders’ Equity for the Years Ended August 31, 2022 and 2023;

Condensed Statements of Cash Flows for the Years Ended August 31, 2022 and 2023.

(3)

Exhibits

The accompanying Index to Exhibits is incorporated herein by reference.

Item 16. 10-K Summary

None.

INDEX TO EXHIBITS

Exhibit No.		Description
3.1		Amended and Restated Certificate of Incorporation (incorporated by reference from Form 8-K filed September 6, 2022).

3.2		Certificate of Designations, Rights and Preferences of Series A Convertible Preferred Stock (incorporated by reference from Form 8-K filed September 6, 2022.

3.3		Certificate of Merger (incorporated by reference from Form 10 filed October 27, 2020).

3.4		Bylaws of Sandy Springs Holdings, Inc. (incorporated by reference from Form 10 filed October 27, 2020).

4.1		Amended Form of Class A Warrant (Incorporated by reference from Exhibit 4.1 to Form 8-K filed July 27, 2021).

4.2		Amended Form of Class B Warrant (Incorporated by reference from Exhibit 4.2 to Form 8-K filed July 27, 2021).

4.3		Warrant Agent Agreement by and between Bitmine Immersion Technologies, Inc. and West Coast Stock Transfer, Inc. (incorporated by reference from Form 8-K/A filed September 9, 2021).

4.4		Form of Class C-1 Warrant (incorporated by reference from Form S-1, File No. 333-266348, filed July 27, 2022).

4.5		Form of Class C-2 Warrant (incorporated by reference from Form S-1, File No. 333-266348, filed July 27, 2022).

4.6		Form of Class C-3 Warrant (incorporated by reference from Form S-1, File No. 333-266348, filed July 27, 2022).

10.1		Employment Agreement between the Company and Ryan Ramnath dated July 19, 2021 (incorporated by reference from Form 8-K/A filed September 9, 2021).

10.2		Master Services Agreement between Telecommunications Services of Trinidad and Tobago Limited and the Company for Colocation Services dated October 21, 2021 (incorporated by reference from Form S-1/A filed November 14, 2022).

10.3*		Statement of Work No. 1 Colocation Services by and between the Company and Telecommunications Services of Trinidad and Tobago Limited dated June 17, 2022.

10.4		Form of Restricted Stock Agreement (incorporated by reference from Form S-1/A filed November 14, 2022).

10.5*		Amended and Restated Line of Credit Agreement between the Company and Innovative Digital Investors Emerging Technology, L.P. dated May 13, 2023.

10.6		Promissory Note executed by ROC Digital Mining I LLC dated October 13, 2022 (incorporated by reference from Form 8-K filed October 19, 2022).

10.7		Security Agreement executed by ROC Digital Mining I LLC and the Company dated October 13, 2022 (incorporated by reference from Form 8-K filed October 19, 2022).

10.8		Transfer, Bill of Sale and Assignment executed by ROC Digital Mining I LLC and the Company dated October 13, 2022 (incorporated by reference from Form 8-K filed October 19, 2022).

10.9		Limited Liability Company Operating Agreement of ROC Digital Mining I LLC dated July 27, 2022 (incorporated by reference from Form 8-K filed October 19, 2022).

10.10		Limited Liability Company Operating Agreement of ROC Digital Mining Manager LLC dated July 27, 2022 (incorporated by reference from Form 8-K filed October 19, 2022).

10.11*		Colocation Services Agreement between Bitmine Immersion Technologies, Inc. and Soluna SW, LLC dated October 9, 2023.

10.12*		Luxor Physically Backed Forward – Master Agreement between Bitmine Immersion Technologies, Inc. and Luxor Technology Corporation dated October 4, 2023.

10.13*		Waiver and Consent Agreement between Luxor Technology Corporation, Soluna SW, LLC and Bitmine Immersion Technologies, Inc. dated October 13, 3023.

10.14*		Unit Lien Agreement between Luxor Technology Corporation and Bitmine Immersion Technologies, Inc. dated October 4, 2023.

14		Code of Ethics (incorporated by reference to the Annual Report on Form 10-K for the year ended August 31, 2021).

21*		List of Subsidiaries

31.1*		Rule 13a-14(a) Certification of Principal Executive Officer.

31.2*		Rule 13a-14(a) Certification of Principal Accounting Officer.

32.1*		Section 1350 Certification of Principal Executive Officer.

32.2*		Section 1350 Certification of Principal Financial Officer.

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Schema Linkbase Document
101.CAL		XBRL Taxonomy Calculation Linkbase Document
101.DEF		XBRL Taxonomy Definition Linkbase Document
101.LAB		XBRL Taxonomy Labels Linkbase Document
101.PRE		XBRL Taxonomy Presentation Linkbase Document

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BITMINE IMMERSION TECHNOLOGIES, INC.

Dated: December 14, 2023	By:	/s/ Jonathan Bates
		Jonathan Bates, Chief Executive Officer
		(Principal Executive Officer)

Dated: December 14, 2023	By:	/s/ Raymond Mow
		Raymond Mow, Chief Financial Officer
		(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature	Title	Date

/s/ Jonathan Bates	Chairman, Director and Chief Executive Officer	December 14, 2023
Jonathan Bates

/s/ Erik S. Nelson	Director and President	December 14, 2023
Erik S. Nelson

/s/ Raymond Mow	Director and Chief Financial Officer	December 14, 2023
Raymond Mow

/s/ Seth Bayles	Director	December 14, 2023
Seth Bayle

/s/ Michael Maloney	Director	December 14, 2023
Michael Maloney

/s/ Lori Love	Director	December 14, 2023
Lori Love

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Condensed Balance Sheets as of August 31, 2023 and 2022	F-3
Condensed Statements of Operations for the Years Ended August 31, 2023 and 2022	F-4
Condensed Statements of Changes in Stockholders' Equity for Years ended August 31, 2023 and 2022	F-5
Condensed Statements of Cash Flows for the Years Ended August 31, 2023 and 2022	F-6
Notes to Condensed Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Bitmine Immersion Technologies, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bitmine Immersion Technologies, Inc. as of August 31, 2023 and 2022, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/S/ BF Borgers CPA PC

BF Borgers CPA PC (PCAOB ID 5041)

We have served as the Company's auditor since 2020

Lakewood, CO

December 14, 2023

F-2

Bitmine Immersion Technologies, Inc.

Condensed Balance Sheets


	August 31,			August 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	270,547		$	392,550
Prepaid expenses		105,000			5,000
Notes receivable - short term		–			491,395
Notes receivable related party - short term		374,444			–
Total current assets		749,991			888,945
Cryptocurrency		129,469			21,434
Notes receivable - long term		731,472			532,345
Notes receivable - related party long term		655,277			–
Investment in joint venture		987,429			–
Fixed assets, net		495,702			21,875
Fixed assets - not in service		4,453,466			6,509,602
Total assets	$	8,202,805		$	7,974,201

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	74,903		$	84,761
Accrued interest - related party		97,460			–
Loans payable - related party		1,300,000			–
Deferred revenue - short term		86,193			232,913
Total current liabilities		1,558,556			317,674
Deferred revenue long term		386,884			252,322
Total liabilities		1,945,440			569,995

Commitments and contingencies		–			–

Stockholders' Equity:
Series A Preferred Stock, $0.0001 par value, 500,000 shares authorized, 453,966 and 453,966 shares issued and outstanding as of August 31, 2023 and August 31, 2022, respectively		45			45
Common stock, $0.0001 par value, 500,000,000 shares authorized; 49,665,649 and 48,606,915 shares issued and outstanding as of August 31, 2023 and August 31, 2022 respectively		4,967			4,861
Additional paid-in capital		11,183,720			9,865,866
Accumulated deficit		(4,931,367	)		(2,466,566	)
Total stockholders' equity		6,257,365			7,404,205
Total liabilities and equity	$	8,202,805		$	7,974,201

The accompanying notes are an integral part of these condensed financial statements.

F-3

Bitmine Immersion Technologies, Inc.

Condensed Statements of Operations


	Year			Year
	ended			ended
	August 31,			August 31,
	2023			2022
Revenue from the sale of mining equipment	$	244,036		$	394,700
Revenue from hosting, net		12,020			23,644
Revenue from self- mining		389,222			9,325
Total revenue		645,278			427,669
Cost of sales mining equipment		87,080			355,407
Cost of sales self-mining		326,630			194,765
Cost of sales hosting		9,098			6,527
Gross profit (loss)		222,469			(129,030	)

Operating expenses:
General and administrative expenses		293,989			227,597
Depreciation		470,705			–
Professional fees		456,323			856,925
Related party compensation		1,309,663			489,096
Impairment of fixed assets		122,950			–
Gain from sale of digital currencies		(21,682	)		–
Impairment of cryptocurrency		3,523			11,535
Total operating expenses		2,635,470			1,585,154
Income(loss) from operations		(2,413,001	)		(1,714,184	)
Other income (expense)
Interest expense		(97,460	)		(291,049	)
Other income		16,939			–
Interest income		28,720			–
Other income (expense), net		(51,801	)		(291,049	)
Net loss	$	(2,464,801	)	$	(2,005,233	)

Basic and diluted earnings (loss) per common share	$	(0.05	)	$	(0.05	)

Weighted-average number of common shares outstanding:
Basic and diluted		49,055,973			43,107,688

The accompanying notes are an integral part of these condensed financial statements.

F-4

Bitmine Immersion Technologies, Inc.

Condensed Statements of Changes in Stockholders' Equity


									Additional						Total
	Series A Preferred				Common Stock				Paid-in			Accumulated			Stockholders'
	Shares		Value		Shares		Value		Capital			Deficit			Equity
Balance, August 31, 2021		–	$	–		40,433,399	$	4,043	$	817,842		$	(461,334	)	$	360,551

Stock based compensation -related party		–		–		2,201,516		220		658,520			–			658,741

Conversion of debt to Series A Preferred -related party		303,966		30		–		–		3,039,632			–			3,039,662

Series A Preferred for services - related party		150,000		15		–		–		(15	)		–			–

Common stock issued for services -related party		–		–		1,450,000		145		109,855			–			110,000

Common shares issued for services		–		–		400,000		40		87,944			–			87,984

Common shares sold in a private placement		–		–		4,122,000		412		5,152,088			–			5,152,500

Net loss		–		–		–		–		–			(2,005,233	)		(2,005,233	)

Balance, August 31, 2022		453,966	$	45		48,606,915	$	4,861	$	9,865,866		$	(2,466,566	)	$	7,404,205

	`								Additional					Total
	Series A Preferred				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Value		Shares		Value		Capital		Deficit			Equity
Balance, August 31, 2022		453,966	$	45		48,606,915	$	4,861	$	9,865,866	$	(2,466,566	)	$	7,404,205

Common stock issued for services -related party		–		–		408,735		41		190,814		–			190,855

Common shares issued for services		–		–		650,000		65		285,935		–			286,000

Stock based compensation -related parties		–		–		–		–		841,106		–			841,106

Net loss		–		–		–		–		–		(2,464,801	)		(2,464,801	)

Balance, August 31, 2023		453,966	$	45		49,665,649	$	4,967	$	11,183,720	$	(4,931,367	)	$	6,257,365

The accompanying notes are an integral part of these condensed financial statements.

F-5

Bitmine Immersion Technologies, Inc.

Statements of Cash Flows


	Year			Year
	ended			ended
	August 31,			August 31,
	2023			2022
Cash flows from operating activities
Net loss	$	(2,464,801	)	$	(2,005,233	)
Stock based compensation		1,317,961			856,724
Depreciation		470,705			3,125
Change in balance sheet accounts
Impairment of fixed assets		122,950			–
Cryptocurrencies		(108,035	)		(21,434	)
Notes receivable		(123,938	)		(1,023,741	)
Prepaid expenses		(100,000	)		(5,000	)
Accounts payable and accrued expenses		(9,858	)		81,081
Deferred revenue		(12,158	)		485,234
Accrued interest - related party		97,460			–
Net cash (used in) operating activities		(809,715	)		(1,629,243	)

Cash flows from investing activities
Purchase of fixed assets		(612,288	)		(2,767,306	)
Net cash provided by (used in) investing activities		(612,288	)		(2,767,306	)

Cash flows from financing activities:
Common shares sold in a private placement		–			1,812,500
Related party loans -net		1,300,000			2,757,863
Net cash provided by financing activities		1,300,000			4,570,363

Net increase (decrease) in cash and cash equivalents		(122,003	)		173,814
Cash and cash equivalents at beginning of period		392,550			218,737
Cash and cash equivalents at end of period	$	270,547		$	392,550

Supplemental disclosure of non-cash investing and financing activities:
Common stock issued to purchase property	$	–		$	3,340,000
Sale of fixed assets for note receivable	$	613,514		$	–
Property contributed to joint venture	$	987,429		$	–

The accompanying notes are an integral part of these condensed financial statements.

F-6

BITMINE IMMERSION TECHNOLOGIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES

About Bitmine Immersion Technologies, Inc.

Bitmine Immersion Technologies Inc. f/k/a Sandy Springs Holdings, Inc. (“Bitmine” or the “Company”) is a Delaware corporation that commenced operations on July 16, 2020. A predecessor to the Company was incorporated in the state of Nevada on August 16, 1995, as Interactive Lighting Showrooms, Inc.

By a written consent dated July 16, 2021, holders of a majority of the Company’s issued and outstanding common stock approved a resolution to appoint Jonathan Bates, Raymond Mow, Michael Maloney, and Seth Bayles to the board of directors of the Company, and to appoint Jonathan Bates as Chairman, Seth Bayles as Corporate Secretary, Raymond Mow as Chief Financial Officer, and Ryan Ramnath as Chief Operating Officer (collectively, the “New O&Ds”). Erik S. Nelson remained a director and the chief executive officer. At the same time, the shareholders approved the issuance of 32,994,999 shares of common stock in the Company’s offering of common stock at $0.015 per share, and the grant of 4,750,000 shares for services, which were valued at $0.015 per share. As a result of the foregoing stock issuances, the New O&Ds (or entities controlled by them) collectively acquired 24,893,877 shares of common stock, which represented approximately 62% of the issued and outstanding shares at the time.

During the fiscal year ended August 31, 2022, the Company began implementing its business plan by generating revenue from the mining of Bitcoin digital currency, hosting a third party Bitcoin miner and the sale of mining equipment.

The Company’s year-end is August 31st.

Basis of Presentation

The foregoing condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these condensed financial statements do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, the condensed financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of condensed financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the condensed financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s condensed financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company’s financial position and results of operations.

F-7

Reverse Stock Split

On June 25, 2020, the Board of Directors and the shareholders of the Company approved a 1 for 40,000 reverse split, with all fractional shares rounded up to the nearest whole share, and immediately after the completion of the reverse split, effected a 200 for 1 forward stock split. The net effect of the splits was a 1 for 200 reverse split of the Company’s common shares. The stock splits were effective April 27, 2021. No fractional shares of common stock were issued in connection with the Reverse Split. If, as a result of the Reverse Split, a shareholder would have otherwise held a fractional share, the shareholder received, instead of the issuance of such fractional share, one whole share of common stock.

The Company’s condensed financial statements in this Report for the periods ended August 31, 2023, and August 31, 2022, and all references thereto have been retroactively adjusted to reflect the split unless specifically stated otherwise.

Use of Estimates

Segment Reporting

The Company operates in one segment - the cryptocurrency mining industry. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. All material Company operations qualify for aggregation due to their similar customer base and similarities in economic characteristics, nature of products and services, and procurement, manufacturing and distribution processes.

Revenue Recognition

Revenues from digital currency mining

	·	Step 1: Identify the contract with the customer;
	·	Step 2: Identify the performance obligations in the contract;
	·	Step 3: Determine the transaction price;
	·	Step 4: Allocate the transaction price to the performance obligations in the contract; and
	·	Step 5: Recognize revenue when the Company satisfies a performance obligation.

F-8

	·	The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

	·	The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

F-9

Step 5: The Company’s performance is complete in transferring the computing power over-time (midnight to midnight UTC) to the customer and the customer obtains control of that asset.

In exchange for providing computing power, the Company is entitled to the expected bitcoin awards earned over the measurement period, plus the expected global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The transaction consideration the Company receives is non-cash consideration, in the form of bitcoin. The Company measures the bitcoin at the closing U.S. dollar spot rate at the end of the date earned (midnight UTC). However, this accounting convention does not result in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently applied in all periods presented.

During the period ending August 31, 2023, the Company utilized one mining pool for its self-mining operations. During the year ended August 31, 2023, the Company generated $389,222 in revenues from mining cryptocurrency.

Revenues from Hosting

Revenues from the sale of mining equipment

The Company records revenue from the resale of mining equipment it has purchased. Revenue for the sale of mining equipment is recognized under the guidelines of ASC 606. During the year ended August 31, 2023, the Company generated $244,036 in revenues from the sale of mining equipment.

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On August 31, 2023, and August 31, 2022, respectively, the Company’s cash equivalents totaled $270,547 and $392,550, respectively.

F-10

Cryptocurrency

Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. During the year ended August 31, 2023, the Company recorded an impairment charge of $3,523 due to a reduction in the quoted price of cryptocurrency. Subsequent reversal of impairment losses, if the price of cryptocurrency increases, is not permitted. Additionally, during the year ended August 31, 2023, the Company realized a gain from sale of cryptocurrency of $21,682.

Income taxes

The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.

Stock-based Compensation

The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

F-11

Net Loss per Share

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.

Stock Purchase Warrants

The Company accounts for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity. We determine the accounting classification of warrants we issue, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate us to settle the warrants or the underlying shares by paying cash or other assets, and warrants that must or may require settlement by issuing variable number of shares. If warrants do not meet the liability classification under ASC 480-10, we assess the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature.

If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, we also assess whether the warrants are indexed to our common stock and whether the warrants are classified as equity under ASC 815-40 or other GAAP. After all such assessments, we conclude whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date. We do not have any liability classified warrants as of any period presented.

