Riot Platforms, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information that will assist the reader in understanding our results of operations and financial condition. This MD&A should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes and other financial information included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements for the year ended December 31, 2024, as included in our 2024 Annual Report.

Unless otherwise indicated, amounts are stated in thousands of U.S. dollars except for: share, per share, per MWh and miner amounts; bitcoin quantities, prices, and hash rate; cost to mine one bitcoin; and production value of one bitcoin mined.

Our MD&A is primarily organized as follows:

• Business Overview and Trends. Highlights of events that impacted our financial position.
• Results of Operations. Analysis of our financial results comparing the three months ended September 30, 2025 and 2024, and the nine months ended September 30, 2025 and 2024.
• Liquidity and Capital Resources. Analysis of changes in our balance sheets and cash flows and discussion of our financial condition, including potential sources of liquidity, material cash requirements and their general purpose.
• Critical Accounting Policies and Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

Forward-Looking Statements

This MD&A includes forward-looking statements based on current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of factors that could cause actual results to differ materially – and potentially adversely – from the results described in or implied by the forward-looking statements contained in this MD&A and elsewhere in this Quarterly Report.

Business Overview and Trends

General

We are a vertically integrated bitcoin mining company principally engaged in enhancing our power infrastructure to support efficient and large-scale Bitcoin Mining operations in support of the Bitcoin blockchain. We are also in the process of developing a scalable data center platform intended to allocate our power capacity to support non-mining data centers operations, including potential applications in AI and HPC, with the objective of maximizing the value of our energy portfolio. We believe this dual-pronged strategy will enable us to capitalize on both the long-term potential of bitcoin and the growing demand for power and data center infrastructure, positioning us to participate in two rapidly evolving sectors.

We operate in two reportable business segments: Bitcoin Mining and Engineering.

We own and operate multiple data center facilities in Texas and Kentucky that currently provide comprehensive and critical infrastructure for our own Bitcoin Mining operations. The Rockdale Facility in Texas, with 700 MW of developed capacity, is believed to be one of the largest Bitcoin Mining facilities in North America, as measured by developed capacity. In 2024, we completed construction of 400 MW of developed capacity at our second large-scale data center in Texas, the Corsicana Facility. Upon completion, we expect the Corsicana Facility to have approximately one GW of developed capacity available for data center workloads.

Also in 2024, we expanded our operations through the acquisitions of Block Mining, a Kentucky-based vertically integrated bitcoin miner, and E4A Solutions, a leading provider of electrical engineering services to a diverse customer base of energy developers and data center operators. The Block Mining Acquisition added 60 MW of developed capacity for self-mining, which we currently expanded to approximately 95 MW of operational capacity, and are targeting to reach a total of approximately 160 MW during the remainder of 2025. The Block Mining Acquisition also provided us with access to additional energy markets located within the MISO region. The E4A Solutions Acquisition added engineering expertise to service our electrical infrastructure and allows us to provide electrical solutions and services to support the rapidly growing market for electrical infrastructure.

Our market environment is highly competitive, both globally and regionally. We compete with other large-scale bitcoin miners, as well as individual participants, to earn the bitcoin reward that is central to our operations. Our industry continues to evolve alongside the proliferation of bitcoin and cryptocurrencies in general, and we believe we are well positioned within the digital commodities industry in which we operate.

Data Center Development

We strengthened our execution capacity by recruiting critical talent and launching a scalable data center platform to support the initial phase of our data center development at the Corsicana Facility (“Data Center Phase I”). Additionally, we are evaluating further expansion opportunities and assessing the development of our additional power capacity to support future data center applications, including for AI/HPC workloads. We have completed our basis of design for our standard data center build and are assessing procurement of all long-lead equipment, in alignment with our disciplined capital allocation strategy focused on delivering superior risk-adjusted returns. We believe that these foundational investments reflect a proactive, strategic approach to maximize our energy portfolio and access additional revenue opportunities that positions us for durable, long-term leadership and value creation in the data center sector.

Business Segments

Bitcoin Mining

During the nine months ended September 30, 2025, we continued to deploy miners across all our Facilities, with the objective of increasing our operational efficiency and performance moving forward. As of September 30, 2025, we had a total deployed hash rate capacity of 36.5 EH/s, as compared to 31.5 EH/s as of December 31, 2024, an increase of 15.9%.

During the nine months ended September 30, 2025, we mined 4,362 bitcoin, reflecting an increase of 1,050 bitcoin compared to the 3,312 bitcoin we mined during the nine months ended September 30, 2024. The increase was primarily due to our increase in deployed hash rate and significantly improved operational efficiency, partially offset by the increase in the global network hash rate and the halving that occurred in April 2024.

Custodians

As bitcoin is a decentralized cryptocurrency, it is not required that bitcoin be held by a custodian, and we may choose to self-custody. However, we believe that our private keys associated with our bitcoin are better safeguarded within the secure environment provided by custodians. Self-custody poses an increased risk to our private keys, and we may not have the same level of protection as that offered by custody providers who are well-versed in industry best practices for safeguarding digital assets from potential theft, loss, or destruction.

