PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Bitmine transitioned to a blockchain technology company in July 2021, focusing on Bitcoin mining, equipment sales, and hosting [Company Background](index=5&type=section&id=Company%20Background) - The company, originally incorporated in Nevada in 1995, underwent several name changes and a redomiciliation to Delaware by 2020[19](index=19&type=chunk)[20](index=20&type=chunk) - Effective July 17, 2020, the company divested RESS of Delaware, Inc. to Sterling Acquisitions I, Inc., owned by the CEO[21](index=21&type=chunk) - In July 2021, new officers and directors were appointed, acquiring a controlling interest (approximately **62%**) to pivot the company from a shell entity into the Bitcoin mining and hosting business[22](index=22&type=chunk)[23](index=23&type=chunk) [Company Overview](index=5&type=section&id=Company%20Overview) - Since July 2021, Bitmine's core business is blockchain technology, focusing on industrial-scale digital asset mining (primarily Bitcoin) for its own account and hosting third-party equipment[24](index=24&type=chunk) - The company's facilities are designed for advanced mining equipment, offering power, racks, proprietary thermodynamic management, redundant connectivity, 24/7 security, and custom firmware for performance and energy efficiency[24](index=24&type=chunk) - Bitmine plans to use immersion cooling technology, which is up to **95%** more efficient than air cooling, achieving an estimated PUE of **1.05** and extending machine life by **30%** or more[25](index=25&type=chunk) - The company participates in mining pools using the 'Expected Reward Method' to earn digital asset rewards by contributing hash rate[26](index=26&type=chunk) - Bitmine also generates revenue from the purchase and resale of digital asset mining and hosting equipment, often to its hosting customers[30](index=30&type=chunk) [Trinidad Operations](index=7&type=section&id=Trinidad%20Operations) - Initial facilities were planned for Trinidad due to cheap electricity and local technical staff. An agreement with TSTT allows co-location of up to **125 800 kw containers** until October 2031, with electricity billed at **3.5 cents per kwh**[31](index=31&type=chunk) - Operations at the TSTT site were delayed due to a dispute over electricity rates, which was resolved in October 2023, confirming the **3.5 cents per kwh** rate[32](index=32&type=chunk) - During the delay, Bitmine entered into temporary hosting agreements with third parties in Trinidad for **192** and **56** miners, with plans to move them to the TSTT facilities[32](index=32&type=chunk) - Despite the Trinidad resolution, the company is now focusing on developing hosting centers in the United States and Canada, seeking affordable, long-term power agreements[33](index=33&type=chunk) [Pecos, Texas Operations](index=7&type=section&id=Pecos%2C%20Texas%20Operations) - In October 2022, Bitmine entered a joint venture with ROC Digital Mining to develop a Bitcoin mining operation in Pecos, Texas, contributing **$987,429** in assets and cash for **240 Class B Units**[34](index=34&type=chunk) - Bitmine sold ROC Digital four immersion containers for **$1,200,000**, secured by a promissory note with **5%** interest, payable monthly until May 2026. As of August 31, 2023, the note receivable was **$1,029,721**[34](index=34&type=chunk) - The Pecos site's operations were delayed due to an additional electricity deposit request and a dispute with an ASIC miner vendor[38](index=38&type=chunk) - In April 2023, a new electricity agreement was finalized at **$0.03991 per kwh** for one year, and the site became fully electrified in June 2023. Bitmine deployed **96 Antminer S-19 pro miners** to its hosting container there by December 1, 2023[39](index=39&type=chunk) [Murray, Kentucky Operations](index=8&type=section&id=Murray%2C%20Kentucky%20Operations) - On October 4, 2023, Bitmine purchased **1,050 used ASIC miners** for **$488,775** from Luxor Technology Corporation and entered a co-location agreement with Soluna SW, LLC in Murray, Kentucky[40](index=40&type=chunk) - The 18-month hosting agreement requires Bitmine to reimburse Soluna for electricity costs (**$0.025 per kwh**) and pay a hosting fee equal to **50%** of the net profit generated by the machines, payable in Bitcoin, with an **83%** weekly uptime guarantee[40](index=40&type=chunk) [Revenue Sources](index=8&type=section&id=Revenue%20Sources) - Primary revenue streams include hosting fees (from customers and related parties), sales of mining equipment, and proprietary Bitcoin mining[41](index=41&type=chunk)[46](index=46&type=chunk) - Hosting contracts are consumption-based, typically **1-3 years**, with clients billed fixed monthly fees, reimbursed electricity costs, and a negotiable percentage (expected average **25%**) of Bitcoin generated[41](index=41&type=chunk) - Digital asset mining income is generated by solving cryptographic algorithms on the Bitcoin blockchain, participating in mining pools that pay rewards based on the 'Expected Reward Method'[46](index=46&type=chunk) - Equipment sales leverage partnerships with manufacturers to acquire and resell desired equipment, often to hosting customers in 'buy/host' transactions[46](index=46&type=chunk) - The company's decision to allocate data center space to hosting versus self-mining is dynamic, guided by market conditions and overall profitability, considering miner prices and digital asset margins[43](index=43&type=chunk)[44](index=44&type=chunk) - Bitmine generally liquidates earned digital assets immediately to cover operating and capital expenses, not holding them as long-term investments, and uses cold storage wallets for security[47](index=47&type=chunk)[50](index=50&type=chunk) [Blockchain and Cryptocurrencies Generally](index=11&type=section&id=Blockchain%20and%20Cryptocurrencies%20Generally) - Bitcoin, introduced in 2008, is a decentralized digital asset with a public transaction ledger (blockchain) and a limited total issuance of **21 million**, created through a 'mining' process[48](index=48&type=chunk)[60](index=60&type=chunk) - Bitcoin can be used for goods/services or converted to fiat currencies on 24/7 trading platforms, which are less regulated than traditional securities exchanges and potentially more susceptible to manipulation[49](index=49&type=chunk) - The decentralized nature of Bitcoin avoids some centralized network threats but makes holdings vulnerable to risks like power failure, data corruption, security breaches, and loss of private keys[51](index=51&type=chunk) - Blockchain technology offers a secure, efficient, verifiable, and permanent way to store records without intermediaries, with cryptocurrencies serving as a medium of exchange, store of value, or unit of account[52](index=52&type=chunk) - Cryptocurrencies offer advantages like fraud deterrence, immediate settlement, lower fees, and decentralization, but also present significant risks due to their new and untested environment[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Digital Asset Mining](index=13&type=section&id=Digital%20Asset%20Mining) - Digital asset mining involves specialized computers ('miners') solving complex cryptographic algorithms to validate transactions and add blocks to the blockchain, earning digital asset rewards (e.g., Bitcoin)[58](index=58&type=chunk) - Profitability depends on the sale price of the digital asset exceeding mining costs (hardware, electricity, facility costs)[58](index=58&type=chunk) - Miners typically join 'mining pools' to combine processing power ('hashing power') and increase the likelihood of solving blocks, with rewards distributed proportionally after deducting pool operator fees (typically up to **2%**)[59](index=59&type=chunk) [Mathematically Controlled Supply](index=13&type=section&id=Mathematically%20Controlled%20Supply) - Bitcoin's supply is mathematically controlled, with new Bitcoin awards halved approximately every four years (every **210,000 blocks**). The current reward is **6.25 Bitcoin per block**, expected to halve to **3.125 Bitcoin** in early 2024[60](index=60&type=chunk) - This controlled creation limits total Bitcoin to **21 million**, preventing devaluation through excessive production unless the network's source code is altered[60](index=60&type=chunk) - As of July 16, 2022, over **19 million Bitcoins** had been mined[60](index=60&type=chunk) [Performance Metrics](index=14&type=section&id=Performance%20Metrics) - Hash rate measures the computational operations miners perform to support digital asset blockchains. Higher hash rate increases the chance of solving a block[61](index=61&type=chunk)[62](index=62&type=chunk) - The industry has evolved from CPU/GPU mining to specialized ASIC chips (e.g., S17, S19) to maximize hashing operations[61](index=61&type=chunk) - To maintain competitiveness as the network hash rate increases, miners must deploy more sophisticated and numerous machines, leading to an 'arms race' in the industry[63](index=63&type=chunk) - Bitmine aims to deploy a powerful, energy-efficient fleet, targeting miners with **30-40 J/TH** efficiency, and not accepting anything lower than **82 TH/s** machines in the future[63](index=63&type=chunk)[64](index=64&type=chunk) [Key Factors Affecting Our Performance](index=14&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) - The business is highly dependent on the volatile spot price of Bitcoin and other digital assets, which can be influenced by market forces, investor sentiment, technology, regulation, and manipulation[65](index=65&type=chunk) - Profitability is also impacted by increases in the Bitcoin network's hash rate and difficulty index, which raise mining costs due to increased power consumption[67](index=67&type=chunk) - The periodic 'halving' of Bitcoin rewards (next expected April 2024) directly impacts miner profitability, as each miner produces half the Bitcoin with the same processing power[68](index=68&type=chunk) - Electricity costs are the major operating expense for mining and hosting, making the selection of low-cost power sites crucial for success[69](index=69&type=chunk) - Equipment costs for miners and hosting infrastructure fluctuate unpredictably with digital asset market values, impacting the ability to secure necessary equipment timely and cost-effectively[70](index=70&type=chunk) [Our Customers](index=15&type=section&id=Our%20Customers) - Bitmine's success relies on retaining existing customers and attracting new ones in a constantly evolving and competitive digital asset mining environment[71](index=71&type=chunk) - Competition intensified from late 2020 through 2021 due to rising digital asset prices, attracting new entrants and existing competitors with substantial capital[73](index=73&type=chunk) - The market was also impacted by countries like China outlawing or restricting digital asset mining, which has shifted hosting demand[73](index=73&type=chunk) - The company voluntarily verifies customers against OFAC's SDN list, despite not believing it is currently subject to anti-money laundering laws[74](index=74&type=chunk) [Competition](index=16&type=section&id=Competition) - Bitmine faces significant competition in all aspects of its business, including miner acquisition, capital raising, securing low-cost electricity, and evaluating new technologies[75](index=75&type=chunk) - The increasing market prices of Bitcoin and other cryptocurrencies have led to a rise in the scale and sophistication of competition in the mining industry[77](index=77&type=chunk) - To remain competitive, Bitmine anticipates continuous expansion of its miner fleet with the latest generation equipment and innovation in new technologies and mining solutions[78](index=78&type=chunk) [Regulation](index=16&type=section&id=Regulation) - Blockchain and digital currencies are increasingly subject to evolving governmental regulation in the U.S. and internationally, impacting Bitmine's operations[79](index=79&type=chunk) - While no U.S. or State regulatory body has taken adverse action against Bitcoin's production, sale, or use, future changes or new regulations could significantly affect the business[80](index=80&type=chunk) - Increasing media attention on environmental concerns of cryptocurrency mining has led to regulatory actions, such as China's ban on Bitcoin mining, highlighting the power of governments to impact the industry[81](index=81&type=chunk) - The evolving regulatory and legal environment may subject Bitmine to new laws, including further SEC regulation, which could pose significant risks[82](index=82&type=chunk) [Our Facilities](index=17&type=section&id=Our%20Facilities) - Bitmine initially planned facilities in Trinidad due to low electricity costs (**3.5 cents per kwh** via TSTT agreement, expiring 2031), but faced delays due to a utility dispute[83](index=83&type=chunk)[85](index=85&type=chunk) - The Trinidad electricity rate dispute was resolved in October 2023, confirming the **3.5 cents per kwh** rate[85](index=85&type=chunk) - The company is now focusing on developing hosting locations in the U.S. and Canada, including a facility in Pecos, Texas, and hosting **1,050 miners** in Murray, Kentucky[86](index=86&type=chunk) - Bitmine is exploring power agreements using traditional and environmentally friendly sources, potentially generating revenue from excess power sales and carbon credits[86](index=86&type=chunk) [Hosting Equipment](index=18&type=section&id=Hosting%20Equipment) - Bitmine focuses on building data centers with immersion hosting containers, having purchased ten from Submer in 2021-2022 for an average of **$269,000** each[88](index=88&type=chunk) - The company deployed two containers in Trinidad, sold two to a third party in Trinidad for **$960,000**, and sold four to a joint venture with ROC Digital Mining for **$1,200,000**, contributing one container as equity[91](index=91&type=chunk) - Six containers were sold due to attractive prices and lack of suitable short-term installation locations, but additional containers are believed to be available from vendors as needed[88](index=88&type=chunk) [Mining Equipment](index=18&type=section&id=Mining%20Equipment) - Digital asset mining relies on specialized ASIC chips, primarily from manufacturers like Bitmain in China and Southeast Asia[89](index=89&type=chunk) - Bitmine purchases miners opportunistically from the 'spot' market and does not have formal acquisition agreements, noting that demand and prices for miners fluctuate with digital asset market values[90](index=90&type=chunk) - As of December 1, 2023, Bitmine owned **1,691 miners** (**121 Whatsminers**, **72 Antminer T-19s**, **1,498 