Property and equipment

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for leasehold improvements are typically the lesser of the estimated useful life of the asset or the life of the term of the lease. The estimated useful lives for all other property and equipment are as follows:

Schedule of useful lives of assets
			Life (Years)
Miners and mining equipment			2
Machinery and equipment			5 - 10
Office and computer equipment			3

No depreciation is recorded on an asset until it is placed in service. Due to the nature of the equipment, it can only be placed in service when the hosting site is properly configured to turn on the machines. As of August 31, 2023, and August 31, 2022, the Company had $4,453,466 and $6,509,602, respectively, of fixed assets not in service. During the year ended August 31, 2023 the Company performed an analysis of the carrying cost of its mining equipment compared to the current market price for the same equipment. As a result, the Company determined that its fixed assets had been impaired by an amount of $122,950. This amount was recorded as an “impairment of fixed assets” on its statements of operations for the year ended August 31, 2023.

F-12

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.

We adopted ASC 842 on July 16, 2020. The adoption of this guidance did not have any impact on our condensed financial statements.

In March 2022, the SEC staff released Staff Accounting Bulletin No. 121 (“SAB 121”), which requires entities that hold crypto assets on behalf of platform users to recognize a liability to reflect the entity’s obligation to safeguard the crypto assets held for its platform users, whether directly or through an agent or another third party acting on its behalf, along with a corresponding safeguarding asset. Both the liability and corresponding safeguarding asset shall be measured at fair value. SAB 121 also requires disclosure of the nature and amount of crypto assets being safeguarded, how the fair value is determined, an entity’s accounting policy for safeguarding liabilities and corresponding safeguarding assets, and may require disclosure of other information about risks and uncertainties arising from the entity’s safeguarding activities. The Company is not in the business of holding its customer’s crypto assets for safekeeping. For crypto assets that are not maintained on our platform and for which the Company does not maintain a private key or the ability to recover a customer’s private key, these balances are not recorded, as there is no related safeguarding obligation in accordance with SAB 121. This guidance is effective from the first interim period after June 15, 2022 and should be applied retrospectively. We adopted SAB 121 during the yea ended August 31, 2022, and it did not have any impact on our condensed financial statements.

NOTE 2 – CRYPTOCURRENCIES

The following table presents additional dollar information about the Company’s bitcoin activity for the year ended August 31, 2023:

Schedule of cryptocurrencies
Beginning balance – August 31, 2022	$	21,434
Revenue received from mining		389,222
Revenue received from hosting		12,020
Revenue recorded as “other income” from the termination of hosting agreement		16,939
Sale of equipment with proceeds received in cryptocurrency		56,730
Proceeds from the sale of cryptocurrency		(149,435	)
Cryptocurrency used to pay expenses and to purchase equipment		(213,918	)
Impairment of cryptocurrencies		(3,523	)
Ending balance – August 31, 2023	$	129,469

F-13

The following table presents unit information (each bitcoin represents one unit) about the Company’s bitcoin activity for the year ended August 31, 2023:


Beginning balance – August 31, 2022	–
Revenue received from mining	15.4
Revenue received from hosting	0.4
Revenue recorded as “other income” from the termination of hosting agreement	1.0
Sale of equipment with proceeds received in cryptocurrency	1.9
Proceeds from the sale of cryptocurrency	3.0
Cryptocurrency used to pay expenses and to purchase equipment	(16.7	)
Impairment of cryptocurrencies	–
Ending balance – August 31, 2023	5.0

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table presents the Company’s revenues disaggregated into categories based on the nature of such revenues:

Schedule of disaggregation of revenue
	Year Ended August 31, 2023
	2023		2022
Revenues from the sale of mining equipment	$	244,036	$	394,700
Revenue from hosting, net		12,020		23,644
Revenue from self-mining		389,222		9,325
Total revenue	$	645,278	$	427,669

NOTE 4 – PROPERTY AND EQUIPMENT

The following table sets forth the components of the Company’s property and equipment at August 31, 2023 and August 31, 2022:

Schedule of property and equipment
	August 31, 2023							August 31, 2022
	Cost		Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Equipment	$	966,407		(470,705	)		495,702	$	25,000	$	(3,125	)	$	21,875
Equipment not in service		4,453,466		–			4,453,466		6,509,602		–			6,509,602
Total fixed assets	$	5,419,873		(470,705	)		4,949,168	$	6,534,602	$	(3,125	)	$	6,531,477

Equipment not in service as of August 31, 2023 was comprised of the following:

Schedule of equipment not in service
Transformers	$	2,043,625
Immersion containers		966,214
Trinidad data center and infrastructure(1)		1,189,876
Miners		253,751
Total	$	4,453,466

_________________

(1)

During the three months ended November 30, 2023 the Trinidad location became operational and these assets became subject to depreciation since they were placed into service.

For the years ended August 31, 2023 and August 31, 2022, the Company recorded $470,705 and $3,125 respectively, in depreciation expense.

NOTE 5 – INVESTMENTS AND NOTES RECEIVABLES

Policy on Doubtful Accounts

We evaluate notes receivable for impairment under the guidelines of ASC 310-10-35-41. We establish an allowance for doubtful accounts when we determine that collectability of the note is in question.

Investment

In October 2022, we entered into a joint venture arrangement with ROC Digital Mining to jointly develop and operate a Bitcoin mining operation in Pecos, Texas. Under the joint venture, we contributed one immersion container, six transformers and cash with a value of $987,429 as a capital contribution to ROC Digital Mining I, LLC (the “ROC Digital”). In return, we received 240 Class B Units of ROC Digital pursuant to an ongoing offering of a total of 1,000 Class B Units at $4,400 per unit. We simultaneously sold ROC Digital four immersion containers for $1,200,000, which is payable pursuant to a promissory note the bears interest at 5% per annum, and is payable pursuant to monthly payments of $31,204 per month commencing on December 30, 2022, with any remaining principal and interest payable in full on May 31, 2026. The note is secured by the equipment that was sold. We also obtained the right to locate one container at the location that we would be able to use for self-mining.

F-14

As of August 31, 2023 the joint venture arrangement was classified as a long term asset on the Company’s balance sheet with a value of $987,429. The equipment at the joint venture location in Pecos, Texas was in the set-up and testing phase and no revenue had been generated from the joint venture as of August 31, 2023.

As described below of August 31, 2023 the note receivable from ROC Digital amounted to $1,029,721.

Notes Receivable

Notes receivable consist of notes received as partial consideration for the sale of mining equipment, and are collateralized by the mining equipment that was the subject of the sale. As of August 31, 2023 and August 31, 2022, notes receivable consist of the following:

Schedule of notes receivable
	As of August 31, 2023			As of August 31, 2022

Note receivable with an amended principal amount of $731,472, bearing interest at 5.0% per annum payable monthly. Principal due in one payment on August 31, 2024. Borrower has right to prepay principal with a 10% discount.	$	731,472		$	1,023,741

Note receivable-related party in original principal amount of $1,200,000, bearing interest at 5.0% per annum, payable in 41 equal monthly payments of $31,204 commencing December 30, 2022		1,029,721			–

Total		1,761,193			1,023,741

Less: Non-current portion		(1,386,749	)		(532,345	)

Notes receivable – short-term	$	374,444		$	491,395

As of August 31, 2023 and August 31, 2022 the balance of notes receivable was $1,761,193 and $1,023,741, respectively. During the year ended August 31, 2023, the Company recorded $28,720 in interest income on these notes.

NOTE 6 – LOANS PAYABLE AND ACCRUED LIABILITIES, RELATED PARTY

On October 19, 2022, the Company entered into a Line of Credit Agreement (the “2022 LOC Agreement”) with Innovative Digital Investors Emerging Technology, L.P. (“IDI), a limited partnership controlled by Jonathan Bates, the Company’s Chairman, and Raymond Mow, the Company’s Chief Financial Officer and a Director. The 2022 LOC Agreement provided for loans of up to $1,000,000 at the request of the Company to finance the purchase of equipment necessary for the operation of the Company’s business, and related working capital. Loans under the 2022 LOC Agreement accrue interest at twelve percent (12%) per annum, compounded on a 30/360 monthly basis until the loans have been repaid in full. The Company had the right to submit draw requests under the 2022 LOC Agreement until April 15, 2023. Each draw request is subject to the approval of IDI in its sole discretion. The amount drawn, plus all accrued interest therein, is repayable in full on December 1, 2023.

Effective May 13, 2023, the Company and IDI amended the 2022 LOC Agreement to increase the amount that the Company may borrow thereunder to $1,750,000, extended the date by which the Company could borrow funds thereunder to December 1, 2023, and extended the maturity date to December 1, 2024. Simultaneous with the extension, the Company borrowed an additional $500,000, primarily to fund the purchase of ASIC miners. As of August 31, 2023, the amount of principal and interest due to related party was $1,300,000 and $97,460, respectively, as compared to $-0- and $-0- at August 31, 2022.

F-15

NOTE 7 – STOCKHOLDERS’ EQUITY

Stockholders’ Equity

The Company is authorized to issue 500,000,000 shares of Common Stock with a par value of $0.0001 per share, and 20,000,000 shares of preferred stock with a par value of $0.0001 per share. As of August 31, 2023, and August 31, 2022, there were 49,665,649 and 48,606,915 shares of common stock outstanding, respectively. As of August 31, 2023 and August 31, 2022, our board of directors had authorized the issuance of one series of preferred stock, the Series A Convertible Preferred Stock (the “Series A Preferred”), for 500,000 shares, of which 453,966 shares had been issued.

Issuance of Shares

During the year ended August 31, 2023, the Company issued the following shares:

	·	71,429 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $31,429, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.

	·	70,423 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $30,986, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.

	·	45,455 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $20,000 or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.

	·	100,000 shares were issued to a third party for investor relations services. The shares were valued at $44,000, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering.

	·	200,000 shares were issued to an investment banking firm as an annual renewal of an investment banking agreement. The shares were valued at $0.44 per share.

	·	71,429 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $31,429, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.
	·	150,000 shares were issued to a Director pursuant to the terms of her Director appointment. The shares vest prorate over a 15 month period at the rate of 10,000 shares per month commencing on August 31, 2023. These shares were valued at $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering.

F-16

The Company estimates the fair value of stock-based compensation based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). The Company attributes compensation to expense using the straight-line method. Since the Company’s common stock is thinly traded, the Company utilizes the value, or an estimate thereof, paid by third parties for common stock in arms-length transactions with the Company.

Warrants

As of August 31, 2023, and August 31, 2022, the Company had the following warrants outstanding:

Schedule of warrants outstanding
Class	Amount Outstanding		Exercise Price		Expiration Date
Class A Warrants		590,000	$	2.00	August 5, 2024
Class B Warrants		590,000	$	5.00	August 5, 2024
Class C-1 Warrants		4,147,600	$	2.00	January 15, 2025
Class C-2 Warrants		4,147,600	$	4.00	January 15, 2025
Class C-3 Warrants		25,600	$	1.25	June 27, 2027
Total		9,500,800

NOTE 8 – COMMITMENTS AND CONTINGENCIES

As of August 31, 2023 and August 31, 2022, the Company had no contractual commitments.

NOTE 9 – SUBSEQUENT EVENTS

The Company paid the purchase price for the machines purchased from Luxor in part by crediting $149,250 due the Company from Luxor for the simultaneous sale to Luxor of 100 new ASIC miners to Luxor. The Company paid the balance of the purchase price of the machines by entering into a forward contract with Luxor under which the Company sold Luxor future hash rate generated by the miners through April 1, 2024. The implied finance rate under the forward contract is approximately 12.5%.

On November 7, 2023, the Company purchased 96 used S19 95T ASIC miners and 48 used M30S+ 102T ASIC miners for $79,728 cash.

In October 2022, the Company completed the installation of initial hosting containers under the Company’s agreement with Telecommunications Services of Trinidad & Tobago Limited (“TSTT”). However, prior to commencing operations, TSTT advised the Company that the utility refused to honor its existing agreement with TSTT with respect to electricity supplied to the Company’s pilot hosting site, and instead indicated that the rate would be approximately $0.09 per kwh, which TSTT disputed. The dispute has been resolved, the site became operational in October 2023, and the Company’s rate for electricity will be TSTT’s existing rate of 3.5 cents per kwh.

F-17

EXHIBIT 10.3

STATEMENT OF WORK NO. 1

COLOCATION SERVICES

This Statement of Work (“SOW”) is dated the 17^th day of June, 2022 (the “Effective Date”) and is entered into pursuant to the Master Consultancy Services Agreement dated the 18^th day of October, 2021 (the “Agreement”) between TELECOMMUNICATIONS SERVICES OF TRINIDAD AND TOBAGO LIMITED a limited liability company incorporated under the Companies Ordinance Chapter 31 No. 1 of the laws of Trinidad and Tobago and continued under the Companies Act Chapter 81:01 with its registered office is situated at No. 1 Edward Street, Port of Spain in the island of Trinidad (hereinafter called "TSTT") of the One Part and BITMINE IMMERSION TECHNOLOGIES, having its registered office situate at 2030 Powers Ferry Road SE, Suite 212, Atlanta, GA 30339 (“Customer”) of the Other Part.

TSTT and Customer may also be referred to individually as “Party” and collectively as “Parties” throughout this Agreement.

“Customer Equipment” means Customer owned infrastructure and equipment to be placed at the Premises.

“Premises” means the TSTT locations identified in Appendix I hereto at which the Customer will allowed to co-locate the Customer Equipment (“Services”)

Term

This SOW shall take effect from the Effective Date and continue for a period of (10) years from the date of installation of the Customer Equipment or 10^th July, 2022, whichever is later (“Term”).

Obligations of TSTT

During the Term, TSTT shall be responsible for the following:

(i)

Granting a licence to the Customer to occupy, a certain portion of the external premises of the TSTT sites listed at Appendix I hereto (“Licensed Area”)at Customer’s own risk and expense in order to place, install, operate and co-locate certain Customer Equipment comprising of servers, power and cooling equipment which are to be housed in certain container units, which shall be supplied and installed by the Customer at the Premises (“Designated Use”). The number of container units to be installed under this SOW shall be twenty (20) units and details of the specific Premises for co-location for these units are set forth in Appendix I hereto. The Parties agree that the arrangements, rights and obligations of the Parties with respect to the installation of units in excess of the twenty (20) units contemplated by this SOW, shall be documented in subsequent SOW’s to be agreed between the Parties.

	(ii)	Granting to the Customer its servants and/or agents to access to the Licensed Area for the Designated Use only and to enter, occupy and use the Licensed Area and to have ingress and egress thereto and there from, by and from the entrance and exit of the Premises as may be necessary or convenient.

	(iii)	Provision of fibre/internet connectivity to the container unit.

	(iv)	Coordination and provision of instructions on placement of each container unit at the respective Premises.

	(v)	Supply of uptime reports on a quarterly basis on the functionality of the fibre services being provided to Customer.

Customer’s Responsibilities

3.1	Customer shall be solely responsible for the Customer Equipment, which shall remain Customer’s sole property. Unless otherwise specifically agreed, TSTT shall have no duty to maintain or care for the Customer Equipment. Customer shall protect, maintain and keep in good order the Premises and the Customer Equipment, and shall ensure that neither Customer nor its agents or contractors damage any part of the Premises or any equipment located on or about the Premises.

3.2	Customer shall not make any construction changes or material alterations to the Premises, including cabling and power supplies, without TSTT’s prior consent. All fixtures, alterations, additions, repairs, improvements and/or appurtenances attached to or built into, on or about the Premises, shall be and remain part of the Premises and shall not be removed by Customer unless so required by TSTT in which event the items required to be removed shall be removed at Customer’s sole cost and expense.

3.3	Upon termination or expiration of this SOW, Customer shall remove all Customer Equipment, leaving the Premises in their original condition, ordinary wear and tear excepted. The fixtures which are to remain part of the Premises shall thereafter become the sole property and responsibility of TSTT.

3.4	The Customer shall not do or permit anything to cause interference, nuisance, annoyance, inconvenience, loss or damage to TSTT’s own equipment, facilities or services at the Premises. TSTT shall immediately notify the Customer in writing of any such interference, nuisance, annoyance, inconvenience, loss or damage of which it becomes aware and Customer shall have five (5) days after the receipt of such notice in which to cure same. Where interruption is caused to the services provided to other TSTT customers, the Customer shall immediately rectify the problem upon notification from TSTT. In the event that the Customer fails to remedy the said interference, nuisance, annoyance, inconvenience, loss or damage during the aforementioned cure period then TSTT may immediately this agreement and require removal of Customer Equipment. Such action will not be construed as a waiver of TSTT’s rights to claim for damages or any other remedy available to it in respect of same.

3.5	Customer shall arrange for delivery and installation of container units and Customer Equipment at the Premises at Customer’s sole expense upon the provision of no less than five (5) days’ prior written notice of the intended delivery date to TSTT. Customer may not install any equipment at the Premises, other than the Customer Equipment, without TSTT’s prior written approval.

3.6	Customer shall provide TSTT with written notification at least seven (7) days before removal of any Customer Equipment and such removal shall be subject to TSTT’s verification that there are no outstanding charges due and payable by Customer to TSTT.

3.7	Customer shall not without TSTT’s prior written consent, relocate the container unit.

3.8	Customer shall at its own expense be responsible for the capital outlay to deliver 1 MW of power inclusive of any transformers, electrical lines and connection costs.

3.9	Customer shall at its own expense be responsible for any civil works to accommodate the container unit including site construction such as grading of land and construction of plints consisting of gravel or concrete slabs, which shall be carried out by TSTT.

Fees and Expenses

4.1 In consideration of the performance of the Services during the Term of this SOW in accordance with terms below and subject to the terms and conditions set forth in Clause 3 of the Agreement, Customer shall pay a monthly rental to TSTT based on the number of container units which are installed and commissioned on the Premises, each month (“Fees”).

4.2 The Fees shall be payable in advance on the 1^st of each month in accordance with the following rates:

No. of Container Units (20)	Monthly Cost per Container (USD$)
1^st unit	USD$10,000
2^nd to 9^th units	USD$5,000
10^th to 20^th units	USD$3,600

Where the number of units to be installed exceeds 20 units, the monthly cost per unit shall be USD$3,600.

4.3	Notwithstanding Clause 4.2, Customer shall be required to make an advance payment of Thirty Five Thousand United States Dollars ($35,000) to cover the first month’s rental for the container units installed and commissioned at the Premises and to cover T&TEC installation costs.