Our bitcoin custodian and brokerage services relationships are non-exclusive, and we may change our custodian and brokerage relationships at any time. We continually monitor our bitcoin assets held by our custodians. Our insurance providers do not have inspection rights associated with our bitcoin assets held in cold storage. For additional information regarding our relationships with our custodians, NYDIG Trust Company LLC and Coinbase, Inc., on behalf of itself and Coinbase Custody Trust Company, LLC, and, if applicable, Coinbase or Coinbase Custody International Ltd., and a description of our underlying agreements with them, see Part I, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Annual Report.

Bitcoin Mining Metrics

The following table presents our key Bitcoin Mining metrics:

(1) Hash rate, deployed represents the total potential hash rate of all our deployed miners at period end, whereas hash rate, average operating represents the average total hash rate our deployed miners provided throughout the period. The difference between deployed hash rate and operating hash rate is attributable to down-time of all or some of our miners for power curtailments, or repairs and maintenance of bitcoin miners or supporting infrastructure. The difference between deployed hash rate and operating hash rate is a key measure in determining the efficiency of our Bitcoin Mining operations.

(2) All-in power cost represents the price we paid for our power throughout the period, net of any power curtailments received. Power is overwhelmingly the largest marginal input cost in mining bitcoin and a significant contributor to profitability. Miners with a low cost of power are better positioned to profitably mine across a wider range of bitcoin price environments.

(3) Developed power capacity is the total amount of electricity our Facilities can utilize for Bitcoin Mining.

The following table presents our cost to mine one bitcoin (amounts in thousands, except Quantity of bitcoin mined and Production value of one bitcoin mined amounts):

(1) Other direct cost of revenue includes compensation, insurance, repairs, and ground lease rent and related property tax.

(2) During the three months ended September 30, 2025 and 2024, we paid cash of approximately $60.2 million and $44.1 million respectively, and during the nine months ended September 30, 2025 and 2024, $152.4 million and $235.0 million, respectively, in total deposits and payments for the purchase of miners. Costs to finance the purchase of miners were zero in all periods presented as the miners were paid for with cash from the Company’s cash balance. The seller did not provide any financing nor did the Company borrow from a third-party to purchase the miners.

(3) Power curtailment credits are credited against our power invoices as a result of temporarily pausing our operations to participate in ERCOT’s Demand Response Service Programs. Our fixed-price power purchase contracts enable us to strategically curtail our mining operations and participate in these programs, which significantly lower our cost to mine bitcoin. These credits are recognized outside of cost of revenue in Power curtailment credits on our Condensed Consolidated Statements of Operations, but they significantly reduce our overall cost to mine bitcoin.

(4) We capitalize the acquisition cost of our miners and include these costs in Property and equipment, net on our Condensed Consolidated Balance Sheets. The miners are depreciated over an estimated useful life of three years, during which time the miners are expected to generate bitcoin revenue. We do not consider depreciation expense in determining whether it is economical to operate our miners since depreciation is a non-cash expense and is not a variable operating cost that can be avoided even if we curtail operations temporarily. Depreciation expense incurred is disclosed for each respective period in the table above.

(5) The following table presents the future depreciation expense of all of our bitcoin miners:

(6) Computed as revenue recognized from bitcoin mined divided by the quantity of bitcoin mined during the same period.

During 2023, 2024, and 2025, we entered into purchase orders under the Master Agreement to acquire new miners from MicroBT. These purchase orders represented a total hash rate of 49.2 EH/s, with a total purchase price of approximately $779.5 million, subject to downward price adjustments as provided by the Master Agreement. These miners are primarily intended for deployment at the Corsicana Facility, which commenced operations in April 2024. Delivery of these miners began in 2023, and all miners under these purchase orders are expected to be received by the second quarter of 2026, with deployment following on an ongoing basis. The Master Agreement provided us with four additional annual options to purchase miners, on the same or more favorable terms as the second purchase order executed under the Master Agreement.

For the three and nine months ended September 30, 2025, Bitcoin Mining revenue was approximately $160.8 million and $444.5 million, respectively.

Engineering

Our Engineering business designs and manufactures power-distribution equipment and custom-engineered electrical products. These products support our vertical integration strategy by enabling the internal development of critical electrical components and engineering services necessary for our site developments. This integration helps mitigate execution and counter-party risk in ongoing and future expansion projects. The specialized talent employed in our Engineering business allows us to explore new methods to optimize and develop best-in-class Bitcoin Mining operations, which has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin Mining hardware.

Our Engineering business also provides electricity distribution product design, manufacturing, and installation services primarily focused on large-scale commercial and governmental customers and serves a broad scope of clients across a wide range of markets, including data center, power generation, utility, water, industrial, and alternative energy.

Engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation. Engineering revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract.

In December 2024, we completed the E4A Solutions Acquisition. This acquisition is consistent with our vertically integrated strategy by adding engineering expertise to service our own existing and future electrical infrastructure and enables us to provide electrical solutions and services to support the rapidly growing market for electrical infrastructure.

For the three and nine months ended September 30, 2025, Engineering revenue was approximately $19.1 million and $43.6 million, respectively.

Strategic Goals and Initiatives

Bitcoin Treasury Strategy

Our investment strategy with respect to our bitcoin (“Bitcoin Treasury Strategy”) involves retaining a majority of our currently held bitcoin and acquiring new bitcoin through our mining operations. We may sell or leverage our bitcoin to support operational needs and strategic initiatives. We believe this approach will contribute to operational stability and position us to capitalize on the appreciation of bitcoin while supporting our liquidity profile.

