# Bit Digital (BTBT) 10-Q SEC filing - Q2 FY2026

- Filed: May 15, 2026, 7:00 AM EDT
- Fiscal quarter: Q2 FY2026
- Calendar quarter: Q2 2026
- Accession: 0001213900-26-057116
- OpenCapital page: https://www.opencapital.sh/filings/0001213900-26-057116
- Markdown URL: https://www.opencapital.sh/filings/0001213900-26-057116.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1710350/000121390026057116/0001213900-26-057116-index.htm

## Filing documents

- [10-Q (ea0288833-10q_bitdigital.htm)](https://www.sec.gov/Archives/edgar/data/1710350/000121390026057116/ea0288833-10q_bitdigital.htm)

---

## 10-Q

SEC source: [ea0288833-10q_bitdigital.htm](https://www.sec.gov/Archives/edgar/data/1710350/000121390026057116/ea0288833-10q_bitdigital.htm)

**UNITED
STATES**

**SECURITIES
AND EXCHANGE COMMISSION**

**WASHINGTON,
D.C. 20549**

**FORM 10-Q**

**☒ QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For
the quarterly period ended **March 31, 2026**

**☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT**

For
the transition period from __________ to __________

Commission
file number: **001-38421**

**BIT DIGITAL, INC.**

(Exact name of registrant as specified in its charter)

| Cayman Islands | 98-1606989 |
| --- | --- |
| (State or other jurisdiction of Company or organization) | (I.R.S. Employer Identification No.) |
| 31 Hudson Yards, Floor 11, New York, NY | 10001 |
| (Address of principal executive offices) | (Zip Code) |

Registrant’s
telephone number: **(212) 463-5121**

Securities
registered under Section 12(b) of the Exchange Act:

Title of each class Trading Symbol Name of each exchange on which registered

**Ordinary Shares, $0.01 par value** **BTBT** **Nasdaq Capital Market**

Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐

Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated Filer ☒ Smaller reporting company ☐

Emerging growth company ☐

If
an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒

Applicable
only to Corporate Issuers:

Indicate
the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date: 349,190,420 Ordinary
Shares as of May 11, 2026.

**TABLE OF CONTENTS**

| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii |
| --- | --- |
| PART I |  |
| Financial Statements. | 1 |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 48 |
| Quantitative and Qualitative Disclosures about Market Risk. | 75 |
| Controls and Procedures. | 76 |
| PART II |  |
| Legal Proceedings. | 77 |
| Risk Factors. | 78 |
| Unregistered Sales of Equity Securities and Use of Proceeds. | 78 |
| Defaults Upon Senior Securities. | 78 |
| Mine Safety Disclosures. | 78 |
| Other Information. | 78 |
| Exhibits. | 79 |
| SIGNATURES | 80 |

i

**CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS**

Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives,
and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements
generally are identified by the words “believes,” “project,” “expects,” “anticipates,”
“estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions.

We
intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this
statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking
statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. In particular,
information included under “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and other sections of this report contain forward-looking statements. Where, in any forward-looking
statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans
and expectations of Bit Digital, Inc.’s (“Bit Digital”) management and expressed in good faith and believed to have
a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether
any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond Bit Digital’s control.
Except as may be required by law, Bit Digital undertakes no obligation to modify or revise any forward-looking statements to reflect
new information, events or circumstances occurring after the date of this report. Comparisons of results for current and any prior periods
are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed
as historical data.

Factors
which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited
to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally
accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. Further information concerning our business, including additional
factors that could materially affect our financial results, is included herein and in our other filings with the U.S. Securities and
Exchange Commission (the “SEC”).