4.4	In addition to the Fees set forth at Clause 4.1 herein, Customer shall:

	(i)	allocate 20% of the space in the Licensed Area for TSTT’s use in the course of its business and
	(ii)	be responsible for making payment in United States Currency to TSTT on a monthly basis, for electricity used by each container unit on the Premises. Customer agrees that it shall be billed in accordance with the standard rates charged by the Trinidad and Tobago Electricity Commission (“T&TEC”) for such electricity usage, which is the greater of 3.5 cents per kilowatt hour United States Currency where usage is metered or 75% of the declared reserved capacity, which is equal to the Customer's highest expected monthly kilovolt-ampere (kVA) demand at $7.40 United States Currency.

		Customer also agrees that these rates are subject to change at T&TEC’s sole discretion and all charges incurred for electricity usage shall be passed through to Customer at no extra cost. Notwithstanding clause 12 of the Agreement, if at any time during the Term the price for electricity consumption exceeds 5 cents per kilowatt hour United States Currency, either party may terminate the SOW upon the provision of one (1) months’ notice of termination in writing.

	4.5	In addition to the invoices for the Fees, TSTT shall remit separate invoices for electricity consumption on a monthly basis and Customer shall be required to make payment within twenty (20) days of receipt of such invoices.

Amendments

Any amendments to this SOW shall be made in accordance with Clause 1.2 of the Agreement.

Documentation

The documentation comprising the understanding of the Parties relative to the performance of the Services includes: (i) the Agreement and (ii) this SOW

IN WITNESS WHEREOF, TSTT and Consultant have executed this SOW, each by its duly authorized signatory, as of the date specified below.

Bitmine Immersion Technologies		Telecommunications Services of Trinidad and Tobago Limited

By:	/s/ Jonathan Bates	By:	/s/ Terese Lucio-Barrow

Name:	JONATHAN BATES		Terese Lucio-Barrow

Title:	CHIEF EXECUTIVE OFFICER		CHIEF LEGAL COUNSEL

Date:			June 17^th, 2022

Appendix I

Listing of TSTT Locations

NAME OF LOCATION

NUMBER OF UNITS

TSTT Macoya Work Center - Century Drive Macoya, IDC Estate

Container Specifications

	i.	Containers shall measure 40 feet in length
	ii.	Containers shall be properly equipped with locks and safety mechanisms.

EXHIBIT 10.5

Amended and Restated Line of Credit Agreement

This AMENDED AND RESTATED LINE OF CREDIT AGREEMENT (the “Agreement”) is entered into on this 11th day of May, 202, by and between Innovative Digital Investors, LLC., a limited liability company, on behalf of Innovative Digital Investors Emerging Technology LP, whose address is 10845 Griffith Peak Drive #2, Las Vegas, NV 89135 ("Creditor" or ”IDI”) and BitMine lmmersion Technologies, Inc., a Delaware Corporation, whose principal address is 2030 Powers Ferry Road SE, Suite 212, Atlanta, GA. 30339 (the "Company" or "BitMine"), collectively referred to as the "Parties." This Agreement amends and restates that Line of Credit agreement originally entered into on October 19, 2022.

WHEREAS, BITMINE is a corporation with limited resources and from time to time may be in need of capital in order to advance the development of its operations, specifically equipment related to Cryptocurrency Mining and Infrastructure and working capital needs.

WHEREAS, Qualified Assets will include any Mining Computers selected by the Company, and any equipment used to house these machines, which are approved by IDI in advance of purchase by the Company.

WHEREAS, loan proceeds may also be used for working capital needs at the sole discretion of IDI up to the borrow limit.

WHEREAS, BITMINE is in need of borrowing funds, and IDI is willing to advance funds to BITMINE for the purposes stated above.

WHEREAS, IDI and BITMINE are desiring to enter into this Agreement for the purposes of advancing the development of BitMine's business plan as stated above.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereby agree as follows:

1. Amount of Line of Credit: The amount of the Line of Credit shall be One Million Seven Hundred and Fifty Thousand Dollars ($1,750,000), which IDI shall loan to BitMine as follows:

A. Any requests to borrow funds shall be submitted with a “Use of Funds Statement.” If the request is to finance the purchase of equipment, the Use of Funds Statement shall include appropriate purchase or expense documentation documenting the equipment to be purchased with the proceeds. If the request is for general working capital, the Use of Funds Statement IDI shall indicate the types of expenses to be paid. All Use of Funds Statements shall be submitted to Jonathan Bates and IDI, and are subject to his approval. All amounts disbursed pursuant to a Use of Funds Statement shall be considered “Debt” under this Agreement.

B. Borrowing Period: The Company shall be entitled to borrow funds commencing with the signing of the original line of credit agreement on October 19, 2022 and continuing through December 1, 2023.

C. Senior Debt Status: The Debt shall be senior to all other company debt.

2. Interest Rate: All Debt shall incur interest at the rate of Twelve Percent (12%) per annum, compounded on a 30/360 monthly basis until the Debt has been repaid in full.

3. Time of Payment:

A. Maturity Date: All amounts due IDI under this Agreement, including principal and interest, shall be due and payable on December 1, 2024.

B. Prepayment: Advance payment or payments may be made on any amounts due under this Note without penalty or forfeiture. There shall be no penalty for any prepayment.

4. Collateral: The Company hereby grants Creditor a security interest and lien on all machinery and equipment purchased with the proceeds of the Loan, as well as all other assets or cash balances of the Company, including any in proceeds thereof, to secure repayment of all amounts due under this Agreement.

5. [Intentionally Omitted]

6. Assignability: The rights or obligations under this Note may not be assigned and/or delegated by the Company without the express written consent of the other party. Holder may assign his rights without restriction.

7. Representations and Warranties of Company: The Company represents and warrants as follows:

A. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company bas the corporate power to own its properties and to carry on its business as now being conducted.

B. The Company has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. The Company's Board of Directors has approved this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency. reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

C. This Agreement is the legal, valid and binding obligation of the Company, except as limited by applicable bankruptcy, insolvency, and other similar laws affecting creditors' rights generally.

8. Representations and Warranties of Creditor: The Creditor represents and warrants as follows:

A. That the Creditor has knowledge and experience in financial and business matters and that he understands that the merits and risks associated with the execution of this Agreement.

9. Events of Default:

A. In the "Event of Default'' as that term is described in 9(B), the total amount under due under this Agreement shall become immediately due and payable.

B. The term, "Event of Default" shall mean:

i. The Company is unable to make any of the payments specified in paragraph 3(A), and fails to cure such default within 15 days after written notice from the Creditor.

ii. The Company shall make an assignment for the benefit of creditors or shall admit in writing its inability to pay its debts as they become due; or

iii. The Company shall file a voluntary petition in bankruptcy, or shall be the subject of an involuntary bankruptcy petition which is not dismissed within 30 days after it is filed, or adjudicated bankrupt or insolvent, or shall file any petition or answer seeking any reorganization arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the present or any future Federal Bankruptcy Code or other applicable federal, state or similar statute, law or regulation, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of the Company or of all or any substantial part of its assets.

C. Notice of Default: In the event of an action triggering an Event of Default, the Creditor shall promptly notify the Company by USPS Certified Mail of the Event of Default. The Company shall have ten (10) days from the mailing of the Event of Default notice to cure the Event of Default by making the specified payment(s) or taking the specified actions.

D. Remedies on Default. Upon a default, the Creditor shall be entitled to all remedies provided at law or in equity, including all remedies available under the Uniform Commercial Code, including repossession and sale of any collateral for the Debt.

10. Notices: All notices, requests or instructions hereunder shall be in writing and delivered personally or sent by FedEx mail or similar overnight delivery, postage prepaid, as follows:

If to IDI: C/o Innovative Digital Investors, LLC. Attn.: Jonathan Bates; 10845 Griffith Peak Dr. #2; Las Vegas NV, 89135

If to BITMINE: BitMine Immersion Technologies Inc. Attn.: Jonathan Bates, CEO; 2030 Powers Ferry Road SE; Suite 212; Atlanta, GA. 30339

11. Governing Law and Venue: The terms and provisions of this letter are solely for the benefit of the BitMine and IDI and their respective successors, assigns, heirs and personal representatives. and no other person shall acquire or have any right by virtue of this letter. IDI and the Company agree that any dispute concerning the interpretation, validity or enforceability of this agreement, and any action arising from any alleged breach hereof shall be adjudicated exclusively in State or Superior Court for the county in which IDl's principal executive office shall be located at the time of institution of such action, or in the applicable district and division of the U.S. District Court having venue for disputes in that same county. In the event of any litigation arising from or related to this Agreement, or the services provided under this Agreement. the prevailing party shall be entitled to recover from the non- prevailing party all reasonable costs incurred including staff time, court costs, attorney's fees, and all other related expenses incurred in such litigation. In the event of a settlement of litigation between the parties or a resolution of a dispute by arbitration, the term "prevailing party" shall be determined by that process.

12. Entire Agreement: This Agreement, including all exhibits and schedules attached thereto, executed on even date herewith, constitutes the full and entire understanding and agreement between the parties with regard to the Debt, and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements.

13. Severability: The invalidity or unenforceability of any provision of this letter shall not affect the validity or enforceability of any other provisions of this letter, which shall remain in full force and effect.

14. Counterparts/Electronic Signatures: This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Facsimile or electronically transmitted signatures shall be deemed effective as originals.

15. Authority/Capacities/Entities: Each person signing this Agreement represents and warrants that he or she has complete authority and legal capacity to enter into this Agreement on behalf of the entity for which he or she is signing, and agrees to defend, indemnify. and hold harmless all other parties if that authority or capacity is challenged.

16. Knowing and Voluntary Agreement: The Parties represent they have read this Agreement, understand it. voluntarily agree to its terms, and sign it freely.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

Innovative Digital Investors Emerging Technology LP

By: Innovative Digital Investors, LLC, its General Partner

By: /s/ Jonathan Bates

Jonathan Bates, Managing Member of Innovative Digital Investors, LLC.,

BitMine Immersion Technologies, Inc.

By: /s/ Jonathan Bates

Jonathan Bates,

Chief Executive Officer

EXHIBIT 10.11

CO-LOCATION SERVICES AGREEMENT

This Co-Location Services Agreement (the “Agreement”) is made and entered into as of October 9, 2023 (the “Effective Date”), by and between BitMine Immersion Technologies, Inc. a limited liability company organized in Delaware (“You” or “you”), and Soluna SW, LLC (“Contractor”), and contains the terms and conditions under which Contractor will provide, and you will pay for providing dedicated space, housing, powering, connecting, facility monitoring, and servicing specialized computer equipment dedicated to mining cryptocurrency (collectively, “Services”), as further described herein. You and Contractor may be referred to collectively as the “Parties” or individually as a “Party”.

1. Definitions and Representations

1.1 Definitions

Terms capitalized in this Agreement have the following meanings:

Affiliates means a Party’s shareholders, directors, officers, employees, and agents, as well as a Party’s subsidiaries (entities in which such Party owns fifty percent (50%) or more of voting power) and each of their directors, officers, employees, and agents.

Added Charges means charges that Contractor may invoice to you from time to time for (a) Connectivity Services that exceed the capacity specified in the original Customer Order (b) Other Services or fees or costs set forth under Section 2.12.

Anniversary Date means the annual anniversary of the Start Date.

Authorized Personnel means each person that: (a) is included on the most recent list of persons designated by you in writing to act on your behalf in accordance with Contractor’s then-current procedures; or (b) accompanies Authorized Personnel as described in (a) while at a Co-Location Center, other than Contractor Personnel.

Computational Routine means any set of coded instructions that Mining Equipment may execute.

Confidential Information means non-public information, including (a) information disclosed by the Disclosing Party, in writing or orally, marked as confidential at the time of disclosure; and (b) information containing the Disclosing Party’s communications or proposals, financial statements, intellectual property, benchmarking information, satisfaction surveys, information of any kind and in any medium relating to its business planning or business operations, or trade secrets and any other information that enjoys commercial value because it is not generally known by others, and specifically includes, without limitation, the actual physical location of any Co-Location Center, that may be disclosed, whether orally or in writing, from or on behalf of a Party (in such capacity, the “Disclosing Party”) to the other Party (in such capacity, the “Receiving Party”). The terms and conditions of this Agreement are also deemed the Confidential Information of the Parties.

Connectivity Services means the electrical power needed to run the Mining Equipment and access to the Internet.

Co-Location Center means any one of Contractor’s facilities where Contractor connects and runs cryptocurrency mining equipment. A facility may include a facility secured through a co-location agreement with a third party who either owns or leases a space or building (“Third Party Facility”).

Co-Location Rate means the aggregate monthly fee due by you, as laid forth in Exhibit A.

Cryptographic Reward means cryptocurrency earned from your Mining Equipment, while mining for cryptocurrency.

Customer Order means the Services and the number and type of Mining Equipment to be delivered as you specify on Exhibit A.

Contractor Personnel means an employee, consultant, director, owner or agent of Contractor.

Fees means those fees set forth on Exhibit A and any other amounts owed hereunder.

Force Majeure means a cause or event that is not reasonably foreseeable or is not otherwise caused by or under the control of the Party claiming Force Majeure, and includes acts of God, fires, floods, explosions, riots, wars, hurricane, sabotage, terrorism, vandalism, restraint of government, governmental acts, change of law, injunctions, pandemics and related governmental actions of any type, and other like events that are beyond reasonable anticipation and control at the time of entering into this Agreement.

Mining Equipment means the cryptocurrency mining equipment owned by you, or provisioned by Contractor on your behalf, for deployment in the Mining Space as specified on the Customer Order.

Mining Space means the dedicated area inside a Co-Location Center that Contractor uses to connect and run your Mining Equipment.

NET Income means, for a given period, the Cryptographic Reward, multiplied by the corresponding Spot Price, minus the sum of the Power Cost (as defined in Exhibit A) and the Fixed Charge (as defined in Exhibit A) over the period.

Return Period means a period of thirty (30) calendar days starting on the Termination Date.

Other Services means, other than its Standard Services, the additional services that Contractor may provide under the terms of this Agreement. Other Services may include, without limitation, returning or selling Mining Equipment; removing and replacing Mining Equipment; and repairing Mining Equipment.

Outage Time means the total hours of failure of 95% or greater of your units of electrical power or internet connectivity of each month, excluding mandatory and contracted curtailments by the grid operator which, for the avoidance of doubt, include the 6 hours on weekdays where the data center is idle. For the avoidance of doubt, an Outage Time does not include any outage described in Section 8 hereof.

Pay Period means a month-long billing cycle during the term of the Agreement. Payment Default means payment of any Fees is unpaid after their respective due dates. Service Level Credits means those credits as specified on Exhibit A.

Services means, collectively, the Other Services and the Standard Services.

Spot Price means, for a given period and a given cryptocurrency, the open price plus the close price, divided by 2.

Standard Services means Contractor’s service of housing your Mining Equipment in its Co-Location Center and providing Connectivity Services.

Start Date means the date that Mining Equipment successfully begins operation upon deployment in the Co- Location Center, as set forth on Exhibit A.

Term has the meaning set forth in Section 6 below. Termination Date means the final day of the Term. Termination Fees means those fees laid forth in Exhibit A.

Written Notice shall mean written correspondence via letter or email to those parties designated in Section 1.3 or via a ticketing system which Contractor shall designate. And, for the avoidance of doubt, exclude call, text message, WeChat, Telegram or other messaging medium.

1.2 Representations.

By signing this Agreement or paying the first invoice, You represent that:

	·	You have the legal right and authority to use the Mining Equipment in the manner contemplated under this Agreement;
	·	Power costs are based on market rates set by the applicable grid system set forth in Exhibit A, and You acknowledge and agree You have had sufficient opportunity to review to your satisfaction historical and expected future market rates for power of such grid system.
	·	The individual executing and delivering this Agreement has been duly authorized to enter into and perform this Agreement on behalf of you, and the execution and delivery of this Agreement and its performance of its duties hereunder will not violate the terms of any other agreement to which it is a party or by which it is bound;
	·	You will materially comply with all applicable laws required for the due performance of this Agreement;
	·	The Mining Equipment is currently in good working condition and without defect;
	·	You are an entity that has been duly organized under applicable law and is in good standing;
	·	The Mining Equipment is insured by you at amounts to your satisfaction.

By signing this Agreement, Contractor represents that:

	·	Contractor is duly authorized to grant You access to and use of the Mining Space for the purposes and under the terms of this Agreement;
	·	Contractor’s use of the Co-Location Center and its Services to its knowledge at all times materially complies with all applicable laws;
	·	Contractor shall be licensed, approved, permitted, or consented by any local government (as required) to provide the Services hereunder;
	·	Contractor (a) is properly constituted and organized, (b) is duly authorized to enter into and perform this Agreement, and (c) the execution and delivery of this Agreement and its performance of its duties hereunder will not violate the terms of any other agreement to which it is a party or by which it is bound; and
	·	Contractor’s facilities and operations are insured at commercially reasonable levels.

Both Parties represent that:

Each Party now or in the future may be a publicly traded company and certain laws restrict the trading of securities on the basis of material, non-public information (“MNPI”). Each Party confirms, acknowledges and agrees that it may obtain MNPI as a result of this engagement. Each Party represents and warrants that it is familiar with all applicable securities laws with respect to MNPI and confirms, acknowledges and agrees that it will comply with all such laws.

1.3 Notices.

Any notices to be provided to the Parties under this Agreement shall be delivered to the following addresses (whether by mail or electronic email) or via a ticketing system which Contractor shall designate (“Written Notice”).

To You:

BitMine Immersion Technologies, Inc.

2030 Powers Ferry Road SE; Suite 212

Atlanta, GA 30339

Attn.: Jonathan Bates, CEO

jbates@bitminetech.io

To Contractor:

Soluna SW, LLC

325 Washington Ave. EXTENSION

Albany, NY 12205

Attention: CFO

SWNotices@Soluna.io

2. Operations

2.1 Operations, General. Upon delivery of the Mining Equipment, Contractor will undertake activities to procure, install, and operate all capital equipment, software, and related technology to commence the operations of the Mining Equipment in the Mining Space. Once in operation, Contractor will perform ongoing and support operations to keep the Mining Equipment operating according to commercially reasonable standards, taking into account the type and age of the Mining Equipment, to ensure adequate and reasonable ongoing operations and monitoring of the Mining Equipment including required software updates, systems maintenance, thermal monitoring, and other optimization.