Antminer S-19s**), acquired at an average of **$955 per machine** or **$9.34 per terahash**, with an average efficiency of **33.92 j/TH**[92](index=92&type=chunk) - A significant drop in miner prices (**70-80%** since early 2021) relative to data center and electrical equipment costs has led the company to focus more on self-mining due to lower capital investment needs[93](index=93&type=chunk) [Patents and Trademarks](index=19&type=section&id=Patents%20and%20Trademarks) - The company intends to protect its intellectual property rights through a combination of trademark, patent, copyright, and trade secret laws[94](index=94&type=chunk) [Employees and Independent Contractors](index=19&type=section&id=Employees%20and%20Independent%20Contractors) - As of December 1, 2023, Bitmine had six employees and independent contractors, excluding officers who are currently working without compensation until capital is raised[95](index=95&type=chunk) - The company has no collective bargaining agreements and plans to retain additional employees and consultants, including executive management, as needed[96](index=96&type=chunk) [Available Information](index=19&type=section&id=Available%20Information) - Bitmine makes its annual, quarterly, and current reports, along with amendments, available free of charge on its website (bitminetech.io) as soon as they are filed with the SEC[97](index=97&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) Bitmine faces risks from Bitcoin price volatility, capital needs, hardware acquisition, network hash rate, regulatory uncertainty, and stock ownership [Risks Related to Company's Business and Industry](index=19&type=section&id=Risks%20Related%20to%20Company%27s%20Business%20and%20Industry) - Increased demand for digital assets can lead to shortages and higher prices for hosting and transaction processing hardware, impacting Bitmine's ability to expand[99](index=99&type=chunk) - The business is capital intensive, requiring significant funds for facility construction and equipment. Failure to raise additional capital could delay or terminate expansion[100](index=100&type=chunk)[101](index=101&type=chunk) - Profitability is highly sensitive to Bitcoin prices; if prices are not sufficiently high, or costs increase, operations may become unprofitable[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - Increased processing power on the Bitcoin network (difficulty index) reduces revenue per unit of computing power, necessitating continuous investment in more efficient hardware[105](index=105&type=chunk) - Success in hosting depends on providing a competitive environment; inability to attract customers due to high electricity rates, poor service, or market downturns could harm the business[106](index=106&type=chunk)[107](index=107&type=chunk) - Adverse developments in the blockchain industry (e.g., decline in digital asset value, regulatory changes, new technologies like 'proof of stake') could negatively impact mining rewards and hosting demand[108](index=108&type=chunk)[111](index=111&type=chunk) - Disruptions in crypto asset markets (e.g., bankruptcies of Celsius, Voyager, FTX) can cause extreme price volatility, loss of confidence, and reduced liquidity, impacting Bitmine's stock price and operations[110](index=110&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Bitcoin held in custody by a third party could be deemed property of a bankruptcy estate if the custodian fails, potentially making Bitmine an unsecured creditor[114](index=114&type=chunk) - The business is vulnerable to social, political, and economic events in countries like China, which has banned digital asset mining, impacting equipment supply and market dynamics[115](index=115&type=chunk) - Adoption of 'proof of stake' or similar validation methods for Bitcoin could render current mining operations substantially less profitable or obsolete[116](index=116&type=chunk)[117](index=117&type=chunk) - Ongoing COVID-19 outbreaks could disrupt supply chains, delay equipment delivery, and impact liquidity and financial results[118](index=118&type=chunk) - Changes in tariffs or import restrictions, particularly on Chinese-manufactured mining equipment, could increase costs and adversely affect the business[119](index=119&type=chunk) - A significant portion of assets are pledged to a related party (**$1,625,000** owed as of Dec 1, 2023); failure to repay could lead to foreclosure[120](index=120&type=chunk)[121](index=121&type=chunk) - Delays or cost overruns in constructing hosting facilities, or quality control issues, could negatively impact revenue growth and profitability[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - The business requires significant electric power, and limited availability, increased costs, or government restrictions on power supply could materially affect operations[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Power outages in hosting facilities, without backup generators, could disrupt operations and harm financial results[130](index=130&type=chunk) - Inaccurate predictions of hosting facility requirements could lead to excess capacity costs or inability to meet demand[131](index=131&type=chunk) - Significant changes to blockchain transaction validation methods (e.g., shift from 'proof of work' to 'proof of stake') could reduce demand for current hosting services[132](index=132&type=chunk) - Failure to accurately estimate costs and outcomes for hosting contracts, especially with variable Bitcoin-based fees, could result in lower profits or losses[133](index=133&type=chunk)[134](index=134&type=chunk) - Supply chain and shipping disruptions can cause delays, increased costs, and lost sales/Bitcoin production[135](index=135&type=chunk) - Maintaining banking relationships is challenging for crypto companies; loss of services could materially impact liquidity and operations[136](index=136&type=chunk) - Failures in critical systems of hosting facilities (e.g., power, equipment, security breaches) could disrupt customer businesses, harm reputation, and lead to financial penalties[137](index=137&type=chunk)[138](index=138&type=chunk) - Success depends on retaining key management and attracting skilled employees, which is difficult and costly in this industry, especially with non-competitive compensation currently[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk) - Vulnerability to security breaches, computer malware, and hacking attacks could disrupt operations, lead to asset loss, lawsuits, and reputational damage[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - Failure to keep pace with rapid technological changes (e.g., new cooling, power delivery, validation protocols) could render current technologies obsolete or less competitive[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - Compliance and risk management methods may not be effective against all risks, potentially harming reputation and financial condition[152](index=152&type=chunk) - Infringement on third-party intellectual property rights could lead to significant legal expenses and diversion of management efforts[153](index=153&type=chunk)[154](index=154&type=chunk) - Inability to adequately protect its own intellectual property rights could also materially affect the business[156](index=156&type=chunk)[157](index=157&type=chunk) - The further