ii

## Item 1. Financial Statements.

**Item
1. Financial Statements and Supplementary Data** 

**BIT
DIGITAL, INC.**

**UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS**

**As
of March 31, 2026 and December 31, 2025**

**(Expressed
in US dollars, except for the number of shares)**

| ASSETS | March 31, 2026 | December 31, 2025 / (audited) |
| --- | --- | --- |
| Current Assets |  |  |
| Cash and cash equivalents | $79,529,572 | $118,356,299 |
| Restricted cash | 4,323,022 | 3,856,819 |
| Accounts receivable, net | 91,724,864 | 23,921,591 |
| USDC | 191,024 | 484,459 |
| Digital assets | 294,996,104 | 415,734,409 |
| Net investment in lease – current, net | 3,897,530 | 4,260,877 |
| Loans receivable | 400,000 | 400,000 |
| Other current assets, net | 24,670,479 | 26,734,984 |
| Total Current Assets | 499,732,595 | 593,749,438 |
| Non-Current Assets |  |  |
| Deposits for property, plant, and equipment | 67,983,795 | 52,838,419 |
| Property, plant, and equipment, net | 451,969,400 | 360,243,018 |
| Goodwill | 19,809,807 | 20,145,663 |
| Intangible assets, net | 12,429,693 | 12,820,574 |
| Right-of-use assets | 30,808,084 | 24,654,620 |
| Net investment in lease - non-current, net | 9,043,622 | 9,686,949 |
| Investment securities | 56,008,172 | 69,120,771 |
| Deferred tax assets | 4,537,209 | 2,579,034 |
| Other non-current assets, net | 28,362,375 | 28,579,646 |
| Total Non-Current Assets | 680,952,157 | 580,668,694 |
| Total Assets | $1,180,684,752 | $1,174,418,132 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
| Current Liabilities |  |  |
| Accounts payable | $8,798,632 | $8,874,530 |
| Current portion of deferred revenue | 18,730,619 | 7,997,054 |
| Current portion of lease liabilities | 18,375,500 | 18,460,194 |
| Income tax payable | 788,157 | 1,546,876 |
| Other payables and accrued liabilities | 31,853,843 | 56,067,289 |
| Total Current Liabilities | 78,546,751 | 92,945,943 |
| Non-Current Liabilities |  |  |
| Non-current portion of deferred revenue | 125,776,956 | 71,554,398 |
| Non-current portion of lease liability | 11,307,912 | 5,415,458 |
| Convertible notes payable, net | 334,189,318 | 110,290,945 |
| Derivative liability | 10,008,000 | 19,260,000 |
| Deferred tax liabilities | 12,170,831 | 9,690,586 |
| Total Non-Current Liabilities | 493,453,017 | 216,211,387 |
| Total Liabilities | 571,999,768 | 309,157,330 |
| Commitments and Contingencies – Note 21 |  |  |
| Bit Digital Shareholders’ Equity |  |  |
| Preferred shares, $0.01 par value, 10,000,000 and 10,000,000 shares authorized, 1,000,000 and 1,000,000 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | 9,050,000 | 9,050,000 |
| Ordinary shares, $0.01 par value, 1,000,000,000 and 1,000,000,000 shares authorized, 331,564,720 and 324,322,214 shares issued, 331,434,734 and 324,192,228 shares outstanding as of March 31, 2026 and December 31, 2025, respectively | 3,315,647 | 3,243,222 |
| Treasury stock, at cost, 129,986 and 129,986 shares as of March 31, 2026 and December 31, 2025, respectively | (1,171,679) | (1,171,679) |
| Additional paid-in capital | 783,877,580 | 890,067,907 |
| Accumulated deficit | (325,995,279) | (178,526,245) |
| Accumulated other comprehensive income | 130,640 | 1,330,666 |
| Total Bit Digital Shareholders’ Equity | 469,206,909 | 723,993,871 |
| Non-controlling Interests | 139,478,075 | 141,266,931 |
| Total Equity | 608,684,984 | 865,260,802 |
| Total Liabilities and Equity | $1,180,684,752 | $1,174,418,132 |

The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

**BIT
DIGITAL, INC.**

**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**  

**For
the Three Months Ended March 31, 2026 and 2025**

**(Expressed
in US dollars, except for the number of shares)**

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Revenues |  |  |
| Digital asset mining | $3,704,796 | $7,776,963 |
| Cloud services | 16,766,543 | 14,842,286 |
| Colocation services | 4,773,550 | 1,644,663 |
| ETH staking | 2,296,509 | 560,641 |
| Other | 383,358 | 280,567 |
| Total revenues | 27,924,756 | 25,105,120 |
| Operating costs and expenses |  |  |
| Cost of revenue (exclusive of depreciation and amortization shown below) |  |  |
| Digital asset mining | (3,251,499) | (6,123,889) |
| Cloud services | (6,779,283) | (6,088,000) |
| Colocation services | (1,952,783) | (545,836) |
| ETH staking | (121,334) | (32,568) |
| Depreciation and amortization expenses | (10,035,581) | (7,241,989) |
| General and administrative expenses | (27,627,296) | (8,235,923) |
| Losses on digital assets | (121,070,273) | (49,205,227) |
| Total operating expenses | (170,838,049) | (77,473,432) |
| Loss from operations | (142,913,293) | (52,368,312) |
| Net gain (loss) from disposal of property, plant and equipment | 1,821,729 | (333,620) |
| Change in fair value of derivative liability | 9,252,000 | - |
| Interest expense | (5,084,978) | - |
| Other expense, net | (12,933,246) | (4,337,997) |
| Total other expense, net | (6,944,495) | (4,671,617) |
| Loss before income taxes | (149,857,788) | (57,039,929) |
| Income tax expenses | (421,523) | (671,716) |
| Net loss | $(150,279,311) | $(57,711,645) |
| Net loss attributable to noncontrolling interest | (3,610,275) | - |
| Net loss attributable to Bit Digital shareholders | $(146,669,036) | $(57,711,645) |
| Weighted average number of ordinary share outstanding |  |  |
| Basic | 325,638,843 | 181,413,307 |
| Diluted | 325,638,843 | 181,413,307 |
| Loss per share |  |  |
| Basic | $(0.45) | $(0.32) |
| Diluted | $(0.45) | $(0.32) |

The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

**BIT
DIGITAL, INC.**

**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF  
COMPREHENSIVE LOSS**

**For
the Three Months Ended March 31, 2026 and 2025**

**(Expressed
in US dollars, except for the number of shares)**

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Net loss | $(150,279,311) | $(57,711,645) |
| Other comprehensive loss |  |  |
| Foreign currency translation adjustments | (1,200,026) | (504,670) |
| Comprehensive loss | (151,479,337) | (58,216,315) |
| Comprehensive loss attributable to noncontrolling interests | (4,186,396) | - |
| Comprehensive loss attributable to Bit Digital shareholders | $(147,292,941) | $(58,216,315) |