2.2 Delivery. You will deliver, at your own risk of loss and sole cost and expense, each unit of Mining Equipment to the location designated in Exhibit A. You shall provide Contractor with no less than three (3) weeks prior Written Notice of the actual delivery date. Contractor will receive, unpack, and inspect Mining Equipment for damage and, if damaged, inform you and arrange to return the Mining Equipment in the manner set forth in Section 2.10. The Services provided herein is based on the total number of units to be serviced as specified on the Customer Order. If the total number of units delivered exceed the number of units specified under Customer Order (“Excess Units”), then Section 2.12 shall apply.

You understand that this contract is a reservation of the Mining Space within Contractor’s Co-Location Center and that, if you fail to deliver equipment within sufficient time to start operations by the Start Date, Contractor may elect, in its sole discretion, to either defer the Start Date or collect any fees due to it under this Agreement.

2.3 Installation. Within fifteen (15) days of receiving the Mining Equipment, or as otherwise mutually agreed by the parties, Contractor will install Mining Equipment in the Mining Space that Contractor deems suitable in its sole reasonable discretion. You must provide, at your expense, all other accessories that may be required to access Connectivity Services, including, without limitation a power supply, all power delivering devices must have a point of disconnect. You must also provide any equipment required to alter Contractor’s specified environment to meet your co-location needs and installation of such equipment shall be governed by Section 15.2 (Out of Scope Labor).

2.4 Failed Deployment

Initial Deployments: Upon execution of the definitive agreements, the You shall have a period of twenty (20) business days to deliver the mining machines to the Contractor's facility. If the Your mining machines are not received within this twenty (20) business day period, a Failed Deployment Charge will accrue at a rate of $0.03 per kWh for the period in question until such event is cured. If a period of ten (10) business days beyond the initial twenty (20) business day period elapses without receipt of the mining machines, the Contractor shall have the right to terminate this Agreement. The security deposit paid by You will not be refundable in this case.

Operations and Additional Machines If, during the term of this Agreement, the Contractor identifies a non- hashing machine or requires additional machines due to underperformance of the Your fleet, the Customer shall have a period of ten (10) business days from receipt of written notice by Contractor to deliver a working replacement machine. Failure to deliver a working machine within these ten (10) businesses day period will result in an accrual rate of $0.03 per kWh for the period in question. You shall be responsible for the return shipping costs, packaging or other transportation costs necessary to return the Customer hardware. If a period of ten (10) business days beyond the initial ten (10) business day period elapses without receipt of the mining machines, the Contractor shall have the right to a pro-rata termination of this Agreement for the proportion of unused kW. The proportion of the security deposit paid by the Customer relating to such kW will not be refundable in this case.

2.5 Monitoring. Contractor will monitor its own facility (including, for the avoidance of doubt, the Mining Space) with its own systems in accordance with its internal protocol and practices. Contractor will monitor the safety of the Mining Equipment and all its removable parts by organizing security and video surveillance devices for the Co-Location Center. Contractor shall monitor the safety and function of the Mining Equipment and shall at all times segregate and maintain the identification of the Mining Equipment.

You will receive access to Contractor’s suite of monitoring tools, which may change from time to time but shall initially be access to a Foreman ASIC Monitoring & Management client portal. Contractor shall use this and its proprietary software, MaestroOS^TM, to idle and reboot machines. Both Parties must agree in writing to the installation of any non-stock firmware onto Mining Equipment. Such agreement shall be set forth in an addendum to this Agreement, executed by both parties, and shall otherwise be subject to the terms hereof.

From time-to-time, Contractor may request you to switch to a backup mining pool specified by you at any time that your chosen mining pool has limited up-time, problematic or high-maintenance connectivity, or requires excessive monitoring. Contractor shall not be held responsible, nor shall be required to compensate Service Level Credits, for downtime or lost revenue or operations arising from your failure to do so.

In the event of any loss or damage of the Mining Equipment due to Contractor’s intentional misconduct or gross negligence (such as unstable racks, unreinforced cryptocurrency mining facilities, etc.—but specifically excluding ordinary wear-and-tear on your Mining Equipment), Contractor shall compensate you for such loss or damage. You are otherwise solely responsible for provision of correct network destination information, reception of the results of operation at your preferred destination (e.g., network, mining pool), and management of the value derived thereby.

2.5 Maintenance. Contractor does not have any duty to repair Mining Equipment, and at your request only (a) to fix a trivial failure whose repair requires nothing more than minimally invasive techniques, or (b) upon separate mutual agreement between you and Contractor that shall be governed under section 15.2 (Out of Scope Labor). Maintenance that requires de-racking of machines (e.g., PSU or fan swaps, or swapping of control boards) are not included in the contract price and will incur out of scope labor charges. As set forth in Exhibit B, a fixed number hours per week of out of scope labor (“Hours Cap”) is included in the Fixed Charge. Any out-of-scope labor beyond the Hours Cap will incur at the rate laid forth in Exhibit B. SPARE PARTS ARE NOT INCLUDED IN THE SCOPE OF SERVICE. You agree that you will not hold Contractor responsible for any damage to Mining Equipment incurred during troubleshooting or maintenance, unless such damage is due to Contractor’s intentional misconduct or gross negligence.

2.6 Mining Space. Contractor hereby represents and warrants that the Mining Space is in good working condition and suitable for use as contemplated herein. Issues arising from Contractor’s failure to remedy any issue after reasonable opportunity to do so, which is brought to Contractor’s attention by you via Written Notice, shall be governed under the terms of 6.3(a) Termination.

2.7 Limited Access, Inspection. Contractor will keep the Co-Location Center secure and accessible only to Authorized Personnel and Contractor Personnel.

You shall have the right, upon reasonable prior Written Notice to Contractor, and at reasonable times during usual business hours of Contractor to inspect any physical assets held or operated by Contractor that comprise or otherwise belong to you; it being understood that such inspection shall not unreasonably interfere with the operations of the facility. You may exercise such right through any agent or employee you designated in writing by you or by an independent public accountant, engineer, attorney or other consultant or representative so designated. Contractor shall review and respond in a timely manner to any claims or inquiries made by you regarding matters revealed by such inspection.

2.8 Relocation. Contractor may, in the event of (i) any imminent harm or damage to the Mining Equipment or (ii) due to inability to operate in the Mining Space -- and at Contractor’s sole cost and expense -- re-locate Mining Equipment to a different mining space in the same Co-Location Center, provided that (a) the representation and warranty contained in Section 2.6 shall apply to the new mining space, and (b) in the event any such relocation damages the Mining Equipment, Contractor shall reimburse you for any related damages.

2.9 Removal. Contractor may also remove any item of your Mining Equipment that Contractor believes, in good faith and in its sole reasonable discretion, poses a risk of damage to other equipment or is generally a hazard to the Co-Location Center.

You may remove any item of your Mining Equipment with thirty (30) days Written Notice. Removal of the equipment shall cause to come due the pro-rata of Termination Fees laid forth in Exhibit A.

2.10 Return. Upon Contractor’s receipt of any amounts due under this Agreement, Contractor will, within three (3) business days, return your Mining Equipment, at your sole cost and expense, by (a) packing the Mining Equipment in packing materials reasonably suited for transport, and (b) designating a date, time, and place for you or for your freight service to pick up the Mining Equipment. Contractor shall bear the risk of loss during packing and you shall bear the risk of loss during return shipment. Payment must be current for this clause to take effect.

2.11 Redeployment. Any items of Mining Equipment remaining unreturned after the Return Period ends may, in Contractor’s sole and absolute discretion, be redeployed by Contractor for its own use (without any compensation to you), sold, or disposed of, and such redeployment, sale, or disposal need not be undertaken in a commercially reasonable fashion. If sold, the proceeds shall be distributed, in order of priority:

(i) to Contractor as reimbursement for the cost of storage as calculated under 2.12, and sale (including a commercially reasonable commission) of the Mining Equipment;

(ii) to Contractor in payment of any remaining unpaid Co-location Rates, Added Charges owed by you, or any other fees set forth on Exhibit A or under this Agreement or any other agreement, contract or document between the Parties or their Affiliates, that have accrued and are unpaid; and

(iii) to you as compensation for the sale of its Mining Equipment.

You hereby irrevocably designate and appoint Contractor’s duly authorized officers and agents as your agent and attorney in fact, to act for and in your behalf and stead, for the purpose of executing and delivering any documents, such as a Bill of Sale, that may be required to give effect to a sale of your Mining Equipment under this Section 2.11. This appointment is coupled with an interest and is, therefore, irrevocable.

2.12 Excess Units. If the number of units of Mining Equipment delivered exceeds more than 3% of the number of units as specified in the Customer Order, a handling fee may be charged as laid forth in Exhibit A. Contractor, at its sole and absolute discretion, may elect to (a) accept the Excess Units and charge an additional rate on any increase in Connectivity Services used as a result of adding additional units under this Agreement, (b) return the Excess Units in accordance with Section 2.10, or (c) store the Excess Units until you make arrangements to have them picked up at the storage location. You will be charged a storage rate of one hundred dollars ($100.00) per day per unit if stored within Contractor’s co-location facility, or an amount equal to the costs associated in renting, loading and unloading storage containers plus twenty-five percent (25%). You acknowledge Contractor and their Affiliates have no obligation or duty to ensure the Excess Units are safe, secure and protected while in its possession and agree to agree to indemnify, defend and hold Contractor and its Affiliates from any damages, strict liability, negligence, recklessness malfeasance, costs, expenses, judgements, injuries, attorney’s fees, penalties, and/or fees arising or resulting from Contractor or its Affiliates’ storage or handling of Excess Units.

2.13 Title; Lien, Waiver, Notification of Default.

There is an existing Lien on the machines to Luxor Technology Corporation (“Luxor”). You hereby acknowledge that Contractor and Luxor are party to that certain Waiver and Consent Agreement, approximately of the date hereof, (“Waiver”), which Waiver pertains to, among other things, the Mining Equipment. You hereby acknowledge and agree that any act taken (or not taken) by Contractor in connection with its performance under the Waiver shall not be deemed a breach of this Agreement, and to the extent there is a conflict between the terms of this Agreement and the terms of the Waiver, the Waiver shall control.

You shall promptly notify Contractor upon the occurrence of any event of default or of your receipt of notice of an event of default under any agreement between You and your Affiliates on the one hand and Luxor or any of its Affiliates on the other (“Luxor Agreements”). Upon such event of default or your receipt of notice of an event of default under any Luxor Agreement (“Luxor Default”), one hundred percent (100%) of the cryptocurrency mined from your Mining Equipment will be exclusively for, and remitted to, Contractor’s account until such time as the Luxor Default is cured. If such Luxor Default is not cured within 14 calendar days, Contractor shall be entitled to retain all funds mined to its account and Luxor Default will be deemed a material breach of this Agreement and Contractor shall be entitled to exercise all rights under this Agreement as a result thereof.

2.14 Negative Covenant.

You hereby covenant in favor of Contractor that you will not create or permit to be created or to remain any mortgage, pledge, lien, lease, hypothecation, security interest, encumbrance, charge, or conditional sale or other restriction (”Liens”) on any of the Mining Equipment and all substitutions, replacements, improvements, or additions thereto, other than the existing lien to Luxor. During the Term, you authorize Contractor to file a UCC financing statement describing the restrictions set forth in this Section 2.14, if Contractor determines it is desirable to provide notice to other persons of such restrictions, and with permission and cooperation from Luxor.

3. Connectivity Services

3.1 Provision of Service. Contractor will provide Connectivity Services to Mining Equipment throughout the Term in the capacity specified in the Customer Order. Usage exceeding such capacity will be billed at the maximum rate under Contractor’s respective electrical and internet rate schedules.

3.2 Right to Modify Connectivity Services. Contractor may, for any reason, at any time, and in any event at Contractor’s cost and expense, modify its equipment, cabling, and network facilities for providing Connectivity Services at the Co-Location Center, provided that such modification does not negatively impact the Connectivity Services.

3.3 Service Level Requirements.

	a)	The Co-Location Center is currently in operation and runs in “off-peak” mode resulting in (i) eighteen (18) hours availability on weekdays and (ii) twenty-four (24) hours availability on weekends and federal holidays. Except for situations such as natural disasters, power grid failures, interruption of power by the local utility, and periodic maintenance, during the Term, Contractor shall guarantee that the Outage Time shall not exceed twenty percent (20%) of the total hours in a given month. Contractor shall make reasonable efforts to restore fully functioning Connectivity Services.

	b)	In the event of any Outage Time is in excess of twenty percent (20%) of the total time in a month, you are entitled to unilaterally terminate this Agreement immediately and shall not pay any penalty or bear any liability. For the avoidance of doubt, Outage Time resulting from Force Majeure, outages resulting from the power utility, or loss of connectivity resulting from outages by the internet service provider shall not count against this amount in this Section 3.3 (b).

4. Mining Operations

4.1 Use Restricted to Mining. You shall limit the Computational Routines of the Mining Equipment to processes that mine cryptocurrency and all attended sub-routines, including processes for management and monitoring of the Mining Equipment and participating in mining pools.

4.2 No Assurances. Contractor does not guarantee that use of Mining Equipment solely for mining cryptocurrency is now or will continue to be permitted under the laws of any jurisdiction that may have authority over you.

4.3 Legal Compliance. You shall comply at all times with all applicable laws, regulations, and ordinances of any applicable governmental authority relating to your use of the Mining Equipment.

4.4 KYC & Money Laundering Checks. You shall submit to standard “Know Your Customer” checks upon execution of this Agreement.

4.5 Neither Lease Nor License. You expressly acknowledge and agree that Contractor’s provision of the Services is neither a lease of, nor a license to access, your space within the Co-Location Center. This Agreement does not convey to you an interest in real property.

5. Fees and Billing

5.1 Fees. The applicable fee for Contractor’s Standard Services and any Other Services provided during the Term shall be as set forth in Exhibit A.

5.2 Payments

	a)	Standard Services. You will pay the fee for Contractor’s Security Deposit and Set-up Fee as set forth on Exhibit A in full and prior to the Start Date. Monthly payments are due with respect to the Co- Location Rate, as set forth on Exhibit A.
	b)	Other Services. You will pay any Added Charges promptly upon receipt of an invoice from Contractor. Please refer to payment terms in Section 15.
	c)	If a Payment Default exists for seven (7) calendar days, Contractor may specify that one hundred percent (100%) of the cryptocurrency mined from your Mining Equipment will be exclusively for, and remitted to, Contractor’s account until such time as the Fee plus a late charge of 25% are remitted in full; provided, however, in no event shall the late charges payable hereunder exceed the maximum amount allowed by applicable law. Contractor will sell the cryptocurrency mined on a regular basis and shall not be responsible for any gain / loss resulting from the revaluation of such currency.
	d)	If a Payment Default exists for fourteen (14) calendar days, in addition to the rights granted to Contractor under this Section 5.2, the unpaid amount and any unpaid penalty late charges shall accrue an additional penalty of 25%, which shall be assessed and become due immediately; provided, however, in no event shall the penalty payable hereunder exceed the maximum amount allowed by applicable law.
	e)	If a Payment Default exists for thirty (30) calendar days, in addition to the rights granted to Contractor under Section 5.2(d) above, Contractor may elect in its sole discretion to terminate the agreement and elect to retain funds from (i) the Security Deposit (as defined in Exhibit A) plus (ii) any funds mined to its own account during the period of default, and (iii) liquidate the Mining Equipment to compensate for losses or other amounts owed hereunder or any ancillary agreement between the Parties or their Affiliates.

5.3 Taxes. You are responsible for paying all taxes, fees, or assessments and other charges imposed on you by any governmental agency that may result from this Agreement, or any of the activities contemplated hereunder.

6. Term, Renewal, Termination

6.1 Term. This Agreement shall commence on the day Contractor receives a deposit from you and, unless earlier terminated in accordance with Section 6.3 or Section 15.1, shall continue until the period laid forth in Exhibit A (the “Term”). The foregoing notwithstanding, in no event shall your right to occupy the Mining Space extend beyond any underlying lease or other superior real estate interest in the Co-Location Center.

6.2 Renewal. Unless either Party expresses a desire not to renew this Agreement in writing no later than thirty (30) calendar days prior to the end of the Term, this Agreement will automatically renew on a month- to-month basis until termination by either Party. If no notice of termination is provided, this Agreement shall continue in effect for each successive month until terminated by either party with at least 90 days' written notice. Any such termination shall be effective at the end of the then-current month.

6.3 Termination. This Agreement may be terminated in any of the following ways:

	a)	Either Party may terminate this Agreement immediately upon Written Notice to the other Party (“Termination Notice”) in the event that the other Party has materially breached any obligation under this Agreement or any other written agreement, contract or document between the parties or their Affiliates, or any of its representations or warranties under this Agreement are inaccurate in any material respect, and such breach or inaccuracy is not cured within thirty (30) days (other than a Payment Default, which must be cured within ten (10) business days of the missed payment and without Written Notice) after Written Notice thereof. If you terminate this Agreement under this Section 6.3(a), (x) payment of the Early Termination Fee will not be required and (y) you have the right to immediately remove any item of your Mining Equipment from the Co-Location Center.
	b)	Except as expressly provided herein, you are entitled to unilaterally terminate this Agreement at your sole discretion with one hundred and fifty (150) days written notice, but you will be obligated to pay the Early Termination Fee in the amount set forth on Exhibit A.

7. Casualty Risk

Contractor will bear the risk of loss due to a casualty only to the extent that (a) the event precipitating the loss is due to Contractor’s intentional misconduct or gross negligence, and (b) Contractor’s insurance policy provides coverage for your claim of loss. Otherwise, you shall bear the risk of loss resulting from any casualty event (including, without limitation, fire, earthquake, or flood). You expressly acknowledge this risk and understand the advisability of obtaining your own policy of insurance to cover the risk of loss of your Mining Equipment due to a casualty event. Without limiting the foregoing, under no circumstances shall you have a claim against Contractor or any of its Affiliates in relation to any loss of your Mining Equipment, including, but not limited to, claims for relocation expenses, the value of any unexpired term, or loss of business from full or partial interruption of service.

