BTC Digital .(US:BTCT)2024-08-14 20:00markdown PART I FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for H1 2024 detail stable assets, a widened net loss, and positive operating cash flow [Unaudited Consolidated Balance Sheets](index=4&type=section&id=UNAUDITED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets slightly increased to **$24.66 million** as of June 30, 2024, driven by equipment prepayments Consolidated Balance Sheet Highlights (in thousands of US$) | Account | As of June 30, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | 9,675 | 8,944 | | Total non-current assets | 14,986 | 15,599 | | **Total assets** | **24,661** | **24,543** | | **Liabilities & Equity** | | | | Total current liabilities | 5,069 | 5,101 | | **Total liabilities** | **5,069** | **5,101** | | **Total shareholders' equity** | **19,592** | **19,442** | - Prepayments for equipment significantly increased from **$2.29 million** to **$7.46 million**, indicating future expansion of mining capacity[80](index=80&type=chunk) - Digital assets (BTC) held by the company increased in value from **$436 thousand** to **$815 thousand**[81](index=81&type=chunk) [Unaudited Consolidated Statements of Operations Loss](index=6&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20LOSS) H1 2024 revenues decreased **31.6%** to **$5.0 million**, resulting in a widened net loss and a gross loss Statement of Operations Summary (in thousands of US$) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenues | 4,979 | 7,284 | | Gross loss | (342) | (110) | | Loss from operations | (1,697) | (1,099) | | **Net loss** | **(1,435)** | **(1,115)** | | **Net loss per share (Basic)** | **(0.56)** | **(0.91)** | Quarterly Statement of Operations Summary (in thousands of US$) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenues | 2,329 | 6,377 | | Gross loss | (214) | 233 (Profit) | | **Net loss** | **(704)** | **(135)** | [Unaudited Consolidated Statements of Cash Flows](index=9&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) H1 2024 saw net cash from operations at **$3.7 million**, offset by **$4.3 million** used in investing activities Cash Flow Summary (in thousands of US$) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | 3,669 | 2,411 | | Net cash used in investing activities | (4,282) | (1,827) | | Net cash from/(used in) financing activities | 857 | (417) | | **Net increase in cash** | **244** | **167** | | **Cash at end of period** | **287** | **215** | - The primary use of cash in investing activities was for the purchase of property and equipment, amounting to **$4.0 million** in H1 2024[21](index=21&type=chunk) [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail the company's transformation to bitcoin mining, key accounting policies, capital commitments, and loans - The company changed its name to "BTC Digital Ltd." on August 11, 2023, and is now primarily engaged in the bitcoin mining business, as well as mining machine resale and rental[23](index=23&type=chunk) - Digital assets are treated as indefinite-lived intangible assets, tested for impairment when the carrying amount exceeds fair value. Revenue from mining is recognized when the company receives confirmation of the consideration from the mining pool[50](index=50&type=chunk)[61](index=61&type=chunk) - As of June 30, 2024, the company had an outstanding collateralized loan of **510,000 USDT**, with **11.62 BTC** pledged as collateral[94](index=94&type=chunk) - The company has capital expenditure commitments of **$4.29 million** as of June 30, 2024, for purchasing miners and acquiring a BTC mining facility[123](index=123&type=chunk) [Management's Discussion and Analysis (MD&A)](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A covers bitcoin mining operations, H1 2024 revenue decline, increased net loss, and liquidity - As of June 30, 2024, the company owned **2,021** mining machines with a total hash rate of **213PH/S**, operating at a facility in New Tazewell, Tennessee[128](index=128&type=chunk) - In the first six months of 2024, the company mined **16.45 bitcoins**, generating **$0.94 million** in revenue[128](index=128&type=chunk) - The company uses a diversified strategy to mitigate bitcoin price volatility, including reselling mining machines when prices are high and renting them out when prices are lower[129](index=129&type=chunk) [Results of Operations: Three Months Ended June 30, 2024 vs 2023](index=31&type=section&id=Results%20of%20Operations%20-%20Three%20Months) Q2 2024 total revenue decreased **63.5%** to **$2.3 million** due to lower machine resale and mining Q2 Revenue Breakdown (in thousands