Akerna (US:KERN)2025-11-14 11:35Bitcoin Holdings and Mining Operations - As of November 13, 2025, the Company accumulated approximately 4,090 Bitcoin in reserve and owned about 77,944 Bitcoin miners with a cumulative hashrate of 25.0 EH/s and a weighted average fleet efficiency of 16.3 J/TH[184] - The Company purchased 16,299 Bitmain Miners for approximately $314.0 million, and an additional 981 miners for $18.9 million, financed through the pledge of Bitcoin[185] - The Company operates Bitcoin mining at four sites: Alpha, Medicine Hat, Salt Creek, and Vega, with a fleet upgrade completed on April 4, 2025, improving operational efficiency[198][197] - The current Bitcoin reward for solving a block is 3.125 Bitcoin, with the last halving event occurring in April 2024 and the next expected in 2028, impacting mining output and profitability[203] - The company mined 563 Bitcoin in Q3 2025, a significant increase from 190 Bitcoin in Q3 2024, with the average revenue per Bitcoin mined rising from approximately $61,105 to $114,097[212] - The Company plans to accumulate additional Bitcoin and has established a strategic Bitcoin reserve following the Transactions on April 1, 2025[230] Financial Performance - Revenue for the three months ended September 30, 2025, was $64.2 million, a significant increase of $52.6 million compared to $11.6 million for the same period in 2024, primarily due to improved mining efficiencies and increased Bitcoin production[210][212] - Adjusted EBITDA for the three months ended September 30, 2025, was $27.7 million, compared to a loss of $4.3 million in the same period in 2024, reflecting a positive change of $31.9 million[211] - The net income for the three months ended September 30, 2025, was $3.5 million, compared to a net loss of $576,000 in the same period in 2024, marking an improvement of $4.1 million[210] - For the nine months ended September 30, 2025, revenue was $106.8 million, up from $55.9 million in 2024, reflecting an increase of $51 million[219] - Revenue for the nine months ended September 30, 2025, was $106.8 million, an increase of $50.9 million from $55.9 million in 2024, primarily due to improved mining efficiencies and the addition of 14.86 EH/s from new miners[221] Costs and Expenses - The cost of revenue increased to $28.3 million for the three months ended September 30, 2025, from $11.1 million in 2024, primarily due to higher operational costs and increased power costs per megawatt hour, which rose from $28.40 to $42.41[213] - General and administrative expenses rose to $8.1 million in Q3 2025 from $4.8 million in Q3 2024, driven by $5.2 million in transaction costs related to a merger[215] - Cost of revenue increased by $15.7 million to $55.3 million for the nine months ended September 30, 2025, driven by higher consumption from additional miners[222] - General and administrative expenses rose by $2.5 million to $26.1 million, primarily due to $7.5 million in transaction costs related to the Merger[224] Digital Asset Performance - Losses on digital assets were $5.5 million for Q3 2025, compared to $1.6 million in Q3 2024, attributed to the accumulation of Bitcoin at a higher average cost basis[216] - Loss on digital assets was $114.8 million for the nine months ended September 30, 2025, compared to gains of $201.1 million in 2024, largely due to a decrease in Bitcoin held[225] Cash Flow and Financing - Net cash used in operating activities was $43.1 million for the nine months ended September 30, 2025, a significant improvement from $77.6 million in 2024[236] - Net cash provided by financing activities was $331.9 million for the nine months ended September 30, 2025, primarily from equity sales and the effectuation of the Transactions[238] - The Company issued 159,537,377 shares of Class A common stock for gross proceeds of approximately $220.1 million on June 27, 2025[231] Risks and Strategic Considerations - Power costs are a significant component of the Company's mining expenses and are subject to market fluctuations, affecting overall profitability[204] - The Company holds Bitcoin with third-party custodians such as Anchorage, Bitgo, and Coinbase, exposing it to custodian risk due to potential loss or theft of assets[246] - Credit risk arises from pledging Bitcoin as collateral; no material loss was incurred during the nine months ended September 30, 2025, but the risk of counterparty default remains[247] - The Company places cash and demand deposits with financial institutions of high credit standing to mitigate credit risk, but there are no assurances of complete risk mitigation[247] - Changes in U.S. trade policy and tariffs could adversely impact the Company's ability to import equipment cost-effectively, prompting the Company to adjust its strategies accordingly[248]