The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

**BIT
DIGITAL, INC.**

**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY**

**For
the Three Months Ended March 31, 2026 and 2025**

**(Expressed
in U.S. dollars, except for the number of shares)**

| Line item | Preferred Shares / Shares | Preferred Shares / Amount | Common Shares / Shares | Common Shares / Par Value | Treasury / Shares | Treasury / Amount | Additional paid-in / capital | Retained Earnings (Accumulated / deficit) | Accumulated other comprehensive / (loss) income | Noncontrolling / interest | Total Stockholders’ / Equity |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance, December 31, 2024 | 1,000,000 | $9,050,000 | 179,125,205 | $1,792,548 | (129,986) | $(1,171,679) | $553,583,437 | $(98,209,661) | $(1,565,496) | - | $463,479,149 |
| Share-based compensation expense | - | - | - | - | - | - | 219,255 | - | - | - | 219,255 |
| Issuance of ordinary shares/At-the-market offering, net of offering costs | - | - | 3,149,887 | 31,499 | - | - | 10,145,739 | - | - | - | 10,177,238 |
| Share-based compensation in connection with issuance of ordinary shares to employees | - | - | 21,250 | 216 | - | - | 48,050 | - | - | - | 48,266 |
| Share-based compensation in connection with issuance of ordinary shares to consultants | - | - | 450,000 | 4,500 | - | - | 1,638,000 | - | - | - | 1,642,500 |
| Share-based compensation in connection with issuance of ordinary shares to director | - | - | 20,000 | 200 | - | - | 67,600 | - | - | - | 67,800 |
| Other comprehensive loss | - | - | - | - | - | - | - | - | (504,670) | - | (504,670) |
| Net loss | - | - | - | - | - | - | - | (57,711,645) | - | - | (57,711,645) |
| Balance, March 31, 2025 | 1,000,000 | $9,050,000 | 182,766,342 | $1,828,963 | (129,986) | $(1,171,679) | $565,702,081 | $(155,921,308) | $(2,070,166) | - | $417,417,891 |
| Balance, December 31, 2025 | 1,000,000 | $9,050,000 | 324,192,228 | $3,243,222 | (129,986) | $(1,171,679) | $890,067,907 | $(178,526,243) | $1,330,666 | $141,266,931 | $865,260,802 |
| Share-based compensation expense | - | - | - | - | - | - | 4,139,486 | - | - | - | 4,139,486 |
| Issuance of common stock/At-the-market offering, net of offering costs | - | - | 2,372,035 | 23,720 | - | - | 4,083,942 | - | - | - | 4,107,662 |
| Declaration of dividends to preferred shareholders | - | - | - | - | - | - | - | (800,000) | - | - | (800,000) |
| Changes in ownership interests in a subsidiary - settlement of subsidiary RSUs | - | - | - | - | - | - | (2,397,540) | - | - | 2,397,540 | - |
| Purchase of zero-strike call options in connection with issuance of convertible notes | - | - | - | - | - | - | (119,999,983) | - | - | - | (119,999,983) |
| Share-based compensation in connection with issuance of ordinary shares to employees | - | - | 4,849,374 | 48,494 | - | - | 7,933,979 | - | - | - | 7,982,473 |
| Share-based compensation in connection with issuance of ordinary shares to director | - | - | 21,097 | 211 | - | - | 49,789 | - | - | - | 50,000 |
| Other comprehensive loss | - | - | - | - | - | - | - | - | (1,200,026) | (576,121) | (1,776,145) |
| Net loss | - | - | - | - | - | - | - | (146,669,036) | - | (3,610,275) | (150,279,311) |
| Balance, March 31, 2026 | $1,000,000 | $9,050,000 | 331,434,734 | $3,315,647 | (129,986) | (1,171,679) | $783,877,580 | $(325,995,279) | $130,640 | $139,478,075 | $608,684,984 |

The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

**BIT
DIGITAL, INC.**

**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For
the Three Months Ended March 31, 2026 and 2025**

**(Expressed
in US dollars)**

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Cash Flows from Operating Activities: |  |  |
| Net loss | $(150,279,311) | $(57,711,645) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |
| Depreciation and amortization expenses | 10,035,582 | 7,241,989 |
| (Gain) loss from disposal of property, plant, and equipment | (1,821,729) | 333,620 |
| Amortization of discount on debts issued | 1,780,285 | - |
| Losses on digital assets | 121,070,273 | 49,205,227 |
| Share-based compensation expenses | 15,303,825 | 252,390 |
| Changes in fair value of investment securities | 13,110,707 | 4,692,428 |
| Changes in fair value of derivative liability | (9,252,000) | - |
| Current expected credit losses | (6,834) | - |
| Digital assets mined | (3,704,796) | (7,776,963) |
| Digital assets earned from staking | (2,296,509) | (560,641) |
| Changes in operating assets and liabilities: |  |  |
| Digital assets and stable coins | 5,322,412 | 32,541,117 |
| Right-of-use assets | 1,734,125 | 1,096,155 |
| Deferred revenue | 64,978,510 | (9,520,254) |
| Lease liabilities | (1,813,705) | (1,064,735) |
| Other current assets | 1,628,881 | (10,690,340) |
| Other non-current assets | 211,855 | 1,536,347 |
| Accounts receivable | (67,811,934) | 2,727,964 |
| Accounts payable | 64,314 | (917,012) |
| Other payables and accrued liabilities | (182,813) | 4,934,594 |
| Net investment in lease | 1,021,232 | 608,581 |
| Other long-term liabilities | - | (196,343) |
| Income tax payable | (758,719) | 315,419 |
| Deferred tax liabilities | 571,510 | 354,017 |
| Net Cash (Used in) Provided by Operating Activities | (1,094,839) | 17,401,915 |
| Cash Flows from Investing Activities: |  |  |
| Purchases of and deposits made for property, plant and equipment | (169,168,417) | (64,961,231) |
| Proceeds from disposal of property, plant and equipment | 26,482,746 | - |
| Net Cash Used in Investing Activities | (142,685,671) | (64,961,231) |
| Cash Flows from Financing Activities: |  |  |
| Net proceeds from issuance of ordinary shares/At-the-market offering | 4,107,662 | 10,177,238 |
| Net proceeds from issuance of convertible debt | 222,118,088 | - |
| Purchase of zero-strike call option in connection with issuance of convertible notes | (119,999,983) | - |
| Payment of dividends | (800,000) | (800,000) |
| Repayment of finance lease liabilities | (279,135) | - |
| Net Cash Provided by Financing Activities | 105,146,632 | 9,377,238 |
| Net decrease in cash, cash equivalents and restricted cash | (38,633,878) | (38,182,078) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 273,354 | 535,754 |
| Cash, cash equivalents and restricted cash, beginning of period | 122,213,118 | 98,934,127 |
| Cash, cash equivalents and restricted cash, end of period | $83,852,594 | $61,287,803 |
| Supplemental Cash Flow Information |  |  |
| Cash paid for income taxes, net of refunds | $696,909 | - |
| Non-cash Transactions of Investing and Financing Activities |  |  |
| Remeasurement of finance lease right-of-use asset and liability | $(30,435) | - |
| Reclassification of deposits to property and equipment | $6,461,624 | 80,305,941 |
| Right of use assets exchanged for operating lease liabilities | $8,144,892 | 1,298,508 |
| Issuance of subsidiary shares to employees in settlement of RSUs | $2,397,540 | - |
| Construction in progress included in other payables and accrued liabilities | $(26,572,117) | - |

