BTC Digital .(US:BTCT)2025-04-30 21:02PART I Key Information The company faces significant risks from its limited operating history, market volatility, and an evolving regulatory landscape Risk Factors Key risks include a limited operating history, dependence on volatile digital asset prices, and an uncertain regulatory environment - The company has a limited operating history in the cryptocurrency business, generating $11.7 million in revenue but incurring a net loss of $2.0 million in fiscal year 202440 - The company's revenue is materially dependent on the volatile market value of bitcoin, which rose to over $1.4 trillion in market value in March 2024 after falling to $0.37 trillion in October 20224144 - Acquiring new mining machines is capital-intensive and their cost can be linked to the market price of bitcoin, potentially increasing operational costs474952 - The company faces significant regulatory uncertainty from entities like the SEC or CFTC, which could impose substantial compliance costs or require business model changes38118122 Information on the Company The company transitioned from education to focus exclusively on cryptocurrency mining and related services in the U.S History and Development of the Company The company divested its education business, rebranded to BTC Digital Ltd, and now focuses solely on U.S-based crypto mining - The company changed its name to 'BTC Digital Ltd' and began trading under the symbol 'BTCT' on August 24, 2023167168 - The company terminated its English Language Training (ELT) business in November 2022, shifting entirely to cryptocurrency mining in the U.S166 - In November 2024, the company filed a Form S-3 shelf registration to offer up to $150 million in securities171172 Business Overview The company's operations center on bitcoin mining, machine resale, and rental, with plans for R&D and asset management services FY 2024 Revenue Breakdown | Revenue Stream | Percentage of Total Revenue | | :--- | :--- | | Bitcoin Mining | 10.2% | | Mining Machines Resale | 78.1% | | Mining Machines Rental | 10.1% | | Other Mining-Related Business | 1.6% | Owned Mining Machines (as of report date) | Model | Total Mining Machines Hosted and Under Operation | | :--- | :--- | | Bitmain Antminer T21 190 /S | 400 | | Bitmain Antminer S19j Pro 100/S | 1,739 | | Bitmain Antminer S19 XP 140/S | 272 | | Total | 2,411 | - As of December 31, 2024, the company's network hash rate was 288 PH/S, and it mined cryptocurrencies valued at US$1.2 million in FY2024204 - Growth strategies include expanding the mining machine fleet, R&D for proprietary ASIC miners, and launching crypto asset management services in 2025195197198 - In July 2024, the company acquired a Bitcoin mining facility in Arkansas with a 6MV stable power load for $1.99 million234 Organizational Structure The company operates as a holding company with a portfolio of directly and indirectly owned global subsidiaries - BTC Digital Ltd is a holding company, and all of its subsidiaries are directly or indirectly owned by the Company245 Property, Plants and Equipment The company leases a facility in Manila, Arkansas, for its operations under a one-year renewable term - The company's subsidiary, Quench Data LLC, leases a facility at 3101 AR-77, Manila, Arkansas 72442, under a one-year term that began on May 16, 2024246 Operating and Financial Review and Prospects The company's financial review shows increased revenue to $11.7 million and a reduced net loss of $2.0 million for FY 2024 Operating Results Revenue grew 28.7% to $11.7 million in FY 2024, driven by machine resales, resulting in a reduced net loss of $2.0 million Consolidated Statements of Operations Summary (in thousands of US$) | | 2023 | 2024 | | :--- | :--- | :--- | | Revenues | 9,073 | 11,675 | | Cost of revenues | (10,208) | (11,560) | | Gross profit/(loss) | (1,135) | 115 | | Loss from operations | (2,481) | (2,678) | | Net loss | (2,824) | (1,989) | Revenue Breakdown by Business Line (in thousands of US$) | Revenue Stream | 2023 | 2024 | | :--- | :--- | :--- | | Bitcoin mining | 2,882 | 1,190 | | Mining machines resale | 5,485 | 9,124 | | Other mining-related business | 706 | 1,361 | | Total | 9,073 | 11,675 | - General and administrative expenses increased by 117.5% to $2.4 million in FY2024, driven by stock option expenses and a credit impairment loss265 Non-GAAP Financial Measures Reconciliation (in thousands of US$) | | 2023 | 2024 | | :--- | :--- | :--- | | Net Loss | (2,824) | (1,989) | | Add: Share-based compensation | 138 | 571 | | Adjusted net loss | (2,686) | (1,418) | | EBITDA | 389 | 1,730 | | Add: Share-based compensation | 138 | 571 | | Adjusted EBITDA | 527 | 2,301 | Liquidity and Capital Resources Liquidity improved significantly, with cash increasing to $14.9 million due to $20.3 million raised from financing activities Summary of Cash Flows (in thousands of US$) | | 2023 | 2024 | | :--- | :--- | :--- | | Net cash generated from operating activities | 3,808 | 1,557 | | Net cash used in investing activities | (4,620) | (7,000) | | Net cash generated from financing activities | 807 | 20,300 | | Net increase in cash and cash equivalents | (5) | 14,857 | | Cash and cash equivalents at end of year | 43 | 14,900 | - Net cash from financing activities in 2024 was $20.3 million, primarily due to $19.9 million in proceeds from the S-3 financing292 - Net cash used in investing activities in 2024 was $7.0 million, mainly for repayment of related party advances and equipment purchases290 Directors, Senior Management and Employees The company's leadership received $116,000 in cash compensation in FY 2024, with YUN FENG ASSETS INC. as a major shareholder Directors and Senior Management The company is led by CEO Siguang Peng and features a five-member board with three independent directors chairing key committees Directors and Senior Management | Name | Position | | :--- | :--- | | Siguang Peng | Chief Executive Officer and Director | | Xu Peng | Director and Chairman of the