Power Strategy

Long-term power contracts form the basis of our power strategy. We utilize the Rockdale PPA, Corsicana PPA, and Kentucky PPA (together, the “PPAs”) at our Facilities in the following ways:

Manual Curtailment

We power down operations and return power to the grid when market prices for electricity indicate the potential for us to receive more power curtailment credits than the Bitcoin Mining revenues we would have generated had we not curtailed our mining operations. We receive power credits for the difference between the market power price and our fixed power price, which enables us to maximize our overall profitability between Bitcoin Mining and supporting the grid by not drawing power from the grid when electricity is most scarce.

Ancillary Services

We competitively bid to sell ERCOT and MISO the option to control our electrical load during certain hours. ERCOT and MISO compensate us in the form of Demand Response Service Programs’ Credits, which are received whether or not we are called on to power down.

ERCOT’s 4CP Program

At the Rockdale Facility and the Corsicana Facility, we voluntarily power down operations during times of peak demand in summer months. Participation provides us with substantial savings on transmission costs in the subsequent year’s power bills, reducing our overall power costs.

The following table presents our power curtailment credits:

The following graph presents the primary decision points that guide our decision to curtail power usage or power down our mining operations, and when we might resume mining operations:

Challenges, Risks, and Industry Trends

Increased Competition and Global Network Hash Rate

The price of bitcoin increased during the first quarter of 2024 due to a new source of demand, 11 bitcoin spot Exchange Traded Funds (“ETFs”), which were approved to begin trading by the SEC on January 11, 2024. These ETFs, as investment vehicles, provide investors with a new way to gain exposure to bitcoin through more traditional financial markets.

During 2023 and 2024, the bitcoin mining industry experienced record growth as the price of bitcoin increased from the lows experienced in early 2023. The rising bitcoin price renewed opportunities to access capital markets to fund growth, leading to unprecedented expansion in mining operations, which resulted in a doubling of the size of provisioned hash calculation services on the network, as measured by total hash rate. In advance of the April 2024 bitcoin network halving, many bitcoin mining companies heavily invested in implementing vertically integrated business models, infrastructure, and upgrading and expanding mining fleets. Competition on the bitcoin network has expanded in kind, and we expect competition within the mining industry to intensify as long as bitcoin prices remain elevated or increase further.

We have observed that when the market price for bitcoin experiences sustained increases, new miners are introduced onto the bitcoin network, contributing to an increase in the global network hash rate. Despite the halving in April 2024 and the increase in the global network hash rate, our hash rate grew by approximately 29.4% from December 31, 2023 to September 30, 2025. This growth contributed to an increase of approximately 31.7% in the number of bitcoin we mined during the nine months ended September 30, 2025 as compared to the same period in 2024.

Accordingly, as the global network hash rate continues to rise, miners must scale their operations to maintain or improve their share of mining rewards. In response, we have expanded our Bitcoin Mining capacity through the development of new facilities, such as the Corsicana Facility, and strategic acquisitions, including the Block Mining Acquisition. These efforts are supported by investments in electricity supply and distribution infrastructure. We are also focused on other strategic growth opportunities that enhance our long-term competitiveness. Further, we have adopted new and improved technology to increase both our mining power and efficiency, including our industrial-scale adoption of immersion cooling and our strategic acquisitions of large quantities of the latest powerful and efficient miners available.

Volatile Transaction Fees

The bitcoin mining industry recently experienced an increase in transaction fees on the bitcoin network, alongside growing overall demand for bitcoin. While transaction fees remain inherently volatile, they are paid directly to miners and are representative of the public interest in transacting on the bitcoin network. These transaction fees, combined with the block subsidy issued by the bitcoin network, make up the total reward paid to miners upon solving a block.

Since 2021, we have focused on a vertically integrated business model. We remain committed to building long-term stockholder value by taking strategic actions to further vertically integrate our business at the current Rockdale Facility, developing the Corsicana Facility, and integrating our acquisitions, including the Kentucky Facility and E4A Solutions. Management believes that vertical integration will strengthen each of our business segments by providing increased capacity for our Bitcoin Mining operations, expanding opportunities for implementing our proprietary power strategy, and positioning us to capitalize on supply chain efficiencies and electrical engineering services through our Engineering segment. We continue to focus on deploying our efficient Bitcoin Mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining facilities.

Grid Curtailment

The Public Utility Commission of Texas, ERCOT, and Oncor Electric Delivery Company (“Oncor”) collectively oversee the regulatory, administrative, and delivery aspects of our power supply in Texas. In Kentucky, MISO oversees our power supply. As the bitcoin mining industry has expanded in recent years, regulatory scrutiny on bitcoin mining facilities and their energy consumption has intensified accordingly.

As Texas’s grid operator, ERCOT is responsible for monitoring and testing market participants, including our Bitcoin Mining facilities at the Rockdale Facility and the Corsicana Facility, to evaluate their impact on grid reliability. As part of this process, ERCOT may issue curtailment notices to reduce the power usage at our Texas operations. Our Facilities in Texas are subject to periodic testing and monitoring and have experienced power curtailments in response to instructions we receive from Oncor and ERCOT. Given the inherent uncertainty regarding the duration or extent of power curtailments and testing procedures, we are currently unable to reasonably estimate their potential impact on our operations. If we cannot secure adequate access to electrical power, we may be forced to reduce or shut down our operations, which would have a material adverse effect on our business, prospects, financial condition, and operating results.

