BTCS(BTCS) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION ITEM 1 Financial Statements This section presents BTCS Inc.'s unaudited condensed consolidated financial statements and detailed explanatory notes Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (June 30, 2025 vs. Dec 31, 2024) | Metric | Dec 31, 2024 (USD) | June 30, 2025 (Unaudited) (USD) | Change (USD) | % Change | | :-------------------------- | :------------------- | :------------------------------ | :----------- | :------- | | Total Assets | 38,245,389 | 40,809,558 | 2,564,169 | 6.70% | | Crypto assets | 646,539 | 10,837,423 | 10,190,884 | 1576.25% | | Staked crypto assets | 35,410,144 | 28,588,212 | (6,821,932) | -19.26% | | Total Liabilities | 4,245,435 | 9,739,393 | 5,493,958 | 129.41% | | Loan payable - DeFi protocol | - | 4,000,000 | 4,000,000 | N/A | | Convertible notes payable, net | - | 4,801,098 | 4,801,098 | N/A | | Total Stockholders' Equity | 33,999,954 | 31,070,165 | (2,929,789) | -8.62% | Condensed Consolidated Statements of Operations This section outlines the company's financial performance, including revenues, expenses, and net income or loss over specific periods Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :------------------------------------------ | :--------- | :--------- | :----------- | :------- | | Blockchain infrastructure revenues | 2,772,198 | 561,192 | 2,211,006 | 394% | | Gross profit | (80,935) | 392,344 | (473,279) | -121% | | Realized (gains) losses on crypto asset transactions | 2,777,620 | (287,327) | 3,064,947 | -1067% | | Change in unrealized appreciation (depreciation) of crypto assets | 8,793,161 | (5,943,339) | 14,736,500 | -248% | | Net income (loss) | 3,881,532 | (6,727,869) | 10,609,401 | -158% | | Basic EPS | 0.18 | (0.43) | 0.61 | -141.86% | | Diluted EPS | 0.14 | (0.43) | 0.57 | -132.56% | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | % Change | | :------------------------------------------ | :--------- | :--------- | :----------- | :------- | | Blockchain infrastructure revenues | 4,461,133 | 1,012,578 | 3,448,555 | 341% | | Gross profit | 39,341 | 683,105 | (643,764) | -94% | | Realized (gains) losses on crypto asset transactions | 4,159,908 | (298,014) | 4,457,922 | -1496% | | Change in unrealized appreciation (depreciation) of crypto assets | (5,737,661) | 7,159,328 | (12,896,989) | -180% | | Net income (loss) | (13,387,165) | 5,528,717 | (18,915,882) | -342% | | Basic EPS | (0.65) | 0.35 | (1.00) | -285.71% | | Diluted EPS | (0.65) | 0.28 | (0.93) | -332.14% | Condensed Consolidated Statements of Changes in Stockholders' Equity This section details changes in the company's equity, including stock issuances, compensation, and net income impacts Condensed Consolidated Statements of Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | Metric | Dec 31, 2024 (USD) | June 30, 2025 (USD) | Change (USD) | | :-------------------------------- | :----------------- | :------------------ | :----------- | | Balance at beginning of period | 33,999,954 | 33,999,954 | 0 | | Issuance of common stock, net | - | 4,079,085 | 4,079,085 | | Issuance of warrants | - | 2,533,311 | 2,533,311 | | Stock-based compensation | - | 4,107,038 | 4,107,038 | | Forfeiture of stock based awards | - | (262,058) | (262,058) | | Net income (loss) | - | (13,387,165) | (13,387,165) | | Balance at end of period | 33,999,954 | 31,070,165 | (2,929,789) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Six Months Ended June 30, 2024) | Metric | Dec 31, 2023 (USD) | June 30, 2024 (USD) | Change (USD) | | :-------------------------------- | :----------------- | :------------------ | :----------- | | Balance at beginning of period | 26,165,791 | 26,165,791 | 0 | | Issuance of common stock, net | - | 240,305 | 240,305 | | Stock-based compensation | - | 1,178,084 | 1,178,084 | | Net income (loss) | - | 5,528,717 | 5,528,717 | | Balance at end of period | 26,165,791 | 33,112,897 | 6,947,106 | Condensed Consolidated Statements of Cash Flows This section summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | | :------------------------------------------ | :--------- | :--------- | :----------- | | Net cash used in operating activities | (3,235,514) | (1,693,099) | (1,542,415) | | Net cash provided by (used in) investing activities | (13,365,606) | 531,149 | (13,896,755) | | Net cash provided by financing activities | 15,262,531 | 240,305 | 15,022,226 | | Net (decrease)/increase in cash | (1,338,589) | (921,645) | (416,944) | | Cash, end of period | 639,189 | 536,682 | 102,507 | Note 1 - Business Organization and Nature of Operations This note describes BTCS Inc.'s core business as an Ethereum-first blockchain technology company and its operational focus - BTCS Inc. is an "Ethereum-first" blockchain technology business focused on scalable revenue generation and ETH accumulation through its vertically integrated blockchain infrastructure operations[31] - Operates two core infrastructure initiatives: NodeOps (Ethereum validator nodes earning ETH-denominated staking rewards) and Builder+ (proprietary Ethereum block builder earning execution layer rewards like transaction fees and MEV)[32] - Implements a DeFi/TradFi Flywheel, a capital formation and reinvestment framework leveraging decentralized finance (on-chain borrowing) and traditional capital markets (ATM equity offerings, convertible notes)[33] - During the six months ended June 30, 2025, the Company completed a strategic wind-down of validator node operations on Avalanche, Cosmos, Akash, and Kava, and liquidated the majority of its non-Ethereum token holdings to align with its ETH-centric focus[34] Note 2 - Basis of Presentation This note outlines the accounting principles and presentation methods used for the interim financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules, reflecting normal, recurring adjustments[37] - Interim results for the three months ended June 30, 2025, are not necessarily indicative of results for the full year ending December 31, 2025[37] - Certain prior period amounts were reclassified to conform with current period presentation, with no material impact on financial statements[38] Note 3 - Summary of Significant Accounting Policies This note details the key accounting policies, including recent changes for crypto assets and revenue recognition - No material changes in significant accounting policies from the 2024 Annual Report on Form 10-K, except for specific updates detailed within this note[39] - Crypto Assets Accounting Changes (Effective Jan 1, 2025): - Cost basis of crypto assets is now measured at fair value based on the spot price at the time of receipt (previously last close price of the day in UTC) - Adopted the Last-In, First-Out ("LIFO") method for determining the cost basis of crypto assets disposed of, replacing the specific identification method[50][53] - Revenue Recognition: - Recognizes revenue from staking rewards (NodeOps) and gas fees/tips from block-building (Builder+), collectively termed 'Blockchain infrastructure revenues' - Revenue is measured at fair value of crypto asset awards and gas fees on the date received[64][66] - Warrant Accounting: Warrants are classified as liabilities if they require net cash settlement or provide counterparty choice of cash/share settlement, or require registered shares without precluding cash settlement. Otherwise, they are equity-classified[99][103] - DeFi Lending Arrangements: Borrowings are recognized as financial liabilities. Collateralized ETH remains on the balance sheet as the Company retains ownership, but is restricted from transfer[120] - Recent Accounting Pronouncements: Adopted ASU 2023-07 (Segment Reporting) for 2024, expanding segment expense disclosures. Evaluating ASU 2023-09 (Income Tax Disclosures) effective Jan 1, 2025, and ASU 2024-03 (Expense Disaggregation Disclosures) effective Dec 15, 2026[128][129][130] Note 4 – Crypto Assets This note provides details on the company's crypto asset holdings, including fair market values and restricted ETH Crypto Assets Held as of June 30, 2025 | Asset | Tokens | Cost (USD) | Fair Market Value (USD) | | :-------------- | :------- | :----------- | :---------------------- | | Ethereum (ETH) | 14,659 | 26,893,611 | 36,444,451 | | Cosmos (ATOM) | 355,813 | 5,394,231 | 1,458,228 | | Solana (SOL) | 7,247 | 521,625 | 1,122,321 | | Avalanche (AVAX) | 19,628 | 1,179,923 | 352,714 | | BNB Chain (BNB) | 68 | 48,246 | 44,864 | | Rocket Pool (RPL) | 609 | 6,749 | 3,057 | | Total | | 34,044,385 | 39,425,635 | - ETH holdings include 10,460 ETH staked to validator nodes (approx. $26.01M fair value) and 3,903 ETH deposited as collateral for DeFi borrowings (approx. $9.70M fair value), which is restricted from transfer[133][134] Note 5 – Fair Value of Financial Assets and Liabilities This note presents the fair value measurements of financial assets and liabilities, categorized by valuation levels Fair Value Measured at June 30, 2025 | Asset/Liability | Balance (USD) | Level 1 (USD) | Level 2 (USD) | Level 3 (USD) | | :-------------- | :------------ | :------------ | :------------ | :------------ | | Crypto Assets | 39,425,635 | 39,425,635 | - | - | | Investments | 350,000 | - | - | 350,000 | | Warrant Liabilities | 208,050 | - | - | 208,050 | - Warrant liabilities were reclassified from equity to Level 3 liabilities as of June 30, 2025, because the Company no longer controlled certain fundamental transactions, potentially requiring cash settlement[145][146] - Level 3 investments are carried at original cost ($350,000 as of June 30, 2025) using the measurement alternative under ASC 321[141] Note 6 – Stockholders' Equity This note details changes in stockholders' equity, including common stock issuances, stock options, and restricted stock units - As of June 30, 2025, there were 21,968,566 shares of Common Stock issued and outstanding[150] ATM Offering Sales (Six Months Ended June 30, 2025) | Metric | Value | | :-------------------------------- | :---------- | | Shares sold | 1,871,889 | | Aggregate total gross proceeds | $4,220,000 | | Average selling price per share | $2.25 | | Net proceeds (after commissions) | $4,079,000 | - 1,020,834 restricted shares of Series V Preferred Stock were issued in connection with RSU vesting, subject to market capitalization and time-based vesting[161] Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Shares | Weighted Average Exercise Price | | :-------------------------------- | :--------------- | :------------------------------ | | Options outstanding as of Dec 31, 2024 | 1,302,500 | $1.96 | | Employee options granted | 1,477,068 | $2.43 | | Options outstanding as of Jun 30, 2025 | 2,661,410 | $2.22 | - On January 13, 2025, the Company accelerated the vesting of 1,170,834 LTI RSUs, settling them through restricted Common Stock and Series V preferred stock, which remain subject to original performance and time-based conditions[169][170] Note 7 – Debt This note describes the company's debt obligations, including DeFi protocol borrowings and convertible notes DeFi Protocol Lending Activity (Six Months Ended June 30, 2025) | Metric | Value (USD) | | :-------------------------- | :---------- | | Beginning balance | - | | Proceeds from DeFi borrowings | 5,447,000 | | Repayments of principal | (1,447,000) | | Ending balance | 4,000,000 | - DeFi borrowings are collateralized by approximately 3,903 ETH with a fair market value of $9.70 million as of June 30, 2025[177] - In May 2025, the Company issued $7.81 million in 5% Original Issue Discount Senior Secured Convertible Notes for $7.42 million gross cash proceeds, along with 1,901,916 warrants[181] - Convertible Notes terms: convertible at $5.85/share, mature in 24 months (May 2027), 6% annual interest, secured by all Company assets (excluding ETH collateralized on Aave)[182] Note 8 – Accrued Expenses This note provides a breakdown of accrued expenses and explains significant changes in compensation accruals Accrued Expenses (June 30, 2025 vs. Dec 31, 2024) | Accrued Expense | June 30, 2025 (USD) | Dec 31, 2024 (USD) | Change (USD) | % Change | | :-------------------------- | :------------------ | :----------------- | :----------- | :------- | | Accrued compensation | 621,017 | 