**Reconciliation
of cash, cash equivalents and restricted cash**

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Cash and cash equivalents | $79,529,572 | $118,356,299 |
| Restricted cash | 4,323,022 | 3,856,819 |
| Cash, cash equivalents and restricted cash | $83,852,594 | $122,213,118 |

The
accompanying notes are an integral part of these unaudited consolidated financial statements.

5

**BIT
DIGITAL, INC.**

**NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**1.
ORGANIZATION AND PRINCIPAL ACTIVITIES**

Bit
Digital, Inc. (“BTBT” or the “Company”), is a holding company incorporated on February 17, 2017, under the laws
of the Cayman Islands. The Company is a Strategic Asset Company (SAC) focused on active participation in Ethereum (ETH) infrastructure
while winding down its digital asset mining business. Through our controlling majority equity stake in WhiteFiber Inc. (Nasdaq: WYFI),
the Company also engages in high performance computing (“HPC”) business, including cloud services and HPC data center services.

On
August 15, 2024, WhiteFiber, Inc. (f/k/a Celer, Inc.) (“WhiteFiber”) was incorporated to support the Company’s generative
artificial intelligence (“AI”) workstreams. WhiteFiber was 100% owned by the Company until August 6, 2025 when the Contribution
Agreement became effective (See Note 20. *Related Parties*).

On
August 8, 2025, WhiteFiber completed its initial public offering (“IPO”) of its ordinary shares. Prior to the consummation
of the IPO, the Company entered into a contribution agreement (the “Contribution Agreement”) with WhiteFiber, pursuant to
which the Company contributed (the “Contribution”) its HPC business through the transfer of 100% of the capital shares of
its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber
Japan G.K. and WhiteFiber Iceland, ehf, to WhiteFiber in exchange for 27,043,749 ordinary shares of WhiteFiber (the “Reorganization”).
Pursuant to the Contribution Agreement, the transfer was accounted for as a common control transaction immediately prior to the IPO.
The Contribution became effective on August 6, 2025, when the registration statement on Form S-1, as amended (File No. 333-288650), of
WhiteFiber was declared effective by the U.S. Securities and Exchange Commission (the “SEC”). WhiteFiber AI became a wholly-owned
subsidiary of WhiteFiber and the Company became the direct shareholder of WhiteFiber after the Reorganization. As of the date of this
Form 10-Q, the Company owns approximately 70.1% of WhiteFiber. (See Note 20. *Related Parties*)

On
November 28, 2025, the Company acquired all the shares of Financière Louis David (“FLD”), a France-based company structured
as a Société par Actions Simplifiée (SAS), is a holding/management company that primarily engages in business consulting
and management advisory activities. FLD is the general partner (associé commandité) of Financière Marjos SCA (“Financière
Marjos” or “FM”), a France-based company listed on the Euronext Paris stock exchange (Euronext: FINM), is a holding
and investment company that creates, acquires, and manages diverse businesses and provides financial and administrative services through
subsidiaries and holdings. FLD holds 15.9% of the shares composing the FM’s share capital. The Company has directly acquired a
further 9.1% of the FM’s share capital from three selling shareholders. As a result of the transactions, the Company holds, directly
and indirectly, a number of shares representing 25% of the shares of the Financière Marjos. Following the acquisition, FLD was
renamed Bit Digital Europe Holding (“BDEH”).