See Part I, Item 1A. “Risk Factors” of our 2024 Annual Report for additional discussion regarding potential impacts that our competitive and evolving industry may have on our business.

Recent Events Affecting the Company

An inflationary environment marked by global supply chain logistics disruptions across multiple distribution channels, has at times contributed to delays in certain of our miner delivery schedules and in our infrastructure development schedules, driven by constraints in the globalized supply chains for miners, electricity distribution equipment, and construction materials, and these conditions may contribute to delays in the future. We have also experienced delays in our Engineering business segment’s manufacturing and delivery schedule, and in our infrastructure development schedules, resulting from constraints in the globalized supply chains for miners, electricity distribution equipment, and construction materials.

During the nine months ended September 30, 2025, we continued to operate under such conditions; however, we effectively and efficiently mitigated delivery delays to avoid material impacts to our miner deployment schedule, although we cannot guarantee continued success in mitigating any such delivery delays in the future. Additionally, the development and expansion of our Facilities require large quantities of construction materials, specialized electricity distribution equipment, and other critical components, all of which are in high demand and may be difficult to source. To help mitigate the impacts of increasing demand for these goods, global supply chain constraints, and uncertainty arising from recently imposed U.S. tariffs on imports and retaliatory tariffs imposed by other countries, including any inflationary pricing that may result from such impacts, we procured and currently hold many electrical infrastructure components and materials we require to develop the Corsicana Facility and to expand the Kentucky Facility, as well as replacement components and parts for our existing systems, to help shorten the impact of potential damage to installed equipment.

Summary of Riot’s Bitcoin Mining Results

The following tables present additional information about our Bitcoin Mining activities, including bitcoin production and sales of bitcoin mined:

Results of Operations

Comparative Results for the Three Months Ended September 30, 2025, and 2024:

Revenue

Total revenue for the three months ended September 30, 2025 and 2024 was $180.2 million and $84.8 million, respectively. Total revenue consists of our Bitcoin Mining revenue, Engineering revenue, and Other revenue. Other revenue consists almost entirely of residual activity related to our former data center hosting operations.

For the three months ended September 30, 2025 and 2024, Bitcoin Mining revenue was $160.8 million and $67.5 million, respectively. The increase of $93.3 million was primarily due to higher bitcoin prices in the 2025 period, which averaged $114,361 per bitcoin, as compared to $61,133 per bitcoin for the 2024 period. Despite the substantial increase in the global network hash rate, Bitcoin production increased by 27.4% during the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a 29.4% increase in deployed hash rate.

For the three months ended September 30, 2025 and 2024, Engineering revenue was $19.1 million and $12.6 million, respectively. Of the increase, $3.1 million was due to the E4A Solutions Acquisition in December 2024. The remaining increase was primarily attributable to the accelerated completion of certain custom products and, therefore, the recognition of revenue.

Costs and expenses

The following table presents Cost of revenue for Bitcoin Mining:

(1) All amounts included within Other are individually insignificant.

The increase of approximately $44.3 million in Cost of revenue for Bitcoin Mining was primarily due to the increase in Bitcoin Mining capacity at the Corsicana Facility, which requires additional headcount and direct costs necessary to maintain and support our expanded Bitcoin Mining operations and the acquisition of the Kentucky Facility in July 2024. Property taxes increased due to the continued expansion of the Corsicana Facility. Cost of revenue for Bitcoin Mining excludes depreciation and amortization, which are stated separately on our Condensed Consolidated Statements of Operations.

Cost of revenue for Engineering for the three months ended September 30, 2025 and 2024 was $13.7 million and $13.5 million, respectively, an increase of approximately $0.2 million. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs, which increased along with the increase in revenue compared to the three months ended September 30, 2024.

Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024 were $69.8 million and $66.9 million, respectively, an increase of approximately $2.9 million. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs. The increase was primarily due to a $2.3 million increase in stock-based compensation due to the hiring of employees related to our data center development. The remaining increase was due to an increase in other general operating costs such as insurance and information technology projects to support our growth, partially offset by a $1.4 million decrease in legal and professional fees, primarily related to decreased ongoing litigation.

Depreciation and amortization for the three months ended September 30, 2025 and 2024 was $82.9 million and $60.0 million, respectively, an increase of approximately $22.9 million. The increase was primarily due to increased depreciation from the Corsicana Facility coming online in April 2024 and additional miners being deployed.

The change in fair value of bitcoin for the three months ended September 30, 2025 and 2024 were gains of $133.1 million and $8.6 million, respectively, and was recognized to adjust the fair value of our bitcoin held at the end of each period.

The change in fair value of our derivative assets for the three months ended September 30, 2025 and 2024 was a gain of $10.8 million and a loss of $24.3 million, respectively, and was recorded to adjust the fair value of our PPAs, which were classified as a derivative asset and measured at fair value. The changes in fair value were due to changes in future power prices over the applicable periods. The gain incurred during the three months ended September 30, 2025 was primarily attributable to the average of the forward prices utilized in the discounted cash flow estimation models increasing from $53.31 per MWh as of June 30, 2025 to $55.9 per MWh as of September 30, 2025. The loss recognized during the three months ended September 30, 2024 was primarily attributable to the average of the forward prices decreasing from $51.13 per MWh as of June 30, 2024 to $48.8 per MWh as of September 30, 2024.