3,907,091 | (3,286,074) | -84.10% | | Accrued interest | 6,621 | - | 6,621 | N/A | | Accounts payable and accrued expenses | 102,607 | 70,444 | 32,163 | 45.66% | | Total | 730,245 | 3,977,535 | (3,247,290) | -81.64% | - The significant decrease in accrued compensation reflects bonus payments made during the first quarter of 2025[188] Note 9 – Employee Benefit Plans This note details the company's contributions to employee benefit plans, specifically the 401(k) plan 401(k) Plan Contributions (Six Months Ended June 30) | Year | Contributions (USD) | | :--- | :------------------ | | 2025 | 122,000 | | 2024 | 109,000 | Note 10 – Liquidity This note assesses the company's ability to meet its short-term and long-term financial obligations - The Company has an accumulated deficit of approximately $153.34 million as of June 30, 2025, and net cash used in operating activities was approximately $3.24 million for the six months ended June 30, 2025[191] - Management believes existing cash and liquid crypto assets, combined with ongoing financing strategies (DeFi borrowing, convertible notes, ATM offerings), provide sufficient liquidity to support operations for at least the next twelve months[191] Note 11 – Segment Information This note provides financial information for the company's single reportable segment: blockchain infrastructure - The Company operates as a single reportable segment focused on blockchain infrastructure, which consists of two primary revenue-generating activities: Validator Node Operations ("NodeOps") and Ethereum Block Building ("Builder+")[192] - Gross profit (loss) is the primary segment performance measure reviewed by the CODM for operational and capital allocation decisions[193] Segment Revenue and Gross Profit (Loss) (Three Months Ended June 30, 2025) | Metric | NodeOps (USD) | Builder+ (USD) | Total (USD) | | :-------------------------------- | :------------ | :------------- | :------------ | | Revenues from blockchain infrastructure operations | 262,972 | 2,509,226 | 2,772,198 | | Cost of Revenues | 13,255 | 2,839,878 | 2,853,133 | | Gross profit (loss) | 249,717 | (330,652) | (80,935) | Segment Revenue and Gross Profit (Loss) (Six Months Ended June 30, 2025) | Metric | NodeOps (USD) | Builder+ (USD) | Total (USD) | | :-------------------------------- | :------------ | :------------- | :------------ | | Revenues from blockchain infrastructure operations | 602,263 | 3,858,870 | 4,461,133 | | Cost of Revenues | 60,021 | 4,361,771 | 4,421,792 | | Gross profit (loss) | 542,242 | (502,901) | 39,341 | Note 12 – Subsequent Events This note discloses significant events that occurred after the reporting period but before the financial statements were issued - From July 1, 2025, to August 12, 2025, the Company sold 24,522,525 shares of Common Stock under the ATM Agreement for approximately $131.08 million net proceeds[196] - Borrowed an additional $47.5 million in USDT through Aave from July 1 to August 12, 2025, bringing total outstanding DeFi borrowings to approximately $51.70 million, collateralized by approximately 38,400 ETH (fair value $176.06 million)[197] - On July 21, 2025, entered into a new Securities Purchase Agreement for $10.05 million in 5% OID Senior Secured Convertible Notes, with a $9.55 million purchase price, and 879,375 five-year warrants[199] - Subsequent to June 30, 2025, 1,561,687 shares of Common Stock were issued from cashless exercise of stock options and warrants[202] - On August 7, 2025, market capitalization vesting condition for certain Long-Term Incentive (LTI) awards was satisfied, resulting in 318,055 shares of Common Stock and 318,055 shares of Series V Preferred Stock becoming fully vested[203][204] - On August 7, 2025, the Board approved performance-based stock options for executive officers for exceeding the highest liquidity milestone ($75M cash and crypto balance for 20 consecutive days) under the 2025 Annual Performance Incentive Plan[206][207][208] ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes BTCS's financial condition, operations, and liquidity, highlighting