development and acceptance of blockchain protocols and digital assets are uncertain, with factors like regulation, consumer adoption, and technological changes posing risks[155](index=155&type=chunk)[158](index=158&type=chunk) - Risk of key counterparties (e.g., West Indian Mining Company, ROC Digital Mining I, LLC) defaulting on obligations, leading to material losses not fully recoverable[159](index=159&type=chunk) [Risks Related to Our Limited Operating History and Early Stage of Growth](index=32&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History%20and%20Early%20Stage%20of%20Growth) - As a rapidly developing industry with an evolving business model and no history of revenue generation from services, evaluating future prospects is difficult, and new strategies may not be successful[160](index=160&type=chunk)[161](index=161&type=chunk) - The company may not compete effectively against current and future competitors, many of whom have greater financial and technical resources, leading to pricing pressure and reduced margins[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - Projections are subject to significant risks and uncertainties, including demand for hosting and digital asset adoption, potentially leading to material differences from expected revenues and profitability[167](index=167&type=chunk) - Difficulties in establishing relationships with banks, leasing companies, and other financial institutions due to the crypto industry's nature could materially affect operations[169](index=169&type=chunk) - Failure to maintain effective disclosure controls and internal control over financial reporting could impair the ability to produce timely and accurate financial statements and comply with regulations, incurring significant costs[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Risks Related to Regulatory Framework](index=35&type=section&id=Risks%20Related%20to%20Regulatory%20Framework) - If deemed an 'investment company' under the 1940 Act, restrictions could make it impractical to continue business as contemplated, potentially requiring strategy adjustments or asset liquidation[174](index=174&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - Changes in SEC interpretive positions on digital asset mining firms could force strategy adjustments or asset liquidation[180](index=180&type=chunk) - Regulatory changes requiring registration as a money services business (MSB) or money transmitter (MT) could incur significant, potentially prohibitive, compliance costs[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - Lack of a unifying regulatory principle for digital assets means regulatory changes or actions in various countries could alter investment nature or restrict digital asset use, adversely affecting business[184](index=184&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - Regulatory actions by federal, state, or foreign governments could prohibit or severely restrict digital asset activities, potentially forcing the company to cease operations or liquidate assets at unfavorable prices[189](index=189&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Future legislation and rulemaking by the CFTC and SEC could impose extraordinary expenses, such as registration as a commodity pool operator, or lead to investigations and penalties[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Increasing scrutiny and changing expectations regarding Environmental, Social, and Governance (ESG) policies may impose additional costs or risks, potentially hindering access to capital[205](index=205&type=chunk) - Reliance on white papers and disclosures from digital asset creators exposes the company to risks of misleading/fraudulent statements or unlawful activities, impacting business decisions[206](index=206&type=chunk)[207](index=207&type=chunk) - Interactions with blockchains may inadvertently expose the company to OFAC's SDN list or child pornography, leading to compliance costs, investigations, or penalties[208](index=208&type=chunk)[209](index=209&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) [Risks Related to Digital Assets](index=42&type=section&id=Risks%20Related%20to%20Digital%20Assets) - Digital asset exchanges are new, often unregulated, and vulnerable to fraud, security failures, or operational issues, which could reduce digital asset prices and confidence in the market[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - The company's liquidity depends on the existence of Bitcoin exchanges and a liquid market for Bitcoin to convert mined assets into U.S. Dollars for expenses[213](index=213&type=chunk)[250](index=250&type=chunk) - Digital asset transactions are irrevocable; incorrect transfers or theft can result in irretrievable losses, materially affecting the business[214](index=214&type=chunk) - Losses of digital assets due to third-party service failures may be uninsured or exceed limited liability coverage, impacting recovery[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - Geopolitical or economic events could trigger large-scale sales of digital assets, leading to price reductions[219](index=219&type=chunk) - Digital assets face scaling obstacles (e.g., high fees, slow transaction times), and attempts to increase scale may alter market dynamics and adversely affect Bitcoin's value[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - The IRS classifies digital assets as property for tax purposes, creating potential tax liabilities and reporting requirements for each transaction, which could hinder widespread adoption[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Changes in tax laws or interpretations at federal, state, local, or foreign levels could negatively affect after-tax returns[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Concerns about greenhouse gas emissions and climate change may lead to environmental taxes or restrictions, increasing operating costs[231](index=231&type=chunk) - Latency in confirming transactions on a network due to factors like transaction processors ceasing support or network congestion could erode confidence and impact utility[232](index=232&type=chunk)[233](index=233&type=chunk) - Significant or unexpected changes to transaction processing operations (e.g., regulatory, technological, energy costs) could materially affect business[234](index=234&type=chunk) - Limited use of digital assets in retail/commercial markets, coupled with speculative demand, contributes to price volatility, which could reduce demand for hosting services or asset value[235](index=235&type=chunk) - Increased transaction fees for recording digital assets could reduce demand and prevent network expansion, negatively impacting acceptance and price[236](index=236&type=chunk) - Diversifying into other digital assets could require significant investment and expose the company to new trading risks and volatility[237](index=237&type=chunk) - If rewards/transaction fees for solving blocks are insufficient, transaction processors may reduce or cease operations, negatively impacting network utility and digital asset value[238](index=238&type=chunk) - Increasing network processing power requires continuous capital investment to maintain competitive position; failure to do so will reduce revenue[239](index=239&type=chunk)[240](index=240&type=chunk)[272](index=272&type=chunk) - Limited