8. Disclaimer

THE MINING SPACE AND THE CONNECTIVITY SERVICES ARE PROVIDED “AS IS” AND CONTRACTOR DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY AND ALL EXPRESS AND/OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND TITLE, AND ANY WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE. CONTRACTOR DOES NOT WARRANT THAT THE MINING SPACE AND/OR THE SERVICES WILL BE AVAILABLE UNINTERRUPTED, ERROR-FREE OR IN A COMPLETELY SECURE BASIS. IT IS INTENDED THAT THE FEES AND CHARGES PAYABLE BY YOU HEREUNDER SHALL BE A NET RETURN TO CONTRACTOR, FREE OF EXPENSE, CHARGE, OFFSET, DIMINUTION OR OTHER DEDUCTION WHATSOEVER ON ACCOUNT OF THE PREMISES OR THE MINING SPACE (EXCEPTING FEDERAL AND STATE INCOME TAXES OF GENERAL APPLICATION AND THOSE EXPENSES WHICH THIS AGREEMENT EXPRESSLY MAKES THE RESPONSIBILITY OF CONTRACTOR). YOU HEREBY WAIVE ALL RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE TO MAKE REPAIRS TO THE MINING SPACE OR THE PREMISES AT CONTRACTOR’S OR CONTRACTOR’S LESSOR’S EXPENSE.

YOU UNDERSTAND THAT CONTRACTOR FACILITIES PARTICIPATE IN CERTAIN INTERRUPTIBLE RATE CLASS AND POWER RELIABILITY PROGRAMS. YOU WARRANT AND ACKNOWLEDGE THAT SERVICE INTERRUPTIONS MAY OCCUR FROM TIME-TO-TIME AND THAT THE FAVORABLE CO-LOCATION RATES YOU ARE RECEIVING ARE IN CONSIDERATION FOR THESE PROGRAMS. YOU AGREE THAT YOU SHALL NOT BE ENTITLED TO BONA FIDE INTERRUPTIONS OF SERVICE AS A RESULT OF CONTRACTOR’S OBLIGATIONS ARISING FROM INTERRUPTIBLE RATE CLASS AND POWER RELIABILITY PROGRAMS.

9. Limitation of Liability

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EACH PARTY’S MAXIMUM AGGREGATE LIABILITY TO THE OTHER PARTY RELATED TO OR ARISING UNDER THIS AGREEMENT WILL BE LIMITED TO $1,100,000. IN NO EVENT WILL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF THEIR EMPLOYEES, AGENTS, OR CONTRACTORS, OR ANY OTHER THIRD PARTY FOR ANY CLAIMS ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING IN RELATION TO THE MINING SPACE, THE MINING EQUIPMENT, THE SERVICES, INCLUDING WITHOUT LIMITATION THE SERVICES SET FORTH IN THE SERVICE ORDER FORM, YOUR BUSINESS OR OTHERWISE, WHICH CLAIMS INVOLVE INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.

Contractor shall not be liable to Customer or any third party for damages that are caused by or result from the Initial Firmware designated by Customer, as set forth in Exhibit D hereof.

10. Indemnification

Each Party shall indemnify, defend, and hold harmless the other Party and its Affiliates from and against any and all claims, demands, actions, damages, liability, judgments, reasonable expenses and costs (including but not limited to reasonable attorneys’ fees) (each, a “Loss”) arising from the indemnifying Party’s (a) use of the Mining Space, the Mining Equipment, and Connectivity Services, (b) Computational Routines, (c) breach of any warranty, covenant or obligation hereunder, or (d) violation of any applicable law or regulation.

11. Third-Party Release of Liability and Consent of Obligations to Third Parties

Contractor shall be fully responsible for any losses arising from the negligent or intentional acts and omissions of any and all third parties, including the Contractor Personnel and third parties, involved in the Services or with the servers and any third parties who own, lease or sublease all or any portion of a Co- Location Center. Except in the case of gross negligence or intentional misconduct, no third party who owns, leases or subleases all or any portion of a Third Party Facility be deemed to have any obligations to you.

12. Confidential Information

The Receiving Party will hold the Disclosing Party’s Confidential Information in strict confidence, and will not use, publish, or disclose it to anyone else without first obtaining the Disclosing Party’s prior written permission, except in respect of information that ; (a) becomes part of the public domain through no fault or action of the Receiving Party; (b) becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third party is not and was not prohibited from disclosing such Confidential Information; or (c) was or is independently developed by the Receiving Party without reference to or use, in whole or in part, of any of the Disclosing Party’s Confidential Information. Neither Party will use or disclose Confidential Information of the Disclosing Party without its prior written consent, except where: (i) the disclosure is required by applicable law or regulation (including securities laws regarding public disclosure of business information) or by an order of a court or other governmental body having jurisdiction after taking steps to maintain its confidentiality where practicable; (ii) it is reasonably necessary to be disclosed to that Party’s, or its Affiliates’, employees, officers, directors, attorneys, accountants and other advisors; or (iii) it is necessary for a Party to exercise its rights and perform its obligations under this Agreement. In any event, the Disclosing Party shall ensure that disclosure shall not be broader than necessary and that the Receiving Party agrees prior to receipt to keep the information confidential to the same extent as under the Agreement (except that such agreement need not be obtained for disclosures to a court, regulator or arbitrator).

13. Dispute Resolution

13.1 Applicable Law. This Agreement shall in all respects be governed by the laws of the State of New York without giving effect to any choice or conflict of law provision or rule that would require or permit the application of laws of any jurisdiction other than those of the State of New York. Any action, suit or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any of the Parties in the state of New York, and each of the Parties consents to the exclusive jurisdiction of such courts in any such action, suit or proceeding and waives any objection to venue laid therein. Each of the Parties hereto hereby consents to service of process in any such suit, action or proceeding in any manner permitted by the laws of the State of New York and waives and agrees not to assert by way of motion, as a defense or otherwise, in any such action, suit or proceeding any claim that service of process made in accordance with this Agreement does not constitute good and sufficient service of process. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

13.2 Litigation Fees. The substantially prevailing Party in any litigation or arbitration related to this Agreement shall be entitled to recover reasonable attorneys’ fees and expenses of litigation or arbitration from the other Party, including the fees and expenses of any appeal.

13.3 Limitation of Dispute. Any civil dispute arising from this Agreement shall be limited only to Contractor, and not its Affiliates, employees, agents, or investors.

14. Miscellaneous

14.1 Survival. The rights and obligations of the Parties in this Agreement that would by their nature or context be intended to survive the expiration or termination of this Agreement shall so survive.

14.2 Force Majeure. Any delay or failure in the performance by either you or Contractor shall be excused if and to the extent caused by Force Majeure.

14.3 Notices. All notices to be given by one Party to the other pursuant to this Agreement must be delivered in person, by email, by facsimile, or deposited in the United States mail, postage prepaid, by certified or registered mail, return receipt requested and addressed as specified on the face page of this Agreement. Notices are deemed given and delivered (a) upon receipt, if hand delivered or sent by facsimile or (b) three (3) days after being properly mailed. Any Party, by Written Notice to the others, may alter the address or facsimile telephone number for receipt by it and its agents of Written Notices hereunder.

14.4 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, each party hereto intends that such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law.

14.5 Successors and Assigns. Neither Party shall assign any rights, duties, or obligations hereunder without the prior written consent of the other Party, and any attempt to so assign without such written consent shall be void. Notwithstanding the foregoing, each Party may assign and transfer this Agreement and its rights and obligations hereunder to (a) one of its Affiliates or (b) any other entity in connection with a reorganization, merger, consolidation, acquisition, or other restructuring involving all or substantially all of the assigning Party’s voting securities or assets.

14.6 Negotiation. This Agreement has been negotiated by the Parties and their respective counsel and will be interpreted fairly in accordance with its terms and without any strict construction in favor of or against either Party.

14.7 Modification. No change, amendment, or modification of any provision of this Agreement shall be valid unless set forth in a written instrument signed by both Parties.

15. Terms and Payment

15.1 Terms and payment. You shall be obligated for payment and terms laid forth in Exhibit A, including the monthly Co-Location Rates. In the event of any unavoidable increase in third-party costs borne by Contractor in connection with the provision of Services hereunder (including any increase in taxes, changes in legislation, or changes in the maximum electricity tariff for Contractor), Contractor shall notify you, to the extent commercially reasonable, about its proposed price change in writing at least one (1) week in advance of such increase. No such increase shall be effective unless the Parties have mutually agreed, in writing, to amend this Agreement with respect to such increase. If there is no agreement between the Parties with respect to such increase within two (2) weeks of your receipt of such notice, each of you and Contractor have the right to unilaterally terminate this Agreement without payment of the Early Termination Fee outlined in Exhibit A.

15.2 Out Of Scope Labor. Contractor shall have an obligation to operate and monitor equipment in a commercially reasonable manner, as laid forth in Section 2. For projects that are considered out of the scope of Contractor’s operating obligations (including equipment repair), labor rates shall apply as laid forth in Exhibit B. Contractor shall provide an estimate and notify you in advance before undertaking out-of-scope labor.

(Signature Page Follows)

IN WITNESS WHEREOF, the Parties hereto have caused this Co-Location Services Agreement to be signed by their duly authorized representatives as of the Effective Date.

Soluna SW, LLC		BitMine Immersion Technologies, Inc.

By: Soluna Computing, Inc., its Manager

By:	/s/ John Belizaire	By:	/s/ Jonathan Bates

Name:	John Belizaire	Name:	Jonathan Bates

Title:	CEO	Title:	CEO

EXHIBIT A

Standard Services Pricing and Customer Order

CUSTOMER	BitMine Immersion Technologies, Inc.
MINING FACILITY ADDRESS	4405 Poor Farm Road, Murray, KY 42071
GRID SYSTEM	Tennessee Valley Authority
START DATE	1 November 2023
TERM	Eighteen (18) months
CO-LOCATION DEMAND	The Mining Equipment listed in Exhibit C or 3.3 MW of power demand, whichever is lower.
CO-LOCATION RATE	The Co-Location Rate shall include the following:
	(1)	Power Cost: 100% of all power costs incurred by Contractor in powering your Mining Equipment, inclusive of any grid and energy system losses, will be passed through to you. The Contractor shall provide a reconciliation of power costs to you monthly.
	(2)	Fixed Charge: $0.00 per kW demand per month of fixed operating costs
	(3)	Cryptographic Reward Share: 50.0% of daily Net Income
SET-UP FEE / UNRACKING FEE	One-time Setup Fee: $25.00 per unit One-time Take Down Fee: $25.00 per unit
PAYMENT TERMS	Billing shall be billed as follows:
	(i)	with customer within 5 business days of the close of the month profit share with an estimated electricity payment, and payable net 5.
	(ii)	Within 15 business days of the close of the month, a true- up for any overage / underage on the estimate. Overpayments shall be applied as a credit on the next bill. Underpayment shall be collected net 5.
SECURITY DEPOSIT	$57,952.86 (Based on 3.3 MW * 30.4 days 24 hours 83% * $29 / MWh)
EXCESS UNITS DELIVERED	The following handling fees shall apply to Excess Units: · $10/box, and · $500/pallet.
EARLY TERMINATION FEE	Except as expressly provided herein (e.g. Section 3.3 and 6.3(a),(b)), upon your early termination of the Agreement, you agree to pay $57,952.86.

General: In the event of an inconsistency between the terms and conditions of this Exhibit A and the Agreement, the terms and conditions of this Exhibit A shall control.

EXHIBIT B

Out-Of-Scope Labor Rates

Contractor shall have an obligation to operate and monitor equipment in a commercially reasonable manner, as set forth in Section 2 of the Agreement. For projects that are considered out of the scope of Contractor’s operating obligations (including equipment repair), the following labor rates shall apply. Contractor shall provide an estimate and notify you in advance before undertaking out-of-scope labor.

Labor	Rate
Standard Business Labor Hours (9am - 5pm EST, Monday – Thursday)	$250 / hour
After Hours Labor (5:01pm - 9pm EST, Monday – Thursday)	$350 / Hour
Graveyard Hours Labor (9:01pm - 8:59am EST, Monday – Thursday)	$400 / Hour
Labor All Other Times including US holidays	$400 / Hour
Outside Services (electrical, accounting, engineering, etc.)	Cost Passthrough + 25% markup. Requires quote and approval

Hours Cap: 30 hours per week for the first month, and 20 hours per week for the subsequent months, which does not roll over month to month.

EXHIBIT C

Asset Inventory

The Parties jointly agree that the Mining Equipment located at Contractor’s site corresponds to the asset inventory below.

Machine

Watts / unit

Qty

J/T

Total Power (KW)

Est. Hash Rate (TH/s)

Bitmain Antminer S-19

3,250

1,050

34.2

3,300

(+112.5 kW spare)

96,470

(+ 3,391.5 TH/s Spare)

For the avoidance of doubt, the 27 spare units that You are sending will be stored free of charge and shall not accrue “Excess Units” fees pursuant to 2.12.

EXHIBIT D

Firmware Usage Addendum to Co-Location Services Agreement

This Firmware Usage Addendum ("Addendum") is an integral part of the Co-Location Services Agreement made and entered into as of the Effective Date.

1. Initial Firmware Designation: You have initially designated to use LuxorOS Firmware ("Initial Firmware") for the Mining Equipment ("Mining Equipment" as defined in the Agreement) as part of the Services provided by Contractor.

2. Contractor's Right to Switch Firmware:

2.1. Contractor agrees to deploy the Initial Firmware on the Mining Equipment as designated by you. However, Contractor reserves the right, in its reasonable discretion, to determine if the Initial Firmware is impairing the normal functionality of the Mining Equipment.

2.2. If Contractor determines that the Initial Firmware is causing impairment, Contractor may require you to switch to an alternative firmware. This decision shall be made at the Contractors reasonable discretion.

2.3. The alternative firmware shall be either BraiinsOS or Bitmain stock firmware ("Alternative Firmware"), as designated by Contractor.

3. Notice and Consent: Contractor shall provide Written Notice to you, outlining the reasons for requiring the switch to Alternative Firmware 36 hours prior to any such charge.

4.2. In the event of any conflict between the terms of this Addendum and the Agreement, the terms of the Agreement shall prevail.

Soluna SW, LLC		BitMine Immersion Technologies, Inc.

By: Soluna Computing, Inc., its Manager

By:	/s/ John Belizaire	By:	/s/ Jonathan Bates

Name:	John Belizaire, as Manager	Name:	Jonathan Bates

Title:	CEO	Title:	CEO

EXHIBIT 10.12

LUXOR PHYSICALLY BACKED FORWARD -

MASTER AGREEMENT

10/4/2023

dated as of ……………………

between

BitMine Immersion Technologies, Inc.

LUXOR TECHNOLOGY CORPORATION and ………………………………………………………………………….

(“the Buyer”) (“the Seller”)

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this Luxor Physically Backed Forward Master Agreement, which includes documents confirming evidence (each a “Forward Contract”) exchanged between the parties or otherwise effective for the purpose of confirming or evidencing those Transactions.

Accordingly, the parties agree as follows: ―

Agreement Terms

Definitions

	a.	“Daily Hashrate” means the amount of Petahash the Seller will be delivering to the Buyer on a daily basis.

	b.	“Daily Delivery Quota” means the Daily Hashrate multiplied by the Luxor Bitcoin Hashprice Index Daily Reference Rate

	c.	“Daily Delivery Payment” is equal to the Margin divided by the duration of the Agreement.

	d.	“Delivery Shortfall” means the Daily Delivery Quota, on a transaction day, is less than the amount in the Forward Contract.

	e.	“End Date” represents the last date specified in the Forward Contract.

	f.	“Forward Contract” means a transaction where the Buyer agrees to purchase hashrate from the Seller, and the Seller agrees to provide the specified hashrate as outlined in individual transactions.

	g.	“Hashprice” represents one petahash per second (“PH/s”), per calendar day. Each Unit will trade in increments of $0.01.

	h.	“Notional Value” represents the number of Units multiplied by the Hashprice.

	i.	“Notional Purchase Amount” represents the Unit Hashprice multiplied by the number of units.

	j.	“Start Date” represents the beginning of the Forward Contract.

	2.	Term
		This Agreement shall remain in effect until terminated by either Party in accordance with the provisions outlined herein.

	3.	Hashrate Forward Contract
		The Buyer agrees to purchase hashrate from the Seller, and the Seller agrees to provide the specified hashrate as outlined in individual transactions (the “Luxor Physically Backed Forward Contract” executed under this Agreement.

Obligations

	a.	Buyer agrees to deliver 100% of the Notional Purchase Amount to the Seller by the End Date of the Agreement.
	b.	The Seller agrees to direct 100% of the agreed upon Hashrate, equal to the sum of the daily delivery quota, to the Luxor Mining Pool each Transaction Day.
	c.	In the event a Delivery Shortfall is deemed to occur, the Seller agrees to pay the Shortfall balance in Bitcoin.

Security Interest and Lien

	a.	As collateral security for the payment and performance in full of all Seller’s obligations under this Agreement, Seller hereby pledges and grants to the Buyer a lien on and security interest in and to all of the right, title and interest of the Seller in, to, and under the Collateral and interests in such Collateral, wherever located, in accordance with the Unit Lien Agreement attached as Exhibit B.
	b.	Seller hereby irrevocably authorizes the Buyer, at any time and from time to time, to authenticate and file in any relevant jurisdiction any financing statement (including fixture filings) and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including, without limitation: (i) whether Seller is an organization, the type of organization, and any organizational identification number issued to Seller; (ii) a description of the Collateral as “all equipment, resources, and movable property used to service Buyer’s Purchase Order(s)” or similar language describing the Collateral; and (iii) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Collateral relates. Seller agrees to provide all information described in the immediately preceding sentence to Buyer promptly upon request.