strategic focus and performance drivers - BTCS is an "Ethereum-first" blockchain infrastructure and digital asset treasury company, leveraging a DeFi/TradFi Flywheel strategy to optimize capital efficiency and grow its ETH treasury[211][212] - Streamlined focus during H1 2025 involved pausing ChainQ development, winding down non-Ethereum validator operations (Avalanche, Cosmos, Akash, Kava), and liquidating most alt-coin holdings to concentrate on Ethereum-based revenue and ETH accumulation[215] Total Revenue by Segment (Quarterly) | Segment | 2024 Q2 (USD) | 2024 Q3 (USD) | 2024 Q4 (USD) | 2025 Q1 (USD) | 2025 Q2 (USD) | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | | NodeOps | 485,340 | 334,654 | 381,958 | 339,291 | 262,972 | | Builder+ | 75,852 | 404,503 | 1,939,825 | 1,349,644 | 2,509,226 | | Total Revenue | 561,192 | 739,157 | 2,321,783 | 1,688,935 | 2,772,198 | - Revenue for Q2 2025 increased by 394% YoY to $2.77 million, primarily due to the expansion of Builder+ operations, including the commencement of Binance Smart Chain (BSC) block building, which contributed $0.41 million (15% of overall revenue)[224][225] - Cost of revenues increased significantly (1,590% YoY for Q2 2025) due to higher Validator Payments for block-building activities, leading to negative gross margins for Q2 2025[228][230][222] - Net income for Q2 2025 was $3.88 million (vs. -$6.73 million in Q2 2024), driven by positive changes in the fair value of crypto assets. However, the six-month period ended June 30, 2025, resulted in a net loss of $13.39 million (vs. $5.53 million net income in H1 2024) due to unrealized depreciation and realized losses on non-ETH crypto asset sales[243][244][245] - As of August 12, 2025, the Company had approximately $4.21 million cash and cash equivalents, and $323.04 million in crypto assets. Total debt obligations were $69.56 million ($51.70 million DeFi, $17.86 million convertible notes)[258] ITEM 3 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for smaller reporting companies, exempting detailed market risk disclosures - This section is not applicable to smaller reporting companies[283] ITEM 4 Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[278] - No material changes in internal control over financial reporting occurred during the period[279] PART II - OTHER INFORMATION ITEM 1 Legal Proceedings The Company reported no legal proceedings during the period covered by this report - No legal proceedings to report[282] ITEM 1A Risk Factors This section is not applicable for smaller reporting companies, exempting a detailed discussion of risk factors - This section is not applicable to smaller reporting companies[283] ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds The Company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds to report[284] ITEM 3 Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - No defaults upon senior securities to report[285] ITEM 4 Mine Safety Disclosures This section is not applicable for the Company - This section is not applicable[286] ITEM 5 Other Information This section details personnel transitions, a CFO trading plan, and company investor communication channels - Michal Handerhan transitioned from Chief Operating Officer to Operations Specialist, effective August 13, 2025, as part of a company realignment[287][288] - CFO Michael Prevoznik adopted a Rule 10b5-1 trading plan, effective September 2, 2025, to sell up to 350,000 shares of Common Stock[289] - The Company uses @Charles_BTCS and @Nasdaq_BTCS on X (formerly Twitter) as supplemental communication channels for public updates[291] ITEM 6 Exhibits This section lists exhibits filed or incorporated by reference, including corporate governance and financing agreements - Lists various exhibits filed or incorporated by reference, including corporate governance documents, equity plans, and financing agreements[292][298] Signature The report was duly signed on behalf of BTCS Inc. by its Chief Executive Officer - Report signed by Charles W. Allen, Chief Executive Officer, on August 13, 2025[296]