control over mining operations, especially reliance on third-party mining pools, poses risks if payouts are inaccurate or pools fail[241](index=241&type=chunk)[242](index=242&type=chunk) - A malicious actor or botnet gaining control of over **50%** of network processing power could alter the blockchain, leading to fraudulent blocks or transaction delays[243](index=243&type=chunk)[244](index=244&type=chunk) - Transaction processing operators may sell substantial amounts of digital assets to fund operations, exerting downward pressure on prices[245](index=245&type=chunk)[246](index=246&type=chunk) - The 'halving' of Bitcoin rewards (or reduction on other networks) could negatively impact revenue if price increases do not compensate for reduced mining output[247](index=247&type=chunk)[248](index=248&type=chunk) - Selling most digital assets to cover expenses prevents recognizing gains from future appreciation, though it also avoids losses from price declines[249](index=249&type=chunk) - Digital assets are subject to extreme price volatility influenced by supply, demand, regulatory actions, security breaches, and macroeconomic factors[251](index=251&type=chunk)[253](index=253&type=chunk) - Loss or destruction of a private key is irreversible, leading to irretrievable loss of digital assets. Security procedures may not eliminate all risks[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) - Intellectual property claims against network operations could reduce confidence and impact the ability to hold/transfer digital assets[257](index=257&type=chunk) - Soft or hard forks on a network could require hardware/software upgrades, negatively affecting digital asset value and operations[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - Digital assets are not subject to FDIC or SIPC protections, and cash balances at financial institutions may exceed insured limits, posing risk of loss[270](index=270&type=chunk)[271](index=271&type=chunk) - Widespread delays in transaction recording due to miners excluding transactions could lead to loss of confidence in digital asset networks[273](index=273&type=chunk)[274](index=274&type=chunk) [Risks Related to Ownership of Our Common Stock](index=55&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - An active trading market for the common stock may not develop or be sustained, limiting liquidity and affecting sale prices[277](index=277&type=chunk) - The trading price of common stock is likely to be volatile due to various factors, including Bitcoin price, industry performance, and company announcements, potentially leading to investment losses[278](index=278&type=chunk)[279](index=279&type=chunk) - Concentrated ownership by executive officers, directors, and affiliates (**63.1%** of votes as of Dec 1, 2023) limits other shareholders' ability to influence corporate matters[280](index=280&type=chunk) - Compliance with Sarbanes-Oxley Act requires substantial financial and management resources; failure to maintain adequate internal controls could lead to regulatory scrutiny and harm the business[281](index=281&type=chunk) - Future sales and issuances of capital stock or rights to purchase could result in significant dilution for existing stockholders and cause the stock price to decline[282](index=282&type=chunk) - Dependence on key personnel and difficulty in attracting/retaining qualified employees due to intense competition and current non-competitive compensation poses a risk to operations and expansion[283](index=283&type=chunk)[284](index=284&type=chunk) - Substantial future sales of common stock by existing equity holders could depress the market price[285](index=285&type=chunk) - Lack of analyst coverage or unfavorable research could cause the stock price and trading volume to decline, impairing capital raising efforts[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk) - Complying with laws and regulations for public companies incurs significant costs and demands on management, potentially harming the business[289](index=289&type=chunk)[290](index=290&type=chunk) - The company does not intend to pay dividends in the foreseeable future, requiring stockholders to rely on stock price appreciation for returns[291](index=291&type=chunk) [Item 1B. Unresolved Staff Comments](index=58&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) As a smaller reporting company, Bitmine is not required to provide information on unresolved staff comments - The company is a smaller reporting company and is not required to provide information for this item[292](index=292&type=chunk) [Item 2. Properties](index=58&type=section&id=Item%202.%20Properties) Bitmine operates digital asset mining through hosting agreements in Trinidad, Pecos (TX), and Murray (KY) - Bitmine has a co-location agreement with TSTT in Trinidad for up to **125 800 kw containers**, with electricity at **3.5 cents per kwh**, expiring October 14, 2031[293](index=293&type=chunk) - The company leases one hosting container (capacity for **192 miners**) from West Indian Mining Company Limited (WIMCO) in Trinidad until August 31, 2024, reimbursing actual electricity costs without a hosting fee[294](index=294&type=chunk) - An oral agreement with a third party in Trinidad hosts **56 miners** on an at-will basis, with electricity at a flat rate of **$0.06 per kwh**[294](index=294&type=chunk) - A hosting agreement with ROC Digital Mining I LLC in Pecos, Texas, allows Bitmine to locate one container for self-mining, paying **$500/month** plus pro rata internet, insurance, and electricity at **$0.03991 per kwh** for the first year[295](index=295&type=chunk) - Bitmine hosts **1,050 miners** at Soluna SW, LLC's facility in Murray, Kentucky, for 18 months, reimbursing actual electricity costs (**$0.025 per kwh**) and paying a hosting fee of **50%** of net profit in Bitcoin, with **83%** weekly uptime guarantee[296](index=296&type=chunk) - The company utilizes office space of an affiliated company for its executive offices without charge[297](index=297&type=chunk) [Item 3. Legal Proceedings](index=58&type=section&id=Item%203.%20Legal%20Proceedings) Bitmine is not currently a party to any legal proceedings, but accrues for ordinary course litigation claims - The company is subject to litigation claims in the ordinary course of business and accrues for probable and estimable legal matters[298](index=298&type=chunk) - As of the reporting date, Bitmine is not a party to any legal proceedings[299](index=299&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Bitmine Immersion Technologies, Inc - This item is not applicable[300](index=300&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=59&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BMNR common stock on OTCQX has limited, volatile trading; no dividends anticipated; **49.67 million** shares outstanding - The company's common stock is quoted on the OTCQX under the symbol "BMNR", but has a very limited trading market with significant volatility[302](index=302&type=chunk)[303](index=303&type=chunk) Common Stock Price Range (Quarterly High and Low Daily Close) | Year ended August 31, 2023 | High | Low | | :------------------------- | :--- | :-- | | 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 | High | Low | | First Quarter | $5.49 | $2.22 | | Second Quarter | $3.85 | $0.41 | | Third Quarter | $3.74 | $1.34 | | Fourth Quarter | $2.70 | $0.71 | - As of November 30, 2023, there were **49,665,649 shares** of common stock outstanding and **160 shareholders** of record[304](index=304&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, intending to retain earnings for business operations and expansion[305](index=305&type=chunk) - During the fourth quarter of fiscal year 2023, the company issued **150,000 shares** of restricted common stock to Lori Love for director services and **71,429 shares** to Chris Moses for executive compensation[306](index=306&type=chunk)[312](index=312&type=chunk) - The company did not repurchase any equity securities during the fourth quarter of the fiscal year covered by the report[307](index=307&type=chunk) [Item 6. Selected Financial Data](index=60&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, Bitmine is not required to provide selected financial data - As a smaller reporting company, Bitmine is not required to provide the information for this item[308](index=308&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Bitmine's 2023 revenue increased to **$645,278** driven by self-mining, but a **net loss of ($2.46 million)** resulted from higher operating expenses [Overview](index=60&type=section&id=Overview) - Since July 2021, Bitmine operates as a blockchain technology company, building industrial-scale digital asset mining, equipment sales, and hosting operations, primarily for Bitcoin[310](index=310&type=chunk) - The company plans to use immersion cooling technology in its data centers, which is up to **95%** more efficient than air cooling and extends machine life by **30%** or longer[311](index=311&type=chunk) - Bitmine's digital asset mining focuses on solving cryptographic algorithms for Bitcoin rewards, participating in mining pools that pay based on the 'Expected Reward Method'[313](index=313&type=chunk) - Revenue from mining and hosting is affected by Bitcoin price volatility, network hash rate, and difficulty index; gross profits are primarily impacted by electricity costs[314](index=314&type=chunk) - The company also generates revenue from purchasing and reselling digital asset mining and hosting equipment, often to third parties or hosting customers[316](index=316&type=chunk) - Future hosting revenues depend on Bitcoin price, completion of operational facilities, and attractive electricity prices, while proprietary mining revenues depend on these factors plus equipment availability and capacity[317](index=317&type=chunk)[318](index=318&type=chunk) Key Metrics Affecting Bitcoin Mining Profitability (YoY Change) | Metric | 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 | $20,049.76 | 29.33% | [Results of Operations](index=62&type=section&id=Results%20of%20Operations) Revenue Comparison (Years Ended August 31, 2023 vs. 2022) | Revenue Type | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :----------------------- | :------- | :------- | :--------- | :--------- | | Sale of mining equipment | 244,036 | 394,700 | (150,664) | -38.17% | | Hosting, net | 12,020 | 23,644 | (11,624) | -49.16% | | Self-mining | 389,222 | 9,325 | 379,897 | 4073.91% | | **Total Revenue** | **645,278** | **427,669** | **217,609** | **50.88%** | - Self-mining revenue significantly increased in 2023 due to more deployed miners, despite delays in opening Trinidad and Pecos facilities. The Trinidad site became operational in October 2023, and the Pecos site in June 2023[322](index=322&type=chunk)[323](index=323&type=chunk) - Equipment sales revenue decreased in 2023, primarily due to reporting sales under the installment sale method (ASC 606) for vendor-financed transactions, which defers revenue recognition[325](index=325&type=chunk)[337](index=337&type=chunk) - Hosting revenue decreased in 2023 due to the termination of a client agreement in October 2022, though two new clients were signed in June 2023. The company currently prioritizes self-mining over third-party hosting[330](index=330&type=chunk) Cost of Sales (Years Ended August 31, 2023 vs. 2022) | Cost of Sales Type | 2023 ($) | 2022 ($) | | :----------------- | :------- | :------- | | Hosting | 9,098 | 6,527 | | Self-mining | 326,630 | 194,765 | | Mining equipment | 87,080 | 355,407 | - Cost of sales for hosting and mining increased in 2023, inflated by temporary facility setup/maintenance and higher electricity costs, which are expected to decrease with permanent facilities[333](index=333&type=chunk) Average Cost to Mine One Bitcoin (Years Ended August 31, 2023 vs. 2022) | Metric | 2023 ($) | 2022 ($) | | :---------------------------------------------- | :---------- | :---------- | | 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% | | Total bitcoin mined | 15.44066548 | 0.32856039 | | Total MWHs utilized | 4.59 | 0.10 | | Cost per KWH | 0.0580 | 0.0613 | - Operating expenses increased by **66.2%** to **$2,635,470** in 2023, primarily due to higher general and administrative expenses, depreciation, and related party compensation, partially offset by lower professional fees[339](index=339&type=chunk) Operating Expenses Comparison (Years Ended August 31, 2023 vs. 2022) | Expense Category | 2023 ($) | 2022 ($) | Percentage 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%** | - Other expenses decreased to **($51,801)** in 2023 from **($297,049)** in 2022, mainly due to a decrease in interest expense and the recognition of other income and interest income[340](index=340&type=chunk) - The net loss increased to **($2,464,801)** in 2023 from **($2,005,233)** in 2022, primarily due to the factors discussed above[341](index=341&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) - As of August 31, 2023, the company had **$270,547** in cash and a net loss of **$2,464,801** for the year[342](index=342&type=chunk) Cash Flow Summary (Years Ended August 31, 2023 vs. 2022) | Cash Flow Activity | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :----------------- | :---------- | :---------- | :---------- | :--------- | | Operating | (809,715) | (1,629,243) | 819,528 | -50.30% | | Investing | (612,288) | (2,767,306) | 2,155,018 | -77.87% | | Financing | 1,300,000 | 4,570,363 | (3,270,363) | -71.56% | | Net Change | (122,003) | 173,814 | (295,817) | -170.19% | - The decrease in cash used in operating activities in 2023 was due to a material decrease in operating loss (excluding non-cash items)[343](index=343&type=chunk) - The decrease in cash used in investing activities in 2023 was solely due to reduced equipment purchases[344](index=344&type=chunk) - Cash provided by financing activities decreased in 2023 due to no equity security sales (compared to **$1,812,500** in 2022) and a reduction in net related party loans[345](index=345&type=chunk) - A new Line of Credit Agreement with IDI (related party) was established in October 2022, amended in May 2023 to allow borrowing up to **$1,750,000** at **12%** interest, due December 1, 2024. As of December 1, 2023, **$1,625,000** was borrowed[346](index=346&type=chunk) - The company believes current liquidity is sufficient for the next 12 months, but additional capital is needed for business expansion and market opportunities, with investment bankers engaged for capital-raising alternatives[347](index=347&type=chunk)[348](index=348&type=chunk) [Bitcoin Holdings](index=67&type=section&id=Bitcoin%20Holdings) - As