Board of Directors | | Yupeng Guo | Acting Chief Financial Officer | | Ye Ren | Independent Director and Chair of the Audit Committee | | Zhiyi Xie | Independent Director and Chair of the Compensation Committee | | Yuejun Jiang | Independent Director and Chair of the Nominating and Corporate Governance Committee | Compensation Aggregate executive cash compensation was $116,000 in FY 2024, with equity awards governed by a 2020 Share Incentive Plan Named Executive Officer Compensation (FY 2024) | Name and Principal Position | Salary ($) | Total ($) | | :--- | :--- | :--- | | Siguang Peng | 60,000 | 60,000 | | Yupeng Guo | 36,000 | 36,000 | - As of December 31, 2024, there were 209,753 outstanding options granted to non-executive employees under the 2020 Plan322 Share Ownership As of year-end 2024, executives owned 0.26% of shares, with YUN FENG ASSETS INC. holding a 6.46% stake Beneficial Ownership as of December 31, 2024 | Name of Beneficial Owner | Amount of beneficial ownership | Percentage of outstanding ordinary shares | | :--- | :--- | :--- | | Directors and Executive Officers | | | | Siguang Peng | 10,936 | 0.17% | | Yupeng Guo | 5,599 | 0.09% | | All directors and executive officers as a group | 16,535 | 0.26% | | 5% or Greater Shareholders | | | | YUN FENG ASSETS INC. | 415,602 | 6.46% | - As of December 31, 2024, there were 6,434,040 ordinary shares outstanding6344 Major Shareholders and Related Party Transactions The company settled all significant amounts due to related parties in FY 2024, including repayments to its former Chairman - In the year ended December 31, 2024, the company repaid advances of $2.4 million to former Chairman Mr. Jishuang Zhao and $1.8 million to its associate, Met Chain Co., Limited354 Balances with Related Parties (in thousands of US$) | | As of Dec 31, 2023 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Amounts due to related parties | 4,056 | - | | - Mr. Guo Yupeng | 290 | - | | - Mr. Zhao Jishuang | 1,952 | - | | - Met Chain Co., Limited | 1,814 | - | | Amounts due from related parties | - | 200 | | - Mr. Guo Yupeng | - | 12 | | - Met Chain Co., Limited | - | 188 | Financial Information The company provides consolidated financial statements and does not intend to pay dividends or face material legal proceedings - The company does not intend to declare or pay dividends in the near future, retaining earnings for business operations and expansion360 - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business or financial condition359 Additional Information The company details its share capital, tax status as a Cayman Islands entity, and potential PFIC classification risks for U.S. holders - The company's authorized share capital is $1,500,000, divided into 25,000,000 ordinary shares with a par value of US$0.06 each372376 - As a Cayman Islands entity, the company is not subject to income, capital gains, or dividend withholding tax in the Cayman Islands397 - The company does not expect to be treated as a Passive Foreign Investment Company (PFIC), but its status is determined annually and subject to market fluctuations407 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is credit and concentration risk related to its cash holdings and accounts receivable - The company's main market risk is credit risk from cash and accounts receivable, which is managed through holding funds in reputable institutions and customer credit evaluations426428 PART II Controls and Procedures Management concluded internal control over financial reporting was ineffective due to insufficient U.S. GAAP expertise and system weaknesses - Management concluded that as of December 31, 2024, the company's internal control over financial reporting was ineffective441 - Material weaknesses identified include a lack of sufficient finance personnel with U.S. GAAP experience and inadequate financial system controls442 - Remediation plans include hiring experienced staff, providing U.S. GAAP training, and optimizing financial system controls442 Corporate Governance and Other Matters The company details its governance practices, including its audit committee expert, code of ethics, and cybersecurity risk program - The Board of Directors has identified Ms. Ye Ren as the 'audit committee financial expert'446 Principal Accountant Fees (in thousands of US$) | | 2023 | 2024 | | :--- | :--- | :--- | | Audit fees | 240 | 265 | | Total | 240 | 265 | - As a foreign private issuer, the company follows home country (Cayman Islands) practices for certain Nasdaq governance rules455456 - The company has a cybersecurity risk management program overseen by the Board, and no material threats were identified in 2024460462465 PART III Financial Statements The company presents its audited consolidated financial statements, highlighting key accounting policies and financial positions Consolidated Balance Sheet Summary (in thousands of US$) | | As of Dec 31, 2023 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | 8,944 | 24,553 | | Cash and cash equivalents | 43 | 14,900 | | Digital assets | 436 | 1,085 | | Total Assets | 24,543 | 41,130 | | Total Liabilities | 5,101 | 1,213 | | Total Shareholders' Equity | 19,442 | 39,917 | - Digital assets (bitcoin) are accounted for as indefinite-lived intangible assets and are tested for impairment without subsequent reversal of losses523 Property and Equipment, Net (in thousands of US$) | | As of Dec 31, 2023 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Cost: Miners for Bitcoin | 17,241 | 20,321 | | Less: Accumulated depreciation | 4,539 | 8,151 | | Property and equipment, net | 12,702 | 12,170 | - As of December 31, 2024, the company held a 29.53% equity interest in its joint venture, Met Chain Co Limited, valued at $4.023 million568 - Share-based compensation expense recognized was $571,000 for the year ended December 31, 2024, up from $138,000 in 2023579 Exhibits This section provides an index of all exhibits filed with the report, including corporate documents and material contracts