Power curtailment credits for the three months ended September 30, 2025 and 2024 were $30.6 million and $12.4 million, respectively, and represent sales of unused power under certain of our PPAs and participation in ancillary services under ERCOT Demand Response Services Programs. The amount of these credits varies from period to period depending on various factors impacting the supply of power to, and the demand for power on, the ERCOT grid, such as weather and global fuel costs.

The gain on sale of equipment for the three months ended September 30, 2025 of $2.7 million was primarily attributable to sales of miners for proceeds of $2.9 million.

The impairment of property and equipment in 2025 of $15.3 million was from certain long-lead items previously included in Construction in progress related to the planned expansion of the Corsicana Facility for bitcoin mining purposes. These items were deemed to be impaired as a result of our decision to expand the Corsicana Facility for data center application purposes instead.

Other income (expense)

Interest income for the three months ended September 30, 2025 and 2024 was $3.9 million and $5.5 million, respectively. The decrease was primarily due to a decrease in average cash balances on deposit.

Interest expense for the three months ended September 30, 2025 and 2024 was $8.1 million and $0.4 million, respectively. The increase was primarily due to the debt from new financing arrangements entered into during late 2024 and 2025.

Gain (loss) on equity method investment – marketable securities for the three months ended September 30, 2025 and 2024, were gains of $28.9 million and losses of $38.1 million, respectively, and were recognized to adjust the fair value of our equity method investment held at the end of each period. The equity method investment was sold in its entirety during the three months ended September 30, 2025.

Comparative Results for the Nine Months Ended September 30, 2025 and 2024:

Revenue

Total revenue for the nine months ended September 30, 2025 and 2024 was $494.6 million and $234.1 million, respectively. Total revenue consists of our Bitcoin Mining revenue, Engineering revenue, and Other revenue. Other revenue consists almost entirely of residual activity related to our former data center hosting operations.

For the nine months ended September 30, 2025 and 2024, Bitcoin Mining revenue was $444.5 million and $194.7 million, respectively. The increase of $249.9 million was primarily due to higher bitcoin prices in the 2025 period, which averaged $101,912 per bitcoin, as compared to $58,771 per bitcoin for the 2024 period. Despite the substantial increase in the global network hash rate and the April 2024 halving, bitcoin production increased by 31.7% during the nine months ended September 30, 2025 compared to the same period in 2024 due to the significant increases in our deployed and operating hash rates during each of the periods.

For the nine months ended September 30, 2025 and 2024, Engineering revenue was $43.6 million and $26.9 million, respectively. The increase of $16.7 million was primarily attributable to the E4A Solutions Acquisition in December 2024, which accounted for $11.8 million of the increase. The remaining increase was primarily attributable to the accelerated completion of certain custom products and, therefore, the recognition of revenue.

Costs and expenses

The following table presents Cost of revenue for Bitcoin Mining:

(1) All amounts included within Other are individually insignificant.

The increase of approximately $125.5 million in Cost of revenue for Bitcoin Mining was primarily due to the increase in Bitcoin Mining capacity at the Corsicana Facility, which requires additional headcount and direct costs necessary to maintain and support our expanded Bitcoin Mining operations and the acquisition of the Kentucky Facility in July 2024. Property taxes increased due to the continued expansion of the Corsicana Facility. Cost of revenue for Bitcoin Mining excludes depreciation and amortization, which are stated separately on our Condensed Consolidated Statements of Operations.

Cost of revenue for Engineering for the nine months ended September 30, 2025 and 2024 was $35.4 million and $27.8 million respectively, an increase of approximately $7.6 million. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs, which increased along with the increase in revenue compared to the nine months ended September 30, 2024.

Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 were $217.2 million and $185.8 million, respectively, an increase of approximately $31.4 million. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs. The increase was primarily due to a $17.1 million increase in legal and professional fees primarily related to ongoing litigation and a $7.7 million increase in compensation expense as a result of hiring additional employees to support our ongoing growth and data center team. The remaining increase was due to an increase in other general operating costs such as insurance and information technology projects to support our growth, partially offset by a $2.1 million decrease in stock-based compensation, primarily due to the vesting of awards granted in prior years.

Depreciation and amortization for the nine months ended September 30, 2025 and 2024 was $244.1 million and $129.7 million, respectively, an increase of approximately $114.4 million. The increase was primarily due to increased depreciation from the Corsicana Facility coming online in April 2024 and additional miners being deployed.

The change in fair value of bitcoin for the nine months ended September 30, 2025 and 2024 were gains of $395.9 million and $166.2 million, respectively, and was recognized to adjust the fair value of our bitcoin held at the end of each period.

The change in fair value of our derivative assets for the nine months ended September 30, 2025 and 2024 were gains of $9.9 million and $23.4 million, respectively, and were recorded to adjust the fair value of our PPAs, which were classified as a derivative asset and measured at fair value. The changes in fair value were due to changes in future power prices over the applicable period. The gain incurred during the nine months ended September 30, 2025 was primarily attributable to the average of the forward prices utilized in the discounted cash flow estimation models increasing from $51.98 per MWh as of December 31, 2024 to $55.9 per MWh as of September 30, 2025. The gain recognized during the nine months ended September 30, 2024 was primarily attributable to the average of the forward prices increasing from $45.15 per MWh as of December 31, 2023 to $48.8 per MWh as of September 30, 2024.