of August 31, 2023, Bitmine held approximately **4.99 Bitcoin**, with a fair market value of **$129,469**, classified as 'Cryptocurrencies' on the balance sheet[349](index=349&type=chunk) - An impairment charge of **$3,523** was incurred on cryptocurrency during the year ended August 31, 2023, due to a decline in market price[349](index=349&type=chunk) [Off-Balance Sheet Arrangements](index=67&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company has no off-balance sheet arrangements that have or are reasonably likely to have a material effect on its financial condition, changes in financial condition, results of operations, liquidity, or capital resources[350](index=350&type=chunk) [Related Party Transactions](index=67&type=section&id=Related%20Party%20Transactions) - In 2020, Coral Investment Partners, LP (controlled by Erik Nelson) provided loans to the company, which were fully repaid by August 31, 2021[351](index=351&type=chunk) - On August 31, 2022, the company converted all amounts due under a Line of Credit Agreement with Innovative Digital Investors Emerging Technology, L.P. (IDI, controlled by Jonathan Bates and Raymond Mow) into **303,966 shares** of Series A Convertible Preferred Stock valued at **$3,039,662**[352](index=352&type=chunk) - A new Line of Credit Agreement with IDI was entered into on October 19, 2022, and amended on May 13, 2023, allowing borrowing up to **$1,750,000** at **12%** interest, due December 1, 2024. As of December 1, 2023, **$1,625,000** was borrowed[353](index=353&type=chunk) [Critical Accounting Policies](index=67&type=section&id=Critical%20Accounting%20Policies) - The financial statements are prepared in accordance with U.S. GAAP, requiring management to make significant estimates and assumptions affecting reported amounts, such as stock-based compensation, notes receivable collectability, and asset useful lives[354](index=354&type=chunk)[355](index=355&type=chunk)[357](index=357&type=chunk) - Revenue from digital currency mining is recognized under ASC 606, treating the mining pool operator as the customer and computing power as a single performance obligation fulfilled daily, with non-cash Bitcoin consideration measured at fair value[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk)[364](index=364&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) - Hosting revenues are recognized based on U.S. dollar invoicing for electricity/fees and the company's share of cryptocurrency received from the mining pool for performance obligations achieved simultaneously[371](index=371&type=chunk) - Cryptocurrencies are accounted for as indefinite-lived intangible assets, assessed for impairment quarterly. Impairment losses are recognized when carrying amount exceeds fair value, but subsequent reversals are not permitted[375](index=375&type=chunk) - The company holds cryptocurrencies in a cold storage wallet and uses Gemini Trust Company, LLC and BitGo Trust for liquidation and custody, respectively, to minimize risk[377](index=377&type=chunk) - Property and equipment are stated at cost and depreciated using the straight-line method over estimated useful lives (e.g., miners **2 years**, machinery **5-10 years**). Assets not in service are not depreciated[528](index=528&type=chunk) - The company adopted ASC 842 (Leases) on July 16, 2020, with no material impact, and SAB 121 (Crypto Assets) during the year ended August 31, 2022, also with no material impact[530](index=530&type=chunk)[531](index=531&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=72&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Bitmine is not required to provide quantitative and qualitative market risk disclosures - As a smaller reporting company, Bitmine is not required to provide the information for this item[386](index=386&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=72&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Condensed financial statements and related notes are presented as a separate section of this report - The condensed financial statements and related notes are included as a separate section of this report[387](index=387&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=72&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Bitmine reports no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[388](index=388&type=chunk) [Item 9A. Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were effective as of August 31, 2023, with no material changes - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of August 31, 2023[389](index=389&type=chunk) - Management assessed and concluded that the company's internal control over financial reporting was effective as of August 31, 2023, based on the COSO framework[390](index=390&type=chunk) - No material changes in internal control over financial reporting occurred during the fourth quarter of 2023[392](index=392&type=chunk) - Management acknowledges that internal control systems have inherent limitations and can only provide reasonable, not absolute, assurance against errors and fraud[393](index=393&type=chunk) [Item 9B. Other Information](index=74&type=section&id=Item%209B.%20Other%20Information) Bitmine reports no other information required by this item - No other information is reported under this item[394](index=394&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.](index=74&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) Bitmine reports no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections are reported under this item[395](index=395&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance Directors and Executive Officers](index=75&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance%20Directors%20and%20Executive%20Officers) Bitmine's board and executive officers include Jonathan Bates (CEO) and Raymond Mow (CFO); Lori Love is an audit committee financial expert; all Section 16(a) reports were timely filed Directors and Executive Officers (as of November 30, 2023) | 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 (Chairman & CEO) has over **25 years** of financial industry experience, including roles at J.P. Morgan Securities, LLC, and is CIO/General Partner of Progression Asset Management[397](index=397&type=chunk) - Erik S. Nelson (President & Director) has served as CEO since July 2020 and is President of Coral Capital Advisors, LLC, with extensive public markets experience[398](index=398&type=chunk) - Raymond Mow (CFO & Director) has over **30 years** of financial industry experience, including managing fixed income mutual funds, and is CIO/CCO of Progression Asset Management[400](index=400&type=chunk) - Michael Maloney (Director) is a digital currency and blockchain technology expert, co-founded Galaxy Digital, and served as CFO for Coinmint, LLC[401](index=401&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk) - Seth Bayles (Corporate Secretary & Director) is a corporate attorney with over **15 years** of experience in entertainment, finance, technology, and commercial contracts[406](index=406&type=chunk) - Ryan Ramnath (COO) is CEO of Bitflair Mining Corp. and has expertise in liquid-cooled Bitcoin mining infrastructure and engineering in the energy sector[407](index=407&type=chunk) - Lori Love (Director) is a licensed CPA with over **20 years** of experience in accounting, finance, and risk management, including a CFO role at CleanSpark, Inc[408](index=408&type=chunk) - The full board oversees director nominations, considering factors like judgment, skill, and experience, without specific minimum qualifications or diversity as a criterion[410](index=410&type=chunk) - The Audit Committee consists of Jonathan Bates, Lori Love, and Michael Maloney. Lori Love qualifies as an 'audit committee financial expert'[412](index=412&type=chunk)[413](index=413&type=chunk) - The company has adopted a Code of Ethics, available on its website, applicable to officers, directors, and employees, and has procedures for stockholder communication with the board[414](index=414&type=chunk)[415](index=415&type=chunk) - All executive officers, directors, and **10%** beneficial owners timely filed their Section 16(a) reports for the year ended August 31, 2023[416](index=416&type=chunk) [Item 11. Executive Compensation](index=79&type=section&id=Item%2011.