	6.	Forward Contract Terms
		Each Luxor Physically Backed Forward Contract executed under this Agreement shall specify the details of the Daily Hashrate, Unit Hashprice, Notional Purchase Amount,Daily Delivery Payments, Daily Delivery Quota, Duration, and any additional terms agreed upon by the Buyer and Seller, in accordance with the Hashrate Forward Contract attached as Exhibit A.

	7.	Payment
		The Buyer shall pay the Seller the agreed-upon Forward Contract price for the hashrate provided. Payment terms shall be specified in each Forward Contract and may include daily, monthly, or other periodic payments.

	8.	Hashrate Performance Monitoring
		The Seller shall use commercially reasonable efforts to provide the agreed-upon hashrate to the Buyer as per the terms and conditions outlined in each Forward Contract.

	9.	Performance Monitoring
		The Parties agree to monitor the hashrate performance during the term of each Forward Contract. The Seller shall provide regular updates on the hashrate output and any relevant performance metrics as mutually agreed upon.

10.

Default

	a.	An “Event of Default” shall be deemed to occur in the event a Delivery Shortfall occurs (including any Delivery Shortfall identified in an audit conducted under Section 4(b)) and Seller fails to cure such Delivery Shortfall by delivering a quantity of Bitcoin within 72 hours of the date of written. With each 72-hour period thereafter that such failure remains uncured constituting a separate Event of Default.
	b.	A “Terminal Default” shall be deemed to occur upon the occurrence of : (i) two (2) Events of Default (including contiguous 72-hour periods) within a one (1) month period; (ii) three (3) Events of Default (including contiguous 72 hour periods) within a three (3) month period.

	11.	Termination
		Either Party may terminate a Forward Contract or this Agreement in the event of a material breach by the other Party. Termination shall be subject to any notice periods and cure rights specified in the applicable Forward Contract or governed by applicable laws.

	12.	Confidentiality
		This Agreement, all Transactions subject to this Agreement, and all communications relating to this Agreement or any Transaction subject to this Agreement, and any information made available by one party or its Representatives (as defined below) to the other party or its Representatives with respect to this Agreement or any Transaction subject to this Agreement, are confidential (collectively, “Confidential Information”). Confidential Information shall not be disclosed by a party or its Affiliates or Representatives to any other person, except that Confidential Information may be disclosed (i) to a party’s Affiliates (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential); (ii) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such person or its Affiliates; (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (iv) in connection with the exercise of any remedies hereunder or any action or proceeding relating to this Agreement or the enforcement of rights hereunder; (v) as may be furnished to that party’s accountants, auditors, attorneys, banks, consultants, lenders, investors, and potential investors (collectively the “Representatives”) who shall be required to keep the information that is disclosed in confidence; (vi) with the written consent of the other party; or (vii) to the extent such information (a) becomes publicly available other than as a result of a breach of this section or (b) becomes available to either party or any of its Affiliates on a nonconfidential basis from a source other than the other party.

	13.	Disclosure
		Under no circumstances does Luxor provide legal, financial, investment,accounting, tax, estate-planning,or other professional advice. We may provide information relating to investment approaches and opportunities to buy or sell assets, but you should not construe any features, tools, or other content as being legal, financial, investment, accounting, tax, estate-planning, or other professional advice.

		Nothing contained in this transaction constitutes a solicitation, recommendation, endorsement, or offer by us or a third-party service provider to buy or sell any asset or other financial instrument. We encourage you to seek professional advice regarding any tax and legal requirements with which you must comply.

	14.	Intellectual Property Rights
		Luxor Technology Corporation retains all rights, titles, and interests to its own intellectual property, including all copyrights, inventions, trademarks, designs, domain names, know-how, trade secrets, and other intangible property and other rights ("IPR") in the Services, or any part of it, including all Luxor’s content and materials contained on the Platform or provided in connection with the Services, including but not limited to text, graphics, logos, images, videos, and software. There is no intention to transfer any ownership of IPR between the parties under these Terms of Service.

		You may not copy, modify, distribute, transmit, display, reproduce, publish, license, create derivative works from, or sell any information, software, products, or services obtained from or through our Platform without our prior written permission. Any unauthorized use or reproduction of our IPR may result in civil and criminal penalties. By using the Services, you agree to respect and protect our IPR and acknowledge that any infringement may cause irreparable harm to Luxor Technology Corporation.

	15.	Governing Law and Jurisdiction
		This Agreement will be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine (other than as set forth in Sections 5-1401 and 5-1402 of the New York General Obligations Law).

	16.	Waiver of Jury Trial
		EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY CREDIT SUPPORT DOCUMENT.

	17.	Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act.
		“Tax” as used in Part 2(a) of this Schedule (Payer Tax Representation) and “Indemnifiable Tax” as defined in Section 14 of this Agreement shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), any current or futureregulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practicesadopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of this Agreement.

	18.	Entire Agreement
		This Agreement, including any Forward Contracts executed hereunder, constitutes the entire agreement between the Parties with respect to the subject matter herein andsupersedes all prior negotiations, understandings, or agreements, whether written or oral.

Each Forward Contract executed under this Agreement shall be subject to the terms and conditions contained herein, unless explicitly stated otherwise. Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us or by sending to us a letter substantially similar to this letter, which letter sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement of those terms.

IN WITNESS WHEREOF, the Parties have executed this Physically Backed Hashrate Forward Master Agreement as of the Effective Date.

For and on behalf of:

LUXOR TECHNOLOGY CORP.		Bitmine Immersion Technologies, Inc.

By:	/s/ Matthew Williams	By:	/s/ Jonathan Bates

	Name: Matthew Williams		Name: Jonathan Bates

	Title: Head of Derivatives		Title: CEO

	Date: 10/4/2023		Date: 10/4/2023

Execution Date:

EXHIBIT A

LUXOR PHYSICALLY BACKED FORWARD CONTRACT

Execution Date: 10/4/2023

From:	LUXOR TECHNOLOGY CORP. (“the Buyer”)
	1100 Bellevue Way NE Suite 8A #514 Bellevue, WA 98004 US
	BitMine Immersion Technologies, Inc.

To:	(“the Seller”)
	Address: BitMine Immersion Technologies, Inc.
	2030 Powers Ferry Road SE; Suite 212;
	Atlanta, GA 30339

Dear Sir, Madam:

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of this Luxor Physically Backed Forward Transaction (“Transaction”) entered into between LUXOR TECHNOLOGY CORPORATION. ("the Buyer"), and BitMineImmersion Technologies, Inc. (the “Seller”). The Buyer and the Seller are referred to herein individually as a “Party” and collectively as the “Parties”.

1.	Background

The Buyer wishes to purchase hashrate from Seller and the Seller agrees to provide such hashrate, subject to the terms and conditions set forth in this Agreement.

2.	Application:

This Confirmation shall apply to the Transaction entered into between the Buyer and the Seller on the Trade Date.

3.	Hashrate Forward Sale

The Seller agrees to sell to the Buyer, and the Buyer agrees to purchase from the Seller, all of right, title, and interest in and to certain Future Receivables. The Buyer must pay the Advance Amount to the Seller as a condition to the effectiveness of this Agreement. In the event of breach or termination of this Agreement, the Seller must immediately pay any outstanding amounts owed under this Agreement to the Buyer.

4.	Delivery of Advance Amount

On or around the Effective Date, the Buyer must transfer the Advance Amount to the Seller.

5.	Daily Delivery Quota

	a.	Each day subsequent to the transfer of the Advance Amount by the Buyer, the Seller must transfer the Daily Delivery Quota to the designated Luxor Pool Account. The Seller is obligated to deliver the sum of the all the Daily Delivery Quota payments before the termination of this Agreement.
	b.	Daily delivery payments on margin return will begin 21 days after first date The Seller begins the Daily Delivery Quota.

6.	Forward Contract Terms

Start Date:	10/05/2023
End Date:	04/01/2024
Daily Hashrate (in Petahash)	60
Number of Units of Hashprice (Daily Hashrate x Duration):	10800
Unit Hashprice:	.00175699	BTC
Notional Purchase Amount (Hashprice x # of Units):	18.975492	BTC
Margin Amount:	5.6926476	BTC
Advance Amount (Purchase Amount less Margin):	13.2828444	BTC
Daily Delivery Payments:	As defined in Master Agreement	BTC
Daily Delivery Payments per PH:	As defined in Master Agreement	BTC
Daily Delivery Quota:	BTC Hashprice Index * 60 PH	BTC
Duration:	180 calendar days; beginning as of the Duration Start Time and ending as of the Settlement Time on the Settlement Date.
Duration Start Time based on Coordinated Universal Time (“UTC”):	UTC 00:00:00 on the Start Date
Settlement Time:	UTC 23:59:59 on the End Date
Settlement Currency:	BTC
Calculation Agent:	Luxor Technology Corporation
Business Day:	New York

IN WITNESS WHEREOF, the Parties have executed this Physically Backed Hashrate Forward Master Agreement as of the Effective Date.

LUXOR TECHNOLOGY CORP.		Bitmine Immersion Technologies, Inc.

By:	/s/ Matthew Williams	By:	/s/ Jonathan Bates

	Name: Matthew Williams		Name: Jonathan Bates

	Title: Head of Derivatives		Title: CEO

	Date: 10/4/2023		Date: 10/4/2023

EXHIBIT B

UNIT LIEN AGREEMENT

[To be provided and attached by Luxor Technology Corporation]

EXHIBIT 10.13

Waiver and Consent Agreement

This Waiver and Consent Agreement (the “Agreement”) is between Luxor Technology Corporation (“Luxor”) and Soluna SW, LLC (“Soluna”), which together are the parties (“Parties”) to the Agreement.

WHEREAS Soluna is the owner of the real property and facility located at 4405 Poor Farm Road, Murray, KY 42071 (which real property and facility are hereinafter collectively called the “Facility”) and currently has granted or is about to grant a right to access and use a portion of the Facility to BitMine Immersion Technologies, Inc. (“BitMine”), which right is further detailed in the commercial agreement between Soluna and BitMine dated October 13, 2023 (the “Hosting Agreement”).

WHEREAS, pursuant to the Unit Lien Agreement between Luxor and BitMine dated October 4, 2023 (the “Lien Agreement”), Luxor currently has or is about to be granted a first priority lien on certain equipment (the “Equipment”, as identified in Schedule A) owned or that is about to be owned by BitMine.

WHEREAS BitMine is currently or may from time to time in the future locate the Equipment at the Facility pursuant to the terms of the Hosting Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

While this Agreement is in effect, Soluna acknowledges and agrees that any lien provided to the Equipment under the terms of the Hosting Agreement shall be subordinate to the first priority lien Luxor is provided under the terms of the Lien Agreement. Thus, Soluna waives, relinquishes and releases any interest in, right or claim to and lien on the Equipment having priority over Luxor’s interest in, right or claim to and lien on the Equipment while this Agreement is effective. Notwithstanding the foregoing or anything to the contrary in this Agreement, Luxor shall not have a security interest in:

	a.	the Security Deposit (as defined in the Hosting Agreement); or
	b.	any cryptocurrency mined with the Equipment (or proceeds from the sale thereof).

	2.	The Parties shall promptly notify each other if either Party experiences an event of default or force majeure under their respective contracts with BitMine. A default under either of the Parties’ agreements with BitMine shall be deemed a default under the other Party’s agreement with BitMine.
	3.	The Parties shall have the right but not the obligation to cure any default the other Party may experience under their respective contracts with BitMine.
	4.	In the event BitMine defaults on the Lien Agreement and Luxor elects to enforce its remedies under the Lien Agreement, Luxor shall promptly notify Soluna and will have the right, but not the obligation, to pursue one of the following options:

unless Soluna terminates the Hosting Agreement in accordance with the terms thereof, Luxor shall have the option to assume the Hosting Agreement from BitMine; provided that Luxor shall have the option to (w) amend the composition of the Mining Equipment as defined in the Hosting Agreement so long as the amended Mining Equipment has an aggregate power demand that is in line with the existing composition of machines; (x) propose any other reasonable, good faith amendments to the Hosting Agreement, which shall be negotiated in good faith between the Parties; (y) if Luxor is assigned the Hosting Agreement and desires to sell or reassign it, Soluna’s consent shall be required and will be subject to satisfactory counterparty evaluation; and (z) prior to the assignment of the Hosting Agreement to Luxor:

	i.	Luxor shall be required to replenish any amount of the Security Deposit used to cure any Payment Default (as defined in the Hosting Agreement), including any fees and/or penalties associated therewith) up to the full amount of Security Deposit required by the Hosting Agreement
	ii.	Luxor must cure of any amounts owed as a result of BitMine’s default under the Hosting Agreement and;
	iii.	The total of 4.a.(z)(i) and 4.a(z)(ii) shall be setoff against the amount of BitMine’s Security Deposit and any excess shall be property of Soluna.

Remove and sell the Equipment; provided that (i) proceeds of any sale of the Equipment will be split in the following manner: (x) evenly between the Parties until one Party recovers 100% of any losses related to BitMine’s default; (y) 100% to the other Party until it recovers 100% of any losses related to BitMine’s default; and (z) evenly between the Parties; and (ii) Soluna shall have a right of first refusal to purchase the Equipment, in which case 100% of the sale proceeds will be provided to Luxor pursuant to the procedures laid forth in Exhibit B.

	i.	Removal of the Equipment by Luxor is subject to the 30 day Written Notice requirement set forth in Section 2.9 of the Hosting Agreement.
	ii.	Removal of the Equipment by Luxor shall be subject to a one time take-down fee of $25.00 per unit of Equipment (as more fully described in the Hosting Agreement).This fee shall be waived if Soluna terminates the Hosting Agreement.
	iii.	Equipment will be made available for pickup by Luxor within 12 business days following payment of the removal fee set forth in Section 4(b)(ii) above.
	iv.	Upon the removal of the Equipment, the Hosting Agreement shall terminate (unless earlier terminated by Soluna in accordance with its terms).
	v.	For the avoidance of doubt, Soluna losses related to any default by Bitmine shall include the full amount of any Payment Default, plus any applicable penalties as set forth in Sections 5.2(c) and (d) of the Hosting Agreement, and shall not be reduced or offset by any cryptocurrency (or proceeds from the sale thereof) allocated to Soluna’s accounts or wallets as described in Section 5.2(e) of the Hosting Agreement.

	5.	In the event BitMine has fulfilled its obligations under the Lien Agreement and Luxor has released its lien on the Equipment, Luxor shall promptly notify Soluna. Once Luxor has released its lien on the Equipment, the Parties’ respective obligations under this Agreement shall be considered met and the Agreement shall be terminated.
	6.	Soluna consents to the location and use of the Equipment at the Facility and hereby acknowledges to Luxor that BitMine has full power and authority to locate and use the Equipment at the Facility, subject to the terms of the Hosting Agreement.
	7.	Soluna or one of its affiliates is the owner of the Facility and warrants that it has authority to execute and deliver this Agreement to Luxor.
	8.	Soluna agrees not to take any action to terminate BitMine’s right to occupy the Facility or to have the Equipment located at the Facility, in each case without prior written notice to Luxor.
	9.	Luxor and Soluna shall indemnify, defend, and hold harmless each other and its respective Affiliates from and against any and all claims, demands, actions, damages, liability, judgments, reasonable expenses and costs (including but not limited to reasonable attorneys’ fees) arising from Bitmine’s breach of or default under the Hosting Agreement or the Unit Lien Agreement, any other agreement between Bitmine and Luxor to which Soluna is not a party, or any other agreement between BitMine and Soluna to which Luxor is not a party.
	10.	This Agreement shall in all respects be governed by the laws of the State of New York without giving effect to any choice or conflict of law provision or rule that would require or permit the application of laws of any jurisdiction other than those of the State of New York. Any action, suit or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any of the Parties in the state of New York, and each of the Parties consents to the exclusive jurisdiction of such courts in any such action, suit or proceeding and waives any objection to venue laid therein. Each of the Parties hereto hereby consents to service of process in any such suit, action or proceeding in any manner permitted by the laws of the State of New York and waives and agrees not to assert by way of motion, as a defense or otherwise, in any such action, suit or proceeding any claim that service of process made in accordance with this Agreement does not constitute good and sufficient service of process. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

	11.	The substantially prevailing Party in any litigation or arbitration related to this Agreement shall be entitled to recover reasonable attorneys’ fees and expenses of litigation or arbitration from the other Party, including the fees and expenses of any appeal.
	12.	This Agreement shall be continuous, absolute, and unconditional, with no act or omission by either Party affecting or impairing its validity. The Agreement shall remain in full force and effect for as long as the Equipment is located at the Facility and as long as Luxor’s lien on the Equipment remains in place.
	13.	Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, each party hereto intends that such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law.

[signature page follows]

IN WITNESS WHEREOF, the Parties have executed this Agreement in a manner appropriate to each and with the authority to do so as of the date set forth below.

SOLUNA SW, LLC		LUXOR TECHNOLOGY CORPORATION

By: Soluna Computing, Inc., its Manager

Signature:	/s/ John Belizaire	Signature:	/s/ Ethan Vera

Name:	John Belizaire	Name:	Ethan Vera

Title:	CEO	Title:	Chief Operations Officer

Date:	Oct 13, 2023	Date:	Oct 13, 2023

This Agreement is acknowledged and consented to by the undersigned below:

Bitmine Immersion Technologies, Inc.

Signature:	/s/ Jonathan Bates

Name:	Jonathan Bates

Title:	CEO

Date:	10/4/2023

[Signature page to Waiver and Consent Agreement]

Schedule A

Equipment

Name	Quantity
Bitmain S19 95T	1,050

Schedule B

Right of First Refusal Procedures

In the event that Luxor proposes to dispose of or sell any the Equipment pursuant to its rights and remedies under the Lien Agreement, Soluna shall have a right of first refusal to purchase the Equipment as set forth below (“right of First Refusal”).

	(a)	Notice of Intent to Market: Luxor shall provide Soluna with a written notice (the “Notice of Intent to Market”) of its intention to market the Equipment for disposal or sale. The Notice of Intent to Market shall be provided at least three (3) days before the Luxor begins marketing the Equipment.

	(b)	Sale Notice: Luxor shall provide Soluna with a written notice (the "Sale Notice") of such proposed disposal at least seven (7) days prior to the proposed disposal (the "Notice Period"). The Sale Notice shall include the price and terms on which the Luxor is willing to dispose of the Equipment and an executed copy of the sale agreement, with the names of the counterparty redacted. Such sale agreement shall clearly state that the sale of the Equipment is subject to this Right of First Refusal.