of US$) | Revenue Source | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Bitcoin mining | 267 | 892 | | Mining machines resale | 1,707 | 5,485 | | Miner rental and other | 355 | - | | **Total** | **2,329** | **6,377** | - The decrease in mining revenue was attributed to using more machines for rentals, delays in deploying new machines, and the Bitcoin halving event[133](index=133&type=chunk) - General and administrative expenses increased by **34.7%** to **$0.4 million**, primarily due to an increase in employees and office expenses for business development[138](index=138&type=chunk) [Results of Operations: Six Months Ended June 30, 2024 vs 2023](index=33&type=section&id=Results%20of%20Operations%20-%20Six%20Months) H1 2024 total revenue decreased **31.6%** to **$5.0 million**, primarily from machine resale H1 Revenue Breakdown (in thousands of US$) | Revenue Source | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Bitcoin mining | 939 | 1,342 | | Mining machines resale | 3,435 | 5,485 | | Miner rental and other | 605 | 457 | | **Total** | **4,979** | **7,284** | - General and administrative expenses increased by **59.1%**, primarily due to a **$0.57 million** rise in expenses related to the Employee Stock Option Plan[147](index=147&type=chunk) - The company realized a gain on the exchange of digital assets of **$256 thousand** in H1 2024, compared to a gain of **$34 thousand** in H1 2023[141](index=141&type=chunk) [Non-GAAP Financial Measures](index=35&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show H1 2024 Adjusted Net Loss of **$864 thousand** and Adjusted EBITDA of **$932 thousand** Reconciliation of Net Loss to Adjusted Net Loss (in thousands of US$) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net loss | (1,435) | (1,115) | | Add: Share-based compensation | 571 | 138 | | **Adjusted net loss** | **(864)** | **(977)** | Reconciliation of Net Loss to Adjusted EBITDA (in thousands of US$) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net loss | (1,435) | (1,115) | | Adjustments (Interest, Tax, D&A) | 1,796 | 1,723 | | EBITDA | 361 | 608 | | Add: Share-based compensation | 571 | 138 | | **Adjusted EBITDA** | **932** | **746** | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2024, cash was **$287 thousand**, with positive operating cash flow offset by investing - Cash and cash equivalents stood at **$287,000** as of June 30, 2024, up from **$43,000** at the end of 2023[164](index=164&type=chunk) - Capital expenditures were **$4.0 million** for the six months ended June 30, 2024, a significant increase from **$1.8 million** in the same period of 2023[172](index=172&type=chunk) - The company may require additional cash resources for future investments or acquisitions and may seek to sell equity or debt securities if needed[165](index=165&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) Market risk disclosures for Q2 2024 do not materially differ from the 2023 Annual Report on Form 10-K - There have been no material changes in the company's market risk disclosures since the 2023 Annual Report[178](index=178&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) CEO and CFO confirm effective disclosure controls and procedures with no material changes to internal controls - The CEO and CFO have certified that the company's disclosure controls and procedures were effective as of the end of the quarter[179](index=179&type=chunk) - No material changes to internal controls over financial reporting occurred during the second quarter of 2024[179](index=179&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material litigation, arbitration, or administrative proceedings - The company is not currently involved in any material legal proceedings[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On June 28, 2024, the company agreed to acquire a Bitcoin mining facility for **$1.99 million** - The company agreed to acquire a Bitcoin mining facility for **$1.99 million** on June 28, 2024[182](index=182&type=chunk) [Other Items (Risk Factors, Defaults, Mine Safety, Other Info)](index=40&type=section&id=Other%20Items) No new risk factors, defaults, or Rule 10b5-1 trading plan changes were reported for the quarter - No new risk factors are reported for the quarter[182](index=182&type=chunk) - No directors or officers adopted or terminated a Rule 10b5-1 trading plan in Q2 2024[182](index=182&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section indexes exhibits filed, including CEO and CFO certifications and Inline XBRL data files - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer, along with XBRL data[183](index=183&type=chunk)