%20Executive%20Compensation) CEO Jonathan Bates and CFO Raymond Mow received significant stock-based compensation in FY2023, with no cash, as the company defers cash compensation until capital is raised - Jonathan Bates (CEO) and Raymond Mow (CFO) were the named executive officers for fiscal year 2023, receiving no cash compensation[418](index=418&type=chunk)[419](index=419&type=chunk)[421](index=421&type=chunk) Summary Compensation Table (Fiscal Years 2023 & 2022) | Name and Principal Position | Fiscal Year | Salary ($) | Stock Compensation ($) | All Other Compensation ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :--------------------- | :------------------------- | :-------- | | Jonathan Bates (CEO) | 2023 | – | 622,120 | – | 622,120 | | | 2022 | – | – | – | – | | Raymond Mow (CFO) | 2023 | – | 155,115 | – | 155,115 | | | 2022 | – | – | – | – | - Jonathan Bates was awarded **150,000 Series A Preferred Shares** (valued at **$1,500,000**), and Raymond Mow **850,000 common shares** (valued at **$374,000**), both vesting on January 15, 2025, contingent on continued employment[421](index=421&type=chunk) - The company's compensation philosophy aims to attract, retain, and reward executives, aligning their interests with corporate success and stockholders through competitive total compensation, including equity awards[423](index=423&type=chunk)[426](index=426&type=chunk) - Currently, the company is not paying cash compensation to executive officers until additional capital is raised[424](index=424&type=chunk) Outstanding Equity Awards at Fiscal Year-End (August 31, 2023) | Name | Number of Unearned Shares, Units or Other Rights () | Market or Payout Value of Unearned Shares, Units or Other Rights ($) | | :------------- | :--------------------------------------------------- | :------------------------------------------------------------------- | | Jonathan Bates | 150,000 | 1,500,000 | | Raymond Mow | 850,000 | 374,000 | - Ryan Ramnath (COO) has an employment agreement dated July 19, 2021, for three years at **$4,000 per month**, without benefits[429](index=429&type=chunk) - The company does not have severance or change of control benefits for named executive officers or directors[430](index=430&type=chunk) - Non-employee directors, including Erik Nelson and Lori Love, received restricted stock grants in fiscal year 2023. Erik Nelson received **350,000 shares** (valued at **$154,000**), and Lori Love received **150,000 shares** (valued at **$66,000**), with specific vesting schedules[435](index=435&type=chunk)[437](index=437&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=83&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of November 30, 2023, insiders beneficially owned **63.1%** of common stock, with Jonathan Bates holding **41.0%**; **9.5 million** warrants are outstanding - As of November 30, 2023, executive officers, directors, and affiliated persons/entities collectively beneficially owned approximately **63.1%** of the outstanding common stock[440](index=440&type=chunk) Beneficial Ownership (as of November 30, 2023) | 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%** | - Jonathan Bates is the largest beneficial owner, with **23,595,583 shares** (**41.0%**), including holdings through Innovative Digital Investors Emerging Technology, LP and BFAM Partners, LLC[440](index=440&type=chunk) Outstanding Warrants (as of August 31, 2023) | 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** | | | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=85&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Bitmine has significant related party transactions, including an IDI line of credit; Michael Maloney is the sole independent director; a Code of Ethics manages conflicts - Coral Investment Partners, LP (controlled by Erik Nelson) provided loans to the company starting in 2020, which were fully repaid by August 31, 2021[445](index=445&type=chunk) - A Line of Credit Agreement with Innovative Digital Investors Emerging Technology, L.P. (IDI, controlled by Jonathan Bates and Raymond Mow) was converted into Series A Convertible Preferred Stock (**$3,039,662**) on August 31, 2022[446](index=446&type=chunk) - A new 2022 LOC Agreement with IDI, amended in May 2023, allows borrowing up to **$1,750,000** at **12%** interest, due December 1, 2024. As of December 1, 2023, **$1,625,000** was borrowed[447](index=447&type=chunk) - The board has one independent director, Michael Maloney, based on NASDAQ Stock Market rules for director independence[449](index=449&type=chunk) - The company has a Code of Ethics and requires annual questionnaires from executive officers and the board to disclose related person transactions and potential conflicts of interest, which are reviewed by outside counsel and the Audit Committee[451](index=451&type=chunk)[452](index=452&type=chunk) [Item 14. Principal Accountant Fees and Services.](index=86&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services.) Bitmine incurred **$100,000** in audit fees from BF Borgers CPA PC for both 2023 and 2022, with all services pre-approved by the board Principal Accountant Fees (Years Ended August 31, 2023 vs. 2022) | Fee Type | 2023 ($) | 2022 ($) | | :--------- | :------- | :------- | | Audit Fees | 100,000 | 100,000 | - Audit fees cover professional services for the audit of annual financial statements (Form 10-K) and reviews of quarterly financial statements (Form 10-Q)[454](index=454&type=chunk) - The entire board performs the functions of an Audit Committee and has an unwritten policy to pre-approve the terms and fees for annual audit services and any other audit-related and tax services[455](index=455&type=chunk) - All services reflected in the table were approved by the board, and the auditor has not been engaged for any non-audit services[4

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2023 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number: 000-56220 BITMINE IMMERSION TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) | Delaware ...

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number: 000-56220 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2023 Or BITMINE IMMERSION TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) | Del ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number: 000-56220 BITMINE IMMERSION TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) | Del ...