6

The
accompanying unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities:

| Name | Background | Ownership |
| --- | --- | --- |
| Bit Digital USA, Inc. (“BT USA”) | A United States company | 100% owned by Bit Digital, Inc. |
|  | Incorporated on September 1, 2020 |  |
|  | Engaged in digital asset mining business |  |
| Bit Digital Canada, Inc. (“BT Canada”) | A Canadian company | 100% owned by Bit Digital, Inc. |
|  | Incorporated on February 23, 2021 |  |
|  | Engaged in digital asset mining business |  |
|  | Dormant and previously engaged in digital asset mining-related business |  |
| Bit Digital Hong Kong Limited (“BT HK”) | A Hong Kong company | 100% owned by Bit Digital, Inc. |
|  | Acquired on April 8, 2020 |  |
|  | Dormant and previously engaged in digital asset mining-related business |  |
| Bit Digital Strategies Limited | A Hong Kong company | 100% owned by Bit Digital, Inc. |
| (“BT Strategies”) | Incorporated on June 1, 2021 |  |
|  | Engaged in treasury management activities |  |
| Bit Digital Singapore Pte. Ltd. | A Singapore company | 100% owned by Bit Digital, Inc. |
| (“BT Singapore”) | Incorporated on July 1, 2021 |  |
|  | Engaged in digital asset staking activities |  |
| Bit Digital Europe Holding (formerly known as Financière | A France company | 100% owned by Bit Digital, Inc. |
| Louis David (“FLD”)) | Incorporated on October 18, 2005 Engaged in business consulting and other management consulting services |  |
| Financière Marjos SCA (“Financière Marjos” or “FM”) | A France company | 25% owned by Bit Digital, Inc. |
|  | Incorporated on January 1, 2000 Engaged in investment holding and management company |  |
| WhiteFiber, Inc. (f/k/a Celer, Inc.) | A Cayman Islands exempted company | 70.1% owned by Bit Digital, Inc.(1) |
| (“WhiteFiber”) | Incorporated on August 15, 2024 |  |
|  | Engaged in HPC business |  |

(1) Upon the completion of the WhiteFiber IPO on August 8, 2025, Bit Digital owned approximately 71.5% of the ordinary shares of WhiteFiber. As of March 31, 2026, the ownership percentage has decreased to approximately 70.1% as a result of ordinary shares issued upon conversion of WhiteFiber restricted share units.

7

**2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis
of presentation and principles of consolidation***

The
interim unaudited condensed consolidated financial statements are prepared and presented in accordance with accounting principles generally
accepted in the United States (“US GAAP”).

The
unaudited condensed consolidated financial information as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 has
been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and
footnote disclosures, which are normally included in annual financial statements prepared in accordance with US GAAP, have been omitted
pursuant to those rules and regulations. The unaudited interim financial information should be read in conjunction with the audited financial
statements and the notes thereto, included in the Form 10-K for the fiscal year ended December 31, 2025, which was filed with the SEC
on March 27, 2026.

In
the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments,
which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures
are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements
have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements
for the year ended December 31, 2025. The results of operations for the three months ended March 31, 2026, and 2025 are not necessarily
indicative of the results for the full years.

*Initial
Public Offering of WhiteFiber*

On
August 8, 2025, WhiteFiber closed its initial public offering (IPO) of 9,375,000 ordinary shares at a public offering price
of $17.00 per share. The IPO generated aggregate gross proceeds of approximately $159.4 million, before deducting underwriting
discounts, commissions, and offering expenses payable by WhiteFiber. After deducting underwriting discounts, commissions, and other related
offering expenses, net proceeds were approximately $147.4 million. The Underwriters were also granted a 30-day option (“over-allotment
option”) to purchase up to an additional 1,406,250 ordinary shares.

On
September 2, 2025, the Underwriters fully exercised their option to purchase the additional 1,406,250 ordinary shares at the
public offering price of $17.00 per share.

Following
the IPO (including the underwriters’ exercise of their option to purchase additional ordinary shares), the Company owned approximately 71.5%
of the outstanding ordinary shares of WhiteFiber and continues to consolidate the assets, liabilities, and results of operations of WhiteFiber
in the Company’s consolidated financial statements. The portion of equity interest in WhiteFiber that the Company does not own
is reflected as noncontrolling interest in the Company’s condensed consolidated financial statements.

***Use
of estimates***

In
preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
valuation of digital assets and other current assets, useful lives of property, plant, and equipment, impairment of long-lived assets,
intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent
liabilities and realization of deferred tax assets. Actual results could differ from those estimates.

8

***Fair
value of financial instruments***

ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as
follows:

- Level  1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
- Level  2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market  prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs  derived from or corroborated by observable market data.
- Level  3 - inputs to the valuation methodology are unobservable.

Fair
value of digital assets is based on Level 1 inputs as these were based on observable quoted prices in the Company’s principal market
for identical assets. The fair value of the Company’s other financial instruments, including cash and cash equivalents, restricted
cash, loans receivable, deposits, accounts receivable, other receivables, accounts payable, and other payables, approximate their fair
values because of the short-term nature of these assets and liabilities. Non-financial assets, such as goodwill, intangible assets, operating
lease right-of-use assets, and property, plant and equipment, are adjusted to fair value when there is an indication of impairment and
the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only upon recognition
of an impairment charge.

Fair
value of the Company’s convertible notes payable is estimated using quoted market prices for the notes in markets that are not
considered active, which represent Level 2 measurements within the fair value hierarchy.

Fair
value of the embedded conversion feature at issuance of the convertible notes and each reporting period was estimated based on significant
inputs that are observable in the market, which represent Level 3 measurements within the fair value hierarchy.

***Cash
and cash equivalents***

Cash
includes cash on hand and demand deposits in accounts maintained with commercial banks. The Company considers all highly liquid investment
instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.

***Restricted
cash***

Restricted
cash represents cash balances that support an outstanding letter of credit to third parties related to security deposits and other purposes
and are restricted from withdrawal.

***USDC***

USD
Coin (“USDC”) is accounted for as a financial instrument that can be redeemed one USDC for one U.S. dollar on demand from
the issuer. While not accounted for as cash or cash equivalents, we treat our USDC holdings as a liquidity resource.