	(c)	Soluna’s Response: During the Notice Period, Soluna may, at its sole discretion, elect to purchase the Equipment by providing written notice to the Luxor and executing the purchase agreement on the terms specified in the Sale Notice.

	(d)	Waiver or Failure to Respond: If the Soluna waives its right of first refusal, fails to respond to the Sale Notice before the expiration of the Notice Period or fails to execute the purchase agreement within the specified timeframe, Luxor shall be entitled to dispose of the Equipment to any third party without any limitation or further obligation to Soluna during the sixty (60) days following the expiration of the Notice Period (“Sale Period”). If Luxor does not sell or otherwise dispose of the Equipment in accordance with the terms set forth in the Sale Notice during the Sale Period, any future sale of the Equipment shall again become subject to the Right of First Refusal on the terms set forth herein.

EXHIBIT 10.14

EXHIBIT B

UNIT LIEN AGREEMENT

This UNIT LIEN AGREEMENT dated as of 10/4/2023 (this “Agreement”), made by and among: Luxor Technology Corporation, as the Buyer (as defined in the Luxor Physically Backed Forward Master Agreement); BitMine Immersion Technologies, Inc. as the Seller (as defined in the Luxor Physically Backed Forward Master Agreement); together with any successors and/or assigns of the Buyer or the Seller.

Lien Creation and Purpose:

1.1. The Seller hereby grants and creates a lien on all 1050 used S19 95T DDP Kentucky units (“ASICs”) being sold under this Agreement in favor of the Buyer as security for the payment of the Purchase Price and any other amounts owed by The Buyer to the Seller under this Agreement (collectively, the "Obligations").

Priority of the Lien:

2.1. The lien created herein shall be a first priority lien on the ASICs, and the Buyer shall have a superior interest in the ASICs in the event of any default by the Seller in the performance of the Obligations.

Default:

3.1. A default shall occur if the Seller fails to fulfill the terms of the Luxor Physically Backed Forward Master Agreement or the Luxor Physically Backed Forward Contract, as specified in Exhibit A.

3.2. In the event of default, the Buyer may exercise its rights as a lienholder, including but not limited to taking possession of the ASICs, selling the ASICs, or taking any other action allowed by law.

Notice of Default:

4.1. Upon default, the Buyer shall provide The Seller with written notice of the default and an opportunity to cure the default within a reasonable period as determined by the Buyer.

Enforcement:

5.1. In the event the Seller fails to cure the default within the specified timeframe, The Buyer may enforce its lien rights as permitted by applicable law.

Costs and Expenses:

6.1. The Seller shall be responsible for all costs, expenses, and fees incurred by the Buyer in connection with the enforcement of this lien, including but not limited to legal fees and costs of sale.

Release of Lien:

7.1. Upon full payment of the Purchase Price and all other amounts due under the Luxor Physically Backed Forward Contract, the Buyer shall release the lien on the ASICs, and the Seller shall have clear and unencumbered title to the ASICs.

Governing Law:

8.1. This ASIC lien provision shall be governed by and construed in accordance with the laws of New York.

Entire Agreement:

9.1. This Unit Lien Agreement is incorporated into and forms an integral part of the Luxor Physically Backed Forward Master Agreement between the Seller and the Buyer. In the event of any conflict between the terms of this provision and the Agreement, the terms of this provision shall prevail.

IN WITNESS WHEREOF, the parties hereto have executed this Unit Lien Agreement as of the date first above written.

LUXOR TECHNOLOGY CORP.		Bitmine Immersion Technologies, Inc.

By:	/s/ Matthew Williams	By:	/s/ Jonathan Bates

	Name: Matthew Williams		Name: Jonathan Bates

	Title: Head of Derivatives		Title: CEO

	Date: 10/4/2023		Date: 10/4/2023

EXHIBIT 21

SUBSIDIARIES OF BITMINE IMMERSION TECHNOLOGIES, INC.

Subsidiary		Jurisdiction of Organization		Ownership
Atlantic Hash, Inc.		Trinidad corporation		100% by the Company

EXHIBIT 31.1

CERTIFICATIONS

I, Jonathan Bates, certify that:

I have reviewed this annual report on Form 10-K of Bitmine Immersion Technologies, Inc.:

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

December 14, 2023
	/s/ Jonathan Bates
	Jonathan Bates
	Chief Executive Officer (Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATIONS

I, Raymond Mow certify that:

I have reviewed this annual report on Form 10-K of Bitmine Immersion Technologies, Inc.:

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

December 14, 2023
	/s/ Raymond Mow
	Raymond Mow
	Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Bitmine Immersion Technologies, Inc. (the “Company”) on Form 10-K for the period ending August 31, 2023 as filed with the Securities and Exchange Commission (the “Report”), Erik S. Nelson, the Company’s President, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of the Company.

December 14, 2023
	/s/ Jonathan Bates
	Jonathan Bates
	Chief Executive Officer (Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Bitmine Immersion Technologies, Inc. (the “Company”) on Form 10-K for the period ending August 31, 2023 as filed with the Securities and Exchange Commission (the “Report”), Raymond Mow the Company’s Chief Financial Officer, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of her knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of the Company.

December 14, 2023

/s/ Raymond Mow

Raymond Mow

Chief Financial Officer

(Principal Financial and Accounting Officer)

Cover - USD ($)	12 Months Ended
Cover - USD ($)	Aug. 31, 2023	Dec. 13, 2023	Feb. 28, 2023
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Aug. 31, 2023
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--08-31
Entity File Number	000-56220
Entity Registrant Name	BITMINE IMMERSION TECHNOLOGIES, INC.
Entity Central Index Key	0001829311
Entity Tax Identification Number	84-3986354
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	2030 Powers Ferry Road SE
Entity Address, Address Line Two	Suite 212
Entity Address, City or Town	Atlanta
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30339
City Area Code	404
Local Phone Number	816-8240
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Public Float			$ 10,217,162
Entity Common Stock, Shares Outstanding		49,665,649
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Auditor Name	BF Borgers CPA PC
Auditor Firm ID	5041
Auditor Location	Lakewood, CO

Condensed Balance Sheets - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Current assets:
Cash and cash equivalents	$ 270,547	$ 392,550
Prepaid expenses	105,000	5,000
Notes receivable - short term	0	491,395
Notes receivable related party - short term	374,444	0
Total current assets	749,991	888,945
Cryptocurrency	129,469	21,434
Notes receivable - long term	731,472	532,345
Notes receivable - related party long term	655,277	0
Investment in joint venture	987,429	0
Fixed assets, net	495,702	21,875
Fixed assets - not in service	4,453,466	6,509,602
Total assets	8,202,805	7,974,201
Current liabilities:
Accounts payable and accrued liabilities	74,903	84,761
Accrued interest - related party	97,460	0
Loans payable - related party	1,300,000	0
Deferred revenue - short term	86,193	232,913
Total current liabilities	1,558,556	317,674
Deferred revenue long term	386,884	252,322
Total liabilities	1,945,440	569,995
Commitments and contingencies
Stockholders' Equity:
Common stock, $0.0001 par value, 500,000,000 shares authorized; 49,665,649 and 48,606,915 shares issued and outstanding as of August 31, 2023 and August 31, 2022 respectively	4,967	4,861
Additional paid-in capital	11,183,720	9,865,866
Accumulated deficit	(4,931,367)	(2,466,566)
Total stockholders' equity	6,257,365	7,404,205
Total liabilities and equity	8,202,805	7,974,201
Preferred Class A [Member]
Stockholders' Equity:
Series A Preferred Stock, $0.0001 par value, 500,000 shares authorized, 453,966 and 453,966 shares issued and outstanding as of August 31, 2023 and August 31, 2022, respectively	$ 45	$ 45

Condensed Balance Sheets (Parenthetical) - $ / shares	Aug. 31, 2023	Aug. 31, 2022
Common stock, par value	$ 0.0001	$ 0.0001
Common Stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	49,665,649	48,606,915
Common stock, shares outstanding	49,665,649	48,606,915
Preferred Class A [Member]
Preferred Stock, Par or Stated Value Per Share	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	453,966	453,966
Preferred stock, shares outstanding	453,966	453,966

Condensed Statements of Operations - USD ($)	12 Months Ended
Condensed Statements of Operations - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Income Statement [Abstract]
Revenue from the sale of mining equipment	$ 244,036	$ 394,700
Revenue from hosting, net	12,020	23,644
Revenue from self- mining	389,222	9,325
Total revenue	645,278	427,669
Cost of sales mining equipment	87,080	355,407
Cost of sales self-mining	326,630	194,765
Cost of sales hosting	9,098	6,527
Gross profit (loss)	222,469	(129,030)
Operating expenses:
General and administrative expenses	293,989	227,597
Depreciation	470,705	0
Professional fees	456,323	856,925
Related party compensation	1,309,663	489,096
Impairment of fixed assets	122,950	0
Gain from sale of digital currencies	(21,682)	0
Impairment of cryptocurrency	3,523	11,535
Total operating expenses	2,635,470	1,585,154
Income(loss) from operations	(2,413,001)	(1,714,184)
Other income (expense)
Interest expense	(97,460)	(291,049)
Other income	16,939	0
Interest income	28,720	0
Other income (expense), net	(51,801)	(291,049)
Net loss	$ (2,464,801)	$ (2,005,233)

Condensed Statements of Operations (Parenthetical) - $ / shares	12 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Income Statement [Abstract]
Basic earnings (loss) per common share	$ (0.05)	$ (0.05)
Diluted earnings (loss) per common share	$ (0.05)	$ (0.05)
Weighted-average number of common shares outstanding, Basic	49,055,973	43,107,688
Weighted-average number of common shares outstanding, Diluted	49,055,973	43,107,688

Condensed Statements of Changes in Stockholders' Equity - USD ($)	Series A Preferred Stocks [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Aug. 31, 2021		$ 4,043	$ 817,842	$ (461,334)	$ 360,551
Beginning balance, shares at Aug. 31, 2021	0	40,433,399
Stock based compensation -related party		$ 220	658,520		658,741
Common shares sold in a private placement, shares		2,201,516
Conversion of debt to Series A Preferred -related party	$ 30		3,039,632		3,039,662
Conversion of debt to Series A Preferred -related party, shares	303,966
Series A Preferred for services - related party	$ 15		(15)
Series A Preferred for services - related party, shares	150,000
Common stock issued for services -related party		$ 145	109,855		110,000
Common stock issued for services-related party, shares		1,450,000
Common shares issued for services		$ 40	87,944		87,984
Common shares issued for services, shares		400,000
Common shares sold in a private placement		$ 412	5,152,088		5,152,500
Common shares sold in a private placement, shares		4,122,000
Net loss				(2,005,233)	(2,005,233)
Ending balance, value at Aug. 31, 2022	$ 45	$ 4,861	9,865,866	(2,466,566)	7,404,205
Ending balance, shares at Aug. 31, 2022	453,966	48,606,915
Common stock issued for services -related party		$ 41	190,814		190,855
Common stock issued for services-related party, shares		408,735
Common shares issued for services		$ 65	285,935		286,000
Common shares issued for services, shares		650,000
Stock based compensation -related parties			841,106		841,106
Net loss				(2,464,801)	(2,464,801)
Ending balance, value at Aug. 31, 2023	$ 45	$ 4,967	$ 11,183,720	$ (4,931,367)	$ 6,257,365
Ending balance, shares at Aug. 31, 2023	453,966	49,665,649

Statements of Cash Flows - USD ($)	12 Months Ended
Statements of Cash Flows - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Cash flows from operating activities
Net loss	$ (2,464,801)	$ (2,005,233)
Stock based compensation	1,317,961	856,724
Depreciation	470,705	3,125
Change in balance sheet accounts
Impairment of fixed assets	122,950	0
Cryptocurrencies	(108,035)	(21,434)
Notes receivable	(123,938)	(1,023,741)
Prepaid expenses	(100,000)	(5,000)
Accounts payable and accrued expenses	(9,858)	81,081
Deferred revenue	(12,158)	485,234
Accrued interest - related party	97,460	0
Net cash (used in) operating activities	(809,715)	(1,629,243)
Cash flows from investing activities
Purchase of fixed assets	(612,288)	(2,767,306)
Net cash provided by (used in) investing activities	(612,288)	(2,767,306)
Cash flows from financing activities:
Common shares sold in a private placement	0	1,812,500
Related party loans -net	1,300,000	2,757,863
Net cash provided by financing activities	1,300,000	4,570,363
Net increase (decrease) in cash and cash equivalents	(122,003)	173,814
Cash and cash equivalents at beginning of period	392,550	218,737
Cash and cash equivalents at end of period	270,547	392,550
Supplemental disclosure of non-cash investing and financing activities:
Common stock issued to purchase property	0	3,340,000
Sale of fixed assets for note receivable	$ 613,514	$ 0

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES

12 Months Ended

Aug. 31, 2023

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES

About Bitmine Immersion Technologies, Inc.

By a written consent dated July 16, 2021, holders of a majority of the Company’s issued and outstanding common stock approved a resolution to appoint Jonathan Bates, Raymond Mow, Michael Maloney, and Seth Bayles to the board of directors of the Company, and to appoint Jonathan Bates as Chairman, Seth Bayles as Corporate Secretary, Raymond Mow as Chief Financial Officer, and Ryan Ramnath as Chief Operating Officer (collectively, the “New O&Ds”). Erik S. Nelson remained a director and the chief executive officer. At the same time, the shareholders approved the issuance of 32,994,999 shares of common stock in the Company’s offering of common stock at $0.015 per share, and the grant of 4,750,000 shares for services, which were valued at $0.015 per share. As a result of the foregoing stock issuances, the New O&Ds (or entities controlled by them) collectively acquired 24,893,877 shares of common stock, which represented approximately 62% of the issued and outstanding shares at the time.

The Company’s year-end is August 31st.

Basis of Presentation

Reverse Stock Split

Use of Estimates

Segment Reporting

Revenue Recognition

Revenues from digital currency mining

	·	Step 1: Identify the contract with the customer;
	·	Step 2: Identify the performance obligations in the contract;
	·	Step 3: Determine the transaction price;
	·	Step 4: Allocate the transaction price to the performance obligations in the contract; and
	·	Step 5: Recognize revenue when the Company satisfies a performance obligation.

	·	The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

	·	The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Step 5: The Company’s performance is complete in transferring the computing power over-time (midnight to midnight UTC) to the customer and the customer obtains control of that asset.

In exchange for providing computing power, the Company is entitled to the expected bitcoin awards earned over the measurement period, plus the expected global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The transaction consideration the Company receives is non-cash consideration, in the form of bitcoin. The Company measures the bitcoin at the closing U.S. dollar spot rate at the end of the date earned (midnight UTC). However, this accounting convention does not result in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently applied in all periods presented.

Revenues from Hosting

Revenues from the sale of mining equipment

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On August 31, 2023, and August 31, 2022, respectively, the Company’s cash equivalents totaled $270,547 and $392,550, respectively.

Cryptocurrency

Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. During the year ended August 31, 2023, the Company recorded an impairment charge of $3,523 due to a reduction in the quoted price of cryptocurrency. Subsequent reversal of impairment losses, if the price of cryptocurrency increases, is not permitted. Additionally, during the year ended August 31, 2023, the Company realized a gain from sale of cryptocurrency of $21,682.

Income taxes

Stock-based Compensation

Net Loss per Share

Stock Purchase Warrants

Property and equipment

Schedule of useful lives of assets
			Life (Years)
Miners and mining equipment			2
Machinery and equipment			5 - 10
Office and computer equipment			3

Recent Accounting Pronouncements

We adopted ASC 842 on July 16, 2020. The adoption of this guidance did not have any impact on our condensed financial statements.

CRYPTOCURRENCIES

12 Months Ended

Aug. 31, 2023

Cryptocurrencies

CRYPTOCURRENCIES

NOTE 2 – CRYPTOCURRENCIES

The following table presents additional dollar information about the Company’s bitcoin activity for the year ended August 31, 2023:

Schedule of cryptocurrencies
Beginning balance – August 31, 2022	$	21,434
Revenue received from mining		389,222
Revenue received from hosting		12,020
Revenue recorded as “other income” from the termination of hosting agreement		16,939
Sale of equipment with proceeds received in cryptocurrency		56,730
Proceeds from the sale of cryptocurrency		(149,435	)
Cryptocurrency used to pay expenses and to purchase equipment		(213,918	)
Impairment of cryptocurrencies		(3,523	)
Ending balance – August 31, 2023	$	129,469

The following table presents unit information (each bitcoin represents one unit) about the Company’s bitcoin activity for the year ended August 31, 2023:


Beginning balance – August 31, 2022	–
Revenue received from mining	15.4
Revenue received from hosting	0.4
Revenue recorded as “other income” from the termination of hosting agreement	1.0
Sale of equipment with proceeds received in cryptocurrency	1.9
Proceeds from the sale of cryptocurrency	3.0
Cryptocurrency used to pay expenses and to purchase equipment	(16.7	)
Impairment of cryptocurrencies	–
Ending balance – August 31, 2023	5.0

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Aug. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table presents the Company’s revenues disaggregated into categories based on the nature of such revenues:

Schedule of disaggregation of revenue
	Year Ended August 31, 2023
	2023		2022
Revenues from the sale of mining equipment	$	244,036	$	394,700
Revenue from hosting, net		12,020		23,644
Revenue from self-mining		389,222		9,325
Total revenue	$	645,278	$	427,669

PROPERTY AND EQUIPMENT

12 Months Ended

Aug. 31, 2023

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

The following table sets forth the components of the Company’s property and equipment at August 31, 2023 and August 31, 2022:

Schedule of property and equipment
	August 31, 2023							August 31, 2022
	Cost		Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Equipment	$	966,407		(470,705	)		495,702	$	25,000	$	(3,125	)	$	21,875
Equipment not in service		4,453,466		–			4,453,466		6,509,602		–			6,509,602
Total fixed assets	$	5,419,873		(470,705	)		4,949,168	$	6,534,602	$	(3,125	)	$	6,531,477

Equipment not in service as of August 31, 2023 was comprised of the following:

Schedule of equipment not in service
Transformers	$	2,043,625
Immersion containers		966,214
Trinidad data center and infrastructure(1)		1,189,876
Miners		253,751
Total	$	4,453,466

_________________

(1)

During the three months ended November 30, 2023 the Trinidad location became operational and these assets became subject to depreciation since they were placed into service.