Power curtailment credits for the nine months ended September 30, 2025 and 2024 were $46.7 million and $31.4 million, respectively, and represent sales of unused power under certain of our PPAs and participation in ancillary services under ERCOT Demand Response Services Programs. The amount of these credits varies from period to period depending on various factors impacting the supply of power to, and the demand for power on, the ERCOT grid, such as weather and global fuel costs.

The change in fair value of contingent consideration for the nine months ended September 30, 2025 was a gain of $17.6 million, as compared to no gain or loss for the nine months ended September 30, 2024, and was a result of the change in estimates for the potential contingent consideration of the acquisitions of Block Mining and E4A Solutions.

The loss on contract settlement of $158.1 million was attributable to the Rhodium Settlement.

The gain on sale of equipment for the nine months ended September 30, 2025 of $2.3 million was primarily attributable to sales of miners for proceeds of $2.9 million.

The impairment of property and equipment of $15.3 million was from certain long-lead items previously included in Construction in progress related to the planned expansion of the Corsicana Facility for bitcoin mining purposes. These items were deemed to be impaired as a result of our decision to expand the Corsicana Facility for data center application purposes instead.

Other income (expense)

Interest income for the nine months ended September 30, 2025 and 2024 was $10.7 million and $22.2 million, respectively. The decrease was primarily due to a decrease in average cash balances on deposit.

Interest expense for the nine months ended September 30, 2025 and 2024 was $16.5 million and $1.1 million, respectively. The increase was primarily due to the debt from new financing arrangements entered into during late 2024 and 2025.

Gain (loss) on equity method investment – marketable securities for the nine months ended September 30, 2025 and 2024, were losses of $28.2 million and $13.6 million, respectively, and was recognized to adjust the fair value of our equity method investment held at the end of each period. The equity method investment was sold in its entirety during the three months ended September 30, 2025.

Non-GAAP Measures

In addition to financial measures presented under GAAP, we consistently evaluate our use of and calculation of non-GAAP financial measures such as “Adjusted EBITDA.” EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of our core business operations in Bitcoin Mining. The adjustments include fair value adjustments such as derivative power contract adjustments, equity securities fair value changes, and non-cash stock-based compensation expense, in addition to financing and legacy business income and expense items.

We believe Adjusted EBITDA can be an important financial performance measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period to period by making such adjustments. Additionally, Adjusted EBITDA is used as a performance metric for share-based compensation.

Adjusted EBITDA is provided in addition to, and should not be considered a substitute for, or superior to, net income, the most comparable measure under GAAP to Adjusted EBITDA. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted net income per share, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this financial measure either in isolation or as a substitute for analyzing our results as reported under GAAP.

The following table reconciles Adjusted EBITDA to Net income (loss), the most comparable GAAP performance measure:

Liquidity and Capital Resources

We generate non-cash revenue through mining bitcoin at our Facilities, which we manage based on our Bitcoin Treasury Strategy, while financing operations and other expenses through sales of our bitcoin production, borrowing against our credit facilities, and issuance of common stock under the ATM offering program. During the nine months ended September 30, 2025 and 2024, we issued and sold approximately 16.1 million shares and 70.1 million shares, respectively, of our common stock under our ATM offering program for aggregate net proceeds (net of commissions and expenses) of $195.2 million and $730.8 million, respectively.

As of September 30, 2025, we had net working capital of approximately $170.0 million, which included cash and cash equivalents of $330.7 million. We reported net income of $27.6 million during the nine months ended September 30, 2025, which included $498.4 million in non-cash net gains, primarily resulting from revenue recognized from bitcoin mined of $444.5 million and the change in fair value of bitcoin of $395.9 million, partially offset by depreciation and amortization of $244.1 million, stock-based compensation of $92.6 million, and losses on marketable securities of $28.2 million.

We monitor our balance sheet on an ongoing basis and evaluate the level of bitcoin retained from monthly production in consideration of our cash requirements for ongoing operations and expansion.

Contractual Commitments and Obligations

As of September 30, 2025, we had a remaining commitment of approximately $105.4 million due to MicroBT for the contractual purchase of miners, which we expect to pay through the second quarter of 2026.

Revenue from Operations

Bitcoin Mining

We expect to generate ongoing revenue from bitcoin rewards in connection with our Bitcoin Mining operations and our ability to liquidate bitcoin rewards at future values will be regularly evaluated to generate cash for operations.

Generating bitcoin rewards that exceed our production and overhead costs will determine our ability to report profit margins related to such Bitcoin Mining operations, although accounting for our reported profitability is complex. Furthermore, regardless of our ability to generate proceeds from the sale of our bitcoin produced from our Bitcoin Mining business, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy.

The ability to raise funds through the sale of equity, debt financings, or the sale of bitcoin to maintain our operations is subject to many risks and uncertainties and any future equity issuances or convertible debt offerings could result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through bitcoin production and successfully convert bitcoin into cash or fund overhead with bitcoin is subject to a number of risks, including regulatory, financial and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the market price of bitcoin and, as such, future prices cannot be predicted.

Engineering

Substantially all Engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts and electrical engineering services. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract. The length of time required to complete a custom product varies but is typically between four and 12 weeks.