9

***Accounts receivable, net***

Accounts
receivable consist of amounts due from our customers. Receivables are recorded at the invoiced amount less current expected credit losses
for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents
the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit
losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information
about past events and current conditions. In accordance with ASC 326, *Measurement of Credit Losses on Financial Instruments* (“ASC
326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine current expected credit
losses that reflects its best estimate of the lifetime expected credit losses. Uncollectible accounts are written off against the current
expected credit losses when collection does not appear probable.

In determining the amount of the current expected
credit losses, the Company considers historical collection history based on past due status, the current aging of receivables, customer-specific
credit risk factors, including their current financial condition, current market conditions, and probable future economic conditions which
inform adjustments to historical loss patterns. Credit loss expense, inclusive of credit loss expense on all categories of financial assets,
is recorded within General and administrative expenses in the condensed consolidated statements of operations.

***Digital
assets holdings***

The
Company’s digital assets primarily include bitcoin, ETH and Liquid Staked ETH (“LsETH”), which are included in current
assets in the accompanying consolidated balance sheets. The Company distinguishes between digital assets which fall within the scope
of ASC 350-60 and those which do not. The Company refers to digital assets which fall within the scope of ASC 350-60 (e.g., bitcoin and
ETH) as “crypto assets.” Digital assets which do not fall within the scope of ASC 350-60, *Accounting for and Disclosure
of Crypto Assets*, are referred to as “digital intangible assets.”

Digital
intangible assets comprised of LsETH that are intangible assets outside the scope of ASC 350-60. A receipt token, in general and by design,
entitles the holder to redeem the crypto intangible asset(s) for which it was exchanged. Therefore, it fails the ‘other goods and
services criterion’ in paragraph 350-60-15-1(b), and thus is outside the scope of Subtopic 350-60. These digital intangible assets
are recorded at cost, less impairment within digital intangible assets on the consolidated balance sheets in accordance with ASC 350-30.
The Company tests digital intangible assets for impairment annually and more frequently if events or changes in circumstances indicate
that it is more likely than not that the asset is impaired. The test for impairment consists of a comparison of the fair value of the
digital intangible assets with their carrying amounts. Refer to *Note 6, Digital Assets Holdings* for additional information.

Digital
assets purchased are recorded at cost and digital assets awarded to the Company through its mining activities and staking activities
are accounted for in accordance with the Company’s revenue recognition policy disclosed below.

Effective
January 1, 2024, the Company early adopted ASU 2023-08, which requires entities to measure certain cryptocurrencies at fair value,
with changes in fair value recorded in net income in each reporting period. The Company’s digital assets are within the scope of
ASU 2023-08 and the transition guidance requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any
difference between the carrying amount of the Company’s digital assets and fair value.

10

ASC
820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The
determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective
of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company uses both
exchanges and Amber Group’s OTC desk to buy and sell digital assets, including transactions involving U.S. dollars or exchanges
between different types of digital assets. Prior to April 1, 2025, the Company considered CoinMarketCap to be its principal market. Effective
April 1, 2025, the Company determined that Coinbase is its principal market as it provides the most reliable and greatest volume and
level of activity for bitcoin and ETH for which the Company can access.

The
Company recognizes mining revenue by utilizing the spot price of Bitcoin determined using Coinbase at 0:00:00 UTC on the date of contract
inception and staking revenue by utilizing the daily close prices obtained from Coinbase.

Purchases
of digital assets by the Company and digital assets awarded to the Company through its mining activities and staking activities are included
within operating activities on the accompanying consolidated statements of cash flows. The changes of digital assets are included within
operating activities in the accompanying consolidated statements of cash flows. After adopting ASU 2023-08, changes in fair value and
realized gains or losses are now reported as “gains (losses) on digital assets” in the consolidated statements of operations.
Prior to this adoption, realized gains or losses were reported as “realized gains (losses) on exchange of digital assets”
in the consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first-in first-out
method of accounting.

***Deposits*** ***for
property, plant, and equipment***

The
deposits for property, plant, and equipment (“PP&E”) represented advance payments for purchases of miner, high performance
computing equipment and other equipment used in our colocation services. The Company initially recognizes deposits for PP&E when
cash is advanced to our suppliers. Subsequently, the Company derecognizes and reclassifies deposits for PP&E to PP&E when control
is transferred to and obtained by the Company.

Below
is the roll forward of the balance of deposits for PP&E for the three months ended March 31, 2026 and for the year ended December
31, 2025 respectively.

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Opening balance | $52,838,419 | $39,059,707 |
| Reclassification to PP&E | (6,461,624) | (138,571,528) |
| Addition of deposits for PP&E | 21,607,000 | 152,350,240 |
| Ending balance | $67,983,795 | $52,838,419 |

11

***Property,
plant, and equipment, net***

Property,
plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets
or declining-balance method. Direct costs related to developing or obtaining software for internal use are capitalized as property, plant,
and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service. The estimated useful lives by asset category are:

| Line item | Estimated Useful Life |
| --- | --- |
| Digital asset miners | 3 years |
| Cloud service equipment | 5 years |
| Colocation service equipment | 10 to 15 years |
| Building | 30 years |
| Leasehold improvements | 15 years |
| Purchased and internally developed software | 1-5 years |
| Vehicle | 5 years |
| Other property and equipment | 20% to 30% |

Effective
January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was
made to better reflect the expected usage patterns and economic benefits of the assets.

***Impairment
of long-lived assets***

Management
reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair
value of the assets.