For the years ended August 31, 2023 and August 31, 2022, the Company recorded $470,705 and $3,125 respectively, in depreciation expense.

INVESTMENTS AND NOTES RECEIVABLES

12 Months Ended

Aug. 31, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

INVESTMENTS AND NOTES RECEIVABLES

NOTE 5 – INVESTMENTS AND NOTES RECEIVABLES

Policy on Doubtful Accounts

We evaluate notes receivable for impairment under the guidelines of ASC 310-10-35-41. We establish an allowance for doubtful accounts when we determine that collectability of the note is in question.

Investment

In October 2022, we entered into a joint venture arrangement with ROC Digital Mining to jointly develop and operate a Bitcoin mining operation in Pecos, Texas. Under the joint venture, we contributed one immersion container, six transformers and cash with a value of $987,429 as a capital contribution to ROC Digital Mining I, LLC (the “ROC Digital”). In return, we received 240 Class B Units of ROC Digital pursuant to an ongoing offering of a total of 1,000 Class B Units at $4,400 per unit. We simultaneously sold ROC Digital four immersion containers for $1,200,000, which is payable pursuant to a promissory note the bears interest at 5% per annum, and is payable pursuant to monthly payments of $31,204 per month commencing on December 30, 2022, with any remaining principal and interest payable in full on May 31, 2026. The note is secured by the equipment that was sold. We also obtained the right to locate one container at the location that we would be able to use for self-mining.

As described below of August 31, 2023 the note receivable from ROC Digital amounted to $1,029,721.

Notes Receivable

Schedule of notes receivable
	As of August 31, 2023			As of August 31, 2022

Note receivable with an amended principal amount of $731,472, bearing interest at 5.0% per annum payable monthly. Principal due in one payment on August 31, 2024. Borrower has right to prepay principal with a 10% discount.	$	731,472		$	1,023,741

Note receivable-related party in original principal amount of $1,200,000, bearing interest at 5.0% per annum, payable in 41 equal monthly payments of $31,204 commencing December 30, 2022		1,029,721			–

Total		1,761,193			1,023,741

Less: Non-current portion		(1,386,749	)		(532,345	)

Notes receivable – short-term	$	374,444		$	491,395

LOANS PAYABLE AND ACCRUED LIABILITIES, RELATED PARTY

12 Months Ended

Aug. 31, 2023

Debt Disclosure [Abstract]

LOANS PAYABLE AND ACCRUED LIABILITIES, RELATED PARTY

NOTE 6 – LOANS PAYABLE AND ACCRUED LIABILITIES, RELATED PARTY

STOCKHOLDERS’ EQUITY

12 Months Ended

Aug. 31, 2023

Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY

Stockholders’ Equity

Issuance of Shares

During the year ended August 31, 2023, the Company issued the following shares:

	·	71,429 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $31,429, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.

	·	70,423 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $30,986, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.

	·	45,455 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $20,000 or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.

	·	100,000 shares were issued to a third party for investor relations services. The shares were valued at $44,000, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering.

	·	200,000 shares were issued to an investment banking firm as an annual renewal of an investment banking agreement. The shares were valued at $0.44 per share.

	·	71,429 shares were issued to an officer pursuant to the terms of his employment contract, which entitle the officer to a quarterly bonus payable in shares of common stock. The shares were valued at $31,429, or $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering. The bonus shares vest on January 15, 2027 if the officer is still employed with us on that date, and are amortized from the date of issuance to January 15, 2027.
	·	150,000 shares were issued to a Director pursuant to the terms of her Director appointment. The shares vest prorate over a 15 month period at the rate of 10,000 shares per month commencing on August 31, 2023. These shares were valued at $0.44 per share, based on the value indicated by the Company’s recently completed Unit Offering.

Warrants

As of August 31, 2023, and August 31, 2022, the Company had the following warrants outstanding:

Schedule of warrants outstanding
Class	Amount Outstanding		Exercise Price		Expiration Date
Class A Warrants		590,000	$	2.00	August 5, 2024
Class B Warrants		590,000	$	5.00	August 5, 2024
Class C-1 Warrants		4,147,600	$	2.00	January 15, 2025
Class C-2 Warrants		4,147,600	$	4.00	January 15, 2025
Class C-3 Warrants		25,600	$	1.25	June 27, 2027
Total		9,500,800

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Aug. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 – COMMITMENTS AND CONTINGENCIES

As of August 31, 2023 and August 31, 2022, the Company had no contractual commitments.

SUBSEQUENT EVENTS

12 Months Ended

Aug. 31, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 9 – SUBSEQUENT EVENTS

On November 7, 2023, the Company purchased 96 used S19 95T ASIC miners and 48 used M30S+ 102T ASIC miners for $79,728 cash.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES (Policies)

12 Months Ended

Aug. 31, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Reverse Stock Split

Reverse Stock Split

Use of Estimates

Use of Estimates

Segment Reporting

Segment Reporting

Revenue Recognition

Revenue Recognition

Revenues from digital currency mining

Revenues from digital currency mining

	·	Step 1: Identify the contract with the customer;
	·	Step 2: Identify the performance obligations in the contract;
	·	Step 3: Determine the transaction price;
	·	Step 4: Allocate the transaction price to the performance obligations in the contract; and
	·	Step 5: Recognize revenue when the Company satisfies a performance obligation.

	·	The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

	·	The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Step 5: The Company’s performance is complete in transferring the computing power over-time (midnight to midnight UTC) to the customer and the customer obtains control of that asset.

In exchange for providing computing power, the Company is entitled to the expected bitcoin awards earned over the measurement period, plus the expected global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The transaction consideration the Company receives is non-cash consideration, in the form of bitcoin. The Company measures the bitcoin at the closing U.S. dollar spot rate at the end of the date earned (midnight UTC). However, this accounting convention does not result in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently applied in all periods presented.

Revenues from Hosting

Revenues from Hosting

Revenues from the sale of mining equipment

Revenues from the sale of mining equipment

Cash and cash equivalents

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On August 31, 2023, and August 31, 2022, respectively, the Company’s cash equivalents totaled $270,547 and $392,550, respectively.

Cryptocurrency

Cryptocurrency

Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. During the year ended August 31, 2023, the Company recorded an impairment charge of $3,523 due to a reduction in the quoted price of cryptocurrency. Subsequent reversal of impairment losses, if the price of cryptocurrency increases, is not permitted. Additionally, during the year ended August 31, 2023, the Company realized a gain from sale of cryptocurrency of $21,682.

Income taxes

Income taxes

Stock-based Compensation

Stock-based Compensation

Net Loss per Share

Net Loss per Share

Stock Purchase Warrants

Stock Purchase Warrants

Property and equipment

Property and equipment

Schedule of useful lives of assets
			Life (Years)
Miners and mining equipment			2
Machinery and equipment			5 - 10
Office and computer equipment			3

Recent Accounting Pronouncements

Recent Accounting Pronouncements

We adopted ASC 842 on July 16, 2020. The adoption of this guidance did not have any impact on our condensed financial statements.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES (Tables)

12 Months Ended

Aug. 31, 2023

Accounting Policies [Abstract]

Schedule of useful lives of assets

Schedule of useful lives of assets
			Life (Years)
Miners and mining equipment			2
Machinery and equipment			5 - 10
Office and computer equipment			3

CRYPTOCURRENCIES (Tables)

12 Months Ended

Aug. 31, 2023

Cryptocurrencies

Schedule of cryptocurrencies

Schedule of cryptocurrencies
Beginning balance – August 31, 2022	$	21,434
Revenue received from mining		389,222
Revenue received from hosting		12,020
Revenue recorded as “other income” from the termination of hosting agreement		16,939
Sale of equipment with proceeds received in cryptocurrency		56,730
Proceeds from the sale of cryptocurrency		(149,435	)
Cryptocurrency used to pay expenses and to purchase equipment		(213,918	)
Impairment of cryptocurrencies		(3,523	)
Ending balance – August 31, 2023	$	129,469

Schedule of cryptocurrencies unit information


Beginning balance – August 31, 2022	–
Revenue received from mining	15.4
Revenue received from hosting	0.4
Revenue recorded as “other income” from the termination of hosting agreement	1.0
Sale of equipment with proceeds received in cryptocurrency	1.9
Proceeds from the sale of cryptocurrency	3.0
Cryptocurrency used to pay expenses and to purchase equipment	(16.7	)
Impairment of cryptocurrencies	–
Ending balance – August 31, 2023	5.0

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

12 Months Ended

Aug. 31, 2023

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

Schedule of disaggregation of revenue
	Year Ended August 31, 2023
	2023		2022
Revenues from the sale of mining equipment	$	244,036	$	394,700
Revenue from hosting, net		12,020		23,644
Revenue from self-mining		389,222		9,325
Total revenue	$	645,278	$	427,669

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Aug. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Schedule of property and equipment
	August 31, 2023							August 31, 2022
	Cost		Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Equipment	$	966,407		(470,705	)		495,702	$	25,000	$	(3,125	)	$	21,875
Equipment not in service		4,453,466		–			4,453,466		6,509,602		–			6,509,602
Total fixed assets	$	5,419,873		(470,705	)		4,949,168	$	6,534,602	$	(3,125	)	$	6,531,477

PROPERTY AND EQUIPMENT (Details - Equipment not in service)

Schedule of equipment not in service
Transformers	$	2,043,625
Immersion containers		966,214
Trinidad data center and infrastructure(1)		1,189,876
Miners		253,751
Total	$	4,453,466

INVESTMENTS AND NOTES RECEIVABLES (Tables)

12 Months Ended

Aug. 31, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of notes receivable

Schedule of notes receivable
	As of August 31, 2023			As of August 31, 2022

Note receivable with an amended principal amount of $731,472, bearing interest at 5.0% per annum payable monthly. Principal due in one payment on August 31, 2024. Borrower has right to prepay principal with a 10% discount.	$	731,472		$	1,023,741

Note receivable-related party in original principal amount of $1,200,000, bearing interest at 5.0% per annum, payable in 41 equal monthly payments of $31,204 commencing December 30, 2022		1,029,721			–

Total		1,761,193			1,023,741

Less: Non-current portion		(1,386,749	)		(532,345	)

Notes receivable – short-term	$	374,444		$	491,395

STOCKHOLDERS’ EQUITY (Tables)

12 Months Ended

Aug. 31, 2023

Equity [Abstract]

Schedule of warrants outstanding

Schedule of warrants outstanding
Class	Amount Outstanding		Exercise Price		Expiration Date
Class A Warrants		590,000	$	2.00	August 5, 2024
Class B Warrants		590,000	$	5.00	August 5, 2024
Class C-1 Warrants		4,147,600	$	2.00	January 15, 2025
Class C-2 Warrants		4,147,600	$	4.00	January 15, 2025
Class C-3 Warrants		25,600	$	1.25	June 27, 2027
Total		9,500,800

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES (Details)	Aug. 31, 2023
Miners and Mining Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	2 years
Machinery and Equipment [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Machinery and Equipment [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Office and Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Accounting Policies [Abstract]
[custom:RevenueFromSelfMining]	$ 389,222	$ 9,325
Revenue from sale of mining equipment	244,036	394,700
Cash equivalents	270,547	392,550
Impairment of Cryptocurrency	3,523	11,535
Gain from sale of cryptocurrency	21,682	(0)
Fixed assets and not service	4,453,466	6,509,602
Asset impairment charges	$ 122,950	$ 0

CRYPTOCURRENCIES (Details) - USD ($)	12 Months Ended
CRYPTOCURRENCIES (Details) - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Cryptocurrencies
Beginning balance of cryptocurrency	$ 21,434
Revenue received from mining	389,222	$ 9,325
Revenue received from hosting	12,020
Revenue recorded as other income from the termination of hosting agreement	16,939
Sale of equipment with proceeds received in cryptocurrency	56,730
Proceeds from the sale of cryptocurrency	(149,435)
Cryptocurrency used to pay expenses and to purchase equipment	(213,918)
Impairment of cryptocurrencies	(3,523)	(11,535)
Ending balance of cryptocurrency	$ 129,469	$ 21,434

CRYPTOCURRENCIES (Details 1)	12 Months Ended
CRYPTOCURRENCIES (Details 1)	Aug. 31, 2023 $ / shares
Cryptocurrencies
Beginning balance of cryptocurrency (in units)
Revenue received from mining	15.4
Revenue received from hosting	0.4
Revenue recorded as other income from the termination of hosting agreement	1.0
Sale of equipment with proceeds received in cryptocurrency	1.9
Proceeds from the sale of cryptocurrency	3.0
Cryptocurrency used to pay expenses	(16.7)
Impairment of cryptocurrencies	0
Ending balance of cryptocurrency	$ 5.0

REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($)	12 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Revenue from Contract with Customer [Abstract]
Revenues from the sale of mining equipment	$ 244,036	$ 394,700
Revenue from hosting, net	12,020	23,644
Revenue from self- mining	389,222	9,325
Total revenue	$ 645,278	$ 427,669

PROPERTY AND EQUIPMENT (Details - Total fixed assets) - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment gross	$ 5,419,873	$ 6,534,602
Accumulated depreciation	(470,705)	(3,125)
Property and equipment net	4,949,168	6,531,477
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment gross	966,407	25,000
Accumulated depreciation	(470,705)	(3,125)
Property and equipment net	495,702	21,875
Equipment Not Yet In Service [Member]
Property, Plant and Equipment [Line Items]
Property and equipment gross	4,453,466	6,509,602
Accumulated depreciation	0	0
Property and equipment net	$ 4,453,466	$ 6,509,602

PROPERTY AND EQUIPMENT (Details - Equipment not in service) - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Property, Plant and Equipment [Line Items]
Total	$ 4,453,466	$ 6,509,602
Transformers [Member]
Property, Plant and Equipment [Line Items]
Total	2,043,625
Immersion Containers [Member]
Property, Plant and Equipment [Line Items]
Total	966,214
Trinidad Infrastructure [Member]
Property, Plant and Equipment [Line Items]
Total	1,189,876
Miners [Member]
Property, Plant and Equipment [Line Items]
Total	$ 253,751

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation expenses	$ 470,705	$ 3,125

INVESTMENTS AND NOTES RECEIVABLES (Details) - USD ($)	Aug. 31, 2023	Dec. 30, 2022	Aug. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 1,761,193		$ 1,023,741
Less: Non-current portion	(1,386,749)		(532,345)
Notes receivable short-term	374,444		0
Notes receivable short-term	0		491,395
Note Receivable 1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Note receivable face amount	$ 731,472
Note receivable stated interest rate	5.00%
Total	$ 731,472		1,023,741
Note Receivable 2 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Note receivable face amount		$ 1,200,000
Note receivable stated interest rate		5.00%
Total	$ 1,029,721		$ 0

INVESTMENTS AND NOTES RECEIVABLES (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Oct. 31, 2022	Aug. 31, 2023	Aug. 31, 2022
Capital contribution		$ 987,429	$ 0
Total notes receivable		1,761,193	1,023,741
Interest and other income		28,720	$ 0
R O C Digital Mining I L L C [Member]
Total notes receivable		$ 1,029,721
R O C Digital Mining I L L C [Member] \| Joint Venture Arrangement [Member]
Capital contribution	$ 987,429
Number of units received	240
Investment total units	1,000
Investment per unit	$ 4,400
ROC Digital four immersion containers, sold	$ 1,200,000
Interest rate	5.00%
Monthly payments	$ 31,204

LOANS PAYABLE AND ACCRUED LIABILITIES, RELATED PARTY (Details Narrative) - Loc Agreement 2022 [Member] - USD ($)	Oct. 19, 2022	Aug. 31, 2023	Aug. 31, 2022
Line of Credit Facility [Line Items]
Line of credit facility	$ 1,000,000
Line of credit interest rate	12.00%
Amount of principal		$ 1,300,000	$ 0
Interest payable		$ 97,460	$ 0

STOCKHOLDERS' EQUITY (Details)	12 Months Ended
STOCKHOLDERS' EQUITY (Details)	Aug. 31, 2023 $ / shares shares
Class of Warrant or Right [Line Items]
Warrants amount outstanding	9,500,800
Class A Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants amount outstanding	590,000
Exercise price \| $ / shares	$ 2.00
Expiration date	Aug. 05, 2024
Class B Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants amount outstanding	590,000
Exercise price \| $ / shares	$ 5.00
Expiration date	Aug. 05, 2024
Class C-1 Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants amount outstanding	4,147,600
Exercise price \| $ / shares	$ 2.00
Expiration date	Jan. 15, 2025
Class C-2 Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants amount outstanding	4,147,600
Exercise price \| $ / shares	$ 4.00
Expiration date	Jan. 15, 2025
Class C-3 Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants amount outstanding	25,600
Exercise price \| $ / shares	$ 1.25
Expiration date	Jun. 27, 2027

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	12 Months Ended
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)	Aug. 31, 2023	Aug. 31, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorized	500,000,000	500,000,000
Common stock, per value	$ 0.0001	$ 0.0001
Common stock, shares, outstanding	49,665,649	48,606,915
Number of value issued for service	$ 286,000	$ 87,984
Officer Employment Contract [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for compensation	71,429
Number of value issued for compensation	$ 31,429
Officer Employment Contract One [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for compensation	70,423
Number of value issued for compensation	$ 30,986
Officer Employment Contract Two [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for compensation	45,455
Number of value issued for compensation	$ 20,000
Investor Relations Services [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for annual renewal of banking agreement	100,000
Number of value issued for service	$ 44,000
Investment Banking Firm [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for annual renewal of banking agreement	200,000
Officer Employment Contract Three [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for compensation	71,429
Number of value issued for compensation	$ 31,429
Director Appointment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares issued for compensation	150,000
Vesting shares	10,000
Series A Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	453,966	453,966
Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized	20,000,000
Preferred stock, per value	$ 0.0001