Customers are typically required to make periodic progress payments based on contractually agreed-upon milestones.

If we are unable to generate sufficient revenue from our Bitcoin Mining and Engineering operations when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.

ATM Equity Offerings

During 2025 and 2024, we offered and sold shares of our common stock through ATM offering programs pursuant to sales agreements with sales agents (each, an “ATM Program”). For additional information regarding our ATM Program, see Note 14. Stockholders’ Equity.

The following table sets forth shares sold and net proceeds received (net of sales commissions and expenses) from shares sold under each ATM Program:

As of September 30, 2025, approximately $162.6 million of our common stock remained available for issuance and sale pursuant to the August 2024 ATM Program. The remaining prior ATM Program sales agreements were terminated as of August 9, 2024.

Legal Proceedings

We have been named a defendant in several lawsuits, as more fully described in Note 17. Commitments and Contingencies.

Cash Flows

The following table presents a summary of our cash flows:

Operating Activities

The increase in cash used in operating activities was primarily attributable to increased power costs of $110.0 million, a $32.9 million increase in selling, general, and administrative costs, excluding stock-based compensation, both of which were primarily driven by our increased mining capacity and headcount, combined with other general operating costs such as insurance and information technology projects to support our growth. During the nine months ended September 30, 2025, we paid a one-time cash cost of $122.6 million related to the loss on contract settlement related to the Rhodium Settlement.

Investing Activities

For the nine months ended September 30, 2025, net cash provided by investing activities was primarily attributable to proceeds from the sale of bitcoin of $291.0 million and proceeds of $106.7 million from the sale of marketable securities, partially offset by purchases and deposits paid for miners and purchases of property and equipment for our ongoing expansions, for which we paid approximately $138.1 million in deposits for the purchase of miners and other equipment, with anticipated additional payments of $105.4 million to be made through the second quarter of 2026, and payments of approximately $118.9 million for the purchase of property and equipment, and payments of $50.9 million for the purchase of land, which is intended for ongoing data center development.

For the nine months ended September 30, 2024, we paid approximately $331.2 million in deposits and payments for the purchase of miners, paid approximately $203.8 million for our investment in marketable securities, and paid approximately $182.1 million for the purchase of property and equipment.

Financing Activities

For the nine months ended September 30, 2025 and 2024, net cash provided by financing activities primarily consisted of proceeds from our ATM Program offerings of $199.6 million and $746.4 million, respectively. We have approximately $854.0 million in total principal on our debt outstanding, primarily consisting of $594.4 million from our 2030 Notes, $200.0 million from our bitcoin-backed credit facility, $54.3 million from our revolving credit facilities, and $5.7 million of debt acquired as part of the Block Mining Acquisition. During the nine months ended September 30, 2025, we received total net proceeds of $254.3 million from the issuance of debt. We have primarily financed our strategic growth through proceeds from issuances of our common stock through ATM Program offerings and various credit facilities, and it is reasonably likely that we will continue to finance our ongoing growth similarly.

Critical Accounting Policies

In preparing our financial statements in accordance with GAAP, there are certain accounting policies that may require a choice between acceptable accounting methods or may require substantial judgment or estimation in their application. The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our Condensed Consolidated Financial Statements. An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our Condensed Consolidated Financial Statements. These include: business combinations, valuation of the Rockdale PPA and the Corsicana PPA, long-lived assets and stock-based compensation. We believe these and other accounting policies set forth in Note 2. Significant Accounting Policies and Recent Accounting Pronouncements should be reviewed as they are integral to understanding our results of operations and financial condition.

We have discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of our Board.

Business combinations

Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for property and equipment and contingent consideration, where applicable. Although we believe our assumptions and estimates have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. Estimates used in determining the value of property and equipment included the estimated replacement costs, which included replacement cost new, remaining life, and effective age. Estimates primarily used in determining the value of the contingent consideration included the timing and probability of achieving milestones and discount rates.

Rockdale PPA and Corsicana PPA Valuations

The Rockdale PPA and the Corsicana PPA are accounted for as derivatives, the valuations of which are based on significant unobservable inputs, which include discounted cash flow estimation models containing quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the respective terms of the Rockdale PPA and the Corsicana PPA. Significant judgment and estimations are required when creating the discounted cash flow estimation models. Should our discounted cash flow estimation models change significantly, potentially material changes to the fair value of the derivative asset may result, which could have a material impact on our financial statements.

See Note 9. Power Supply Agreements for a discussion of the unobservable inputs and their impact on the valuation.

Long-Lived Assets

Long-lived assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Judgment is necessary in estimating our various assets’ useful lives. This includes evaluating our own usage experience with our currently owned assets, the quality of materials used in construction-related projects, and for our miners, the rate of technological advancement and market-related factors such as the price of bitcoin and the bitcoin network hash rate, which impact the value of the miners. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, which is determined based on a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. Significant judgment is used when estimating future cash flows, particularly the price of bitcoin and the bitcoin network hash rate. If such assets are considered impaired, an impairment is recognized based on the amount by which the carrying amount exceeds the estimated fair value of the assets.

Should our estimates of useful lives, undiscounted future cash flows, or asset fair values change, additional and potentially material impairments may be required, which could have a material impact on our reported financial results.