***Goodwill***

Goodwill
represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not
subject to amortization, and instead, assessed for impairment annually at the end of each fiscal year, or more frequently when events
or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying
amount in accordance with ASC 350 - *Intangibles -Goodwill and Other.*

The
impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist that
lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If
the qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more
likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment
is performed.

The
quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including
goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized
for any excess of the carrying amount of the reporting unit over its fair value up to the amount of goodwill allocated to the reporting
unit.

12

***Finite-lived
intangible assets***

Intangible
assets are recorded at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets acquired through
business combinations are measured at fair value at the acquisition date.

Intangible
assets with finite lives are comprised of customer relationships and are amortized on straight-line basis over their estimated useful
lives. The Company assesses the appropriateness of finite-lived classification at least annually. Additionally, the carrying value and
remaining useful lives of finite-lived assets are reviewed annually to identify any circumstances that may indicate potential impairment
or the need for a revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value
exceeds the estimated future undiscounted cash flows expected to be generated from it. We apply judgment in selecting the assumptions
used in the estimated future undiscounted cash flow analysis. Impairment is measured by the amount that the carrying value exceeds fair
value. The useful lives of customer relationships is 19 years.

***Business
combinations***

The
Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805 - *Business Combinations*,
by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at the acquisition date fair
value. The determination of fair value involves assumptions, estimates, and judgments. The initial allocation of the purchase price is
considered preliminary and therefore subject to change until the end of the measurement period (up to one year from the acquisition date).
Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net assets acquired.

Acquisition-related
expenses are recognized separately from the business combination and are expensed as incurred.

***Investment
securities***

As
of March 31, 2026 and December 31, 2025, investment securities represent the Company’s investments in three funds, a privately
held company via a simple agreement for future equity (“SAFE”), four privately held companies, and a publicly traded company
over which the Company neither has control nor significant influence through investments in ordinary shares or preferred shares.

*Investment
in equity method investee*

In
accordance with ASC 323, *Investments - Equity Method and Joint Ventures*, the Company accounts for the investment in
one privately held company using equity method, because the Company has significant influence but does not own a majority equity interest
or otherwise control over the equity investee.

Under
the equity method, the Company initially records its investment at cost and prospectively recognizes its proportionate share of each
equity investee’s net income or loss into its consolidated statements of operations. When the Company’s share of losses in
the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the
Company has incurred obligations or made payments or guarantees on behalf of the equity investee.

The
Company continually reviews its investment in the equity investee to determine whether a decline in fair value below the carrying value
is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance
and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region,
market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its
carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written
down to fair value.

*Investment
in funds*

Equity
securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated
income statements, according to ASC 321, *Investments - Equity Securities*. As a practical expedient, the Company uses Net
Asset Value (“NAV”) or its equivalent to measure the fair value of the investment in the fund. NAV is primarily determined
based on information provided by the fund administrator.

13

*Investment
in privately held company*

Equity
securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated
income statements, according to ASC 321, *Investments - Equity Securities*. The Company elected to record the equity investments
in privately held companies using the measurement alternative at cost, less impairment, with subsequent adjustments for observable price
changes resulting from orderly transactions for identical or similar investments of the same issuer.

Equity
investments in privately held companies accounted for using the measurement alternative are subject to periodic impairment reviews. The
Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair
value of these equity securities. In computing realized gains and losses on equity securities, the Company calculates cost based on amounts
paid using the average cost method. Dividend income is recognized when the right to receive the payment is established.

*Investment
in a publicly traded company*

The
Company’s equity investments consist of minority interests in a publicly traded company over which the Company does not have significant
influence. These investments are classified as equity securities and
are measured at fair value in accordance with ASC 321, *Investments — Equity Securities*.

Equity
securities with readily determinable fair values are measured at fair value, with changes in fair value recognized in earnings and presented
within other income, net in the consolidated statements of operations. The fair value of publicly traded equity securities is determined
using quoted market prices in active markets and is classified as Level 1 inputs within the fair value hierarchy.

*Investment
in SAFE*

SAFE
investments provide the Company with the right to participate in future equity financing of preferred stock. The Company accounted for
this investment under ASC 320, *Investments - Debt Securities* and elected the fair value option for the SAFE investment under ASC
825, *Financial Instruments*, which requires financial instruments to be remeasured to fair value each reporting period, with changes
in fair value recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable
in the market, which represents a Level 3 measurement within the fair value hierarchy.

*Investment
in Innovation Fund/Digital assets held in fund*

On
October 1, 2023, the Company made an investment of 2,701 Ethereum, with a fair value of $4.7 million, into Bit Digital Innovation Master
Fund SPC Ltd. (the “Fund”). The Fund was subsequently consolidated based on the Company’s controlling financial interest.
As a result, the assets held in the Fund were included in current assets in the consolidated balance sheets under the caption “Digital
assets held in Fund” as of June 30, 2023 before the disposition.

The
Fund qualified and operated as an investment company for accounting purposes pursuant to the accounting and reporting guidance under
ASC 946, “*Financial Services – Investment Companies*” (“ASC 946”), which requires fair value measurement
of the Fund. The Company retains the Fund’s investment company specific accounting principles under ASC 946 upon consolidation.
The digital assets held by the Fund were traded on a number of active markets globally. A fair value measurement under ASC 820, “*Fair
Value Measurement*” (“ASC 820”) for an asset assumes that the asset is exchanged in an orderly transaction between
market participants either in the principal market for the asset or, in the absence of a principal market, the most advantageous market
for the asset (ASC 820-10-35-5). The fair value of the assets within the Fund was primarily determined using the price from CoinMarketCap.
Any changes in the fair value of the assets were recorded in Other income (expense), net in the consolidated statements of operations.