Stock-Based Compensation

Stock-based compensation expense related to share-based payment awards is recognized at the grant date of the award and is estimated based on the fair market value of our common stock on the date of the grant. Compensation cost for performance-based, share-based payment awards is recognized over the performance period when achievement of the milestones and targets becomes probable. We use significant judgment in determining the likelihood of meeting milestones and market conditions. Inputs into valuation models such as Monte Carlo simulations include both the Company’s and the Russell 3000’s historical and expected annual volatilities, and depending on the inputs selected, we could calculate significantly different estimated grant date fair values, materially impacting the valuation of our stock-based awards and the stock-based compensation expense we recognize in future periods.

Recent Accounting Pronouncements

See Note 2. Significant Accounting Policies and Recent Accounting Pronouncements for a description of applicable recent accounting pronouncements and any material impact on our financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

The following discussion about our market risk exposures involves forward-looking statements. Actual results could differ materially from those projected in our forward-looking statements. For more information regarding the forward-looking statements used in this section and elsewhere in this Quarterly Report, see the “Cautionary Note Regarding Forward-Looking Statements” at the forepart of this Quarterly Report.

The sensitivity analyses disclosed below provide only a limited, point-in-time view of the market risk of the financial instruments discussed. The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analyses.

Risks Regarding the Price of Bitcoin

Our business and development strategy is focused on maintaining and expanding our Bitcoin Mining operations to maximize the amount of new bitcoin rewards we earn. As of September 30, 2025, we held 19,287 bitcoin recognized at its fair value of $2.2 billion.

We cannot accurately predict the future market price of bitcoin, the future value of which will affect revenue from our operations, and any future declines in the fair value of the bitcoin we mine and hold for our account would be reported in our financial statements and results of operations as a charge against net income, which could have a material adverse effect on the market price for our securities.

The following table presents the impact of 10% changes in the price of bitcoin on our bitcoin holdings during the applicable period:

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Risks Regarding the Price of Power

The following table presents the impact of 10% changes in the future power prices (taking into account the dates of maturity of our various fixed price PPAs) used to derive the fair value of the Rockdale PPA and the Corsicana PPA derivative assets:

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025 to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), to allow timely decisions regarding required disclosures. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Based on this evaluation, our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2025.

Changes in Internal Control over Financial Reporting

In July and December 2024, we acquired 100% of the equity interests of Block Mining and E4A Solutions, respectively. We are currently in the process of integrating the Block Mining and E4A Solutions operations, control processes, and information systems into our systems and control environment and expect to include them in scope of design and operation of our internal control over financial reporting for the year ending December 31, 2025. We believe that we have taken the necessary steps to monitor and maintain appropriate internal control over financial reporting during this integration. Other than changes made in connection with the acquisitions of Block Mining and E4A Solutions, there were no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Investors should carefully review and consider the information regarding certain factors that could materially affect our business, results of operations, financial condition, cash flows and equity as set forth herein and in Part I, Item 1A. Risk Factors of our 2024 Annual Report. We may disclose changes to our risk factors or disclose additional risk factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently believe not to be material may also adversely impact our business, financial condition, results of operations, cash flow and equity.

The following risk factors are in addition to those presented in our 2024 Annual Report:

Risks Related to Our Business

We have only recently begun to explore the development of AI/HPC infrastructure at the Corsicana Facility, and there can be no assurance that this initiative will be successful.

We have commenced initial development activities to evaluate and potentially build out a portion of the Corsicana Facility for AI/HPC applications. This initiative is in its early stages, and we may encounter unforeseen technical, operational, or financial challenges. There can be no assurance that we will complete the buildout at the Corsicana Facility as planned, on schedule, or within budget, or that the facility will operate as intended once completed.

Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business, financial condition and results of operations.

To maintain and further develop our Bitcoin Mining operations, we must procure mining hardware and other Bitcoin Mining technology. Additionally, the development and potential expansion of our Facilities requires large quantities of construction materials, specialized electricity distribution equipment and other critical components, all of which are in high demand and may be difficult to source. While we proactively procure products and materials from our suppliers in sufficient quantities to facilitate deployment at scale, we cannot predict the effect of the recently imposed U.S. tariffs on imports, or the extent to which other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of products and materials we require for our operations, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business, financial condition, and results of operations.

Our success in the AI/HPC sector depends on our ability to attract and retain qualified third-party partners and customers.

We are relying on third-party consultants, vendors, and potential customers to support the development and commercialization of the AI/HPC infrastructure. Our ability to generate revenue from this initiative depends on securing long-term, creditworthy customers and partners. If we are unable to do so, or if these parties fail to perform as expected, our investment may not yield the anticipated returns.

Our expansion into AI/HPC may divert resources from our core Bitcoin mining operations, limit our power capacity for mining, and introduce operational complexity.

While we intend to continue our Bitcoin mining operations, the allocation of resources to support AI/HPC development may reduce the capital, personnel, infrastructure and power capacity available for our mining business. In particular, the diversion of power capacity to AI/HPC workloads may limit our ability to deploy that power for Bitcoin mining, which is a highly competitive and capital-intensive industry. As a result, we may be unable to expand our deployed hash rate (EH/s) at the pace of our competitors, potentially diminishing our market share and profitability. Managing multiple distinct lines of business may increase operational complexity and place additional demands on our management, technical, and support teams, which could negatively affect our overall performance, strategic execution, and profitability.