On
July 1, 2024, the Company entered into a share purchase agreement with Pleasanton Ventures Limited (“Pleasanton Ventures”)
for the disposition of Bit Digital Innovation Master Fund SPC Ltd and Bit Digital Investment Management Limited. Upon the disposition,
the Company no longer has a controlling financial interest in the Fund and therefore deconsolidated the Fund in accordance with ASC 810
– “*Consolidation*” (“ASC 810”). The Company did not record any gain or loss upon deconsolidation
as the digital assets in the Fund were measured at fair value. Subsequently, the investment in the Fund is included under the caption
“Investment securities” as Investment in Innovation Fund. Refer to Note 10. *Investment Securities* for more information.

14

***Leases***

The
Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the
term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor.
The Company’s assessment of the lease term reflects the non-cancellable term of the lease, inclusive of any rent-free periods and/or
periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by
renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating
or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated
statements of operations over the lease term.

For
leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement
reflecting the present value of its fixed minimum payment obligations over the lease term, and the purchase price if the Company is reasonably
certain to exercise a purchase option. A corresponding lease right-of-use asset equal to the initial lease liability is also recorded,
adjusted for any prepayment and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives
received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental
borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically
not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis
and incorporates the term and economic environment of the associated lease. Variable lease costs are recognized in the period in which
the obligation for those payments is incurred and not included in the measurement of right-of-use assets and lease liabilities.

For
the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term.
For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and
are not recognized on the Company’s consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term
lease exception were insignificant.

For
finance leases where the Company is the lessee, the Company recognizes a right-of-use asset and a corresponding lease liability at lease
commencement, measured in a manner consistent with operating leases. Subsequently, fixed lease payments are recognized as amortization
of the right-of-use asset and interest expense is recognized on the outstanding lease liability using the effective interest method.
Finance lease right-of-use assets are amortized into depreciation and amortization expense on a straight-line basis over the lease term
or, if the lease transfers ownership of the underlying asset to the Company, the life of the leased asset.

For
sales-type leases where the Company is the lessor, the Company recognizes a net investment in lease, which comprises of the present value
of the future lease payments and any unguaranteed residual value. Interest income is recognized over the lease term at a constant periodic
discount rate on the remaining balance of the lease net investment using the rate implicit in the lease and is included in “Revenue
– other”. Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which will be recorded
in “Other income, net.”

For
the operating sublease where the Company is the lessor, the Company recognizes lease payments in income over the lease term on a straight-line
basis and is included in “Other income, net”.

***Convertible
notes payable***

The Company accounts for its convertible notes
under ASC 470-20, *Debt with Conversion and Other Options* and ASC 815-40, *Derivatives and Hedging—Contracts
in Entity’s Own Equity*, depending on the specific terms of the debt agreement.

For
convertible notes for which the embedded conversion feature is determined not to be clearly and closely related to the debt host and
does not qualify for the scope exception under ASC 815-40, the Company bifurcates the embedded conversion feature and accounts for it
separately as a derivative liability. Such derivative liabilities are initially measured at fair value, with subsequent changes in fair
value recognized in the condensed consolidated statements of operations. The remaining proceeds are allocated to the debt host, which
is recorded as convertible notes, net of debt discount and issuance costs.

15

For convertible notes for which the embedded conversion feature is
determined to be clearly and closely related to the debt host and does qualify for the scope exception under ASC 815-40, the Company records
the entire convertible notes at face value net of debt issuance costs.

If
any of the conditions to the convertibility of the convertible notes are satisfied, or the convertible notes become due within one year,
then the Company may be required under applicable accounting standards to reclassify the carrying value of the convertible senior notes
as a current, rather than a long-term liability.

Debt
issuance costs related to the convertible notes were capitalized and recorded as a contra-liability and are presented net against the
balance of the convertible notes on the condensed consolidated balance sheet. Debt issuance costs consist of underwriting, legal and
other direct costs related to the issuance of the convertible notes and are amortized to interest expense over the term of the convertible
notes using the effective interest method.

*Zero-strike
call*

The
Company accounts for the Zero-strike call option as either equity instruments or liabilities in accordance with ASC 480 and/or derivative
liabilities in accordance ASC 815, depending on the specific terms of the agreement. The Company evaluates the terms of such instruments
to determine whether they are indexed to the Company’s own stock and qualify for equity classification under ASC 815-40. To the
extent these criteria are met, the Zero-strike call option is equity-classified, which is not remeasured each reporting period and
is recorded as a reduction to additional paid-in-capital within shareholders’ equity when purchased. The transaction is accounted
for separately from the convertible notes and does not impact the accounting for convertible notes.

***Revenue
recognition***

The
Company recognizes revenue in accordance with ASC 606, *Revenue from Contracts with Customers* (“ASC 606”). The Company
recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company
expects to be entitled in such exchange. Refer to Note 3. *Revenue from Contracts with Customers* for further information.

***Contract
costs***

Capitalized
contract costs represent the costs directly related and incremental to the origination of new contracts, including commissions that are
incurred directly related to obtaining customer contracts. We amortize the deferred contract costs on a straight-line basis over the
expected period of benefit. These amounts are included in the accompanying condensed consolidated balance sheets, with the capitalized
costs to be amortized to commission expense over the expected period of benefit included in Other current assets and Non-current assets
and commission expense payable included in Other current liabilities and Other long-term liabilities.

***Deferred
revenue***

Deferred
revenue primarily pertains to prepayments received from customers for services that have not yet commenced as of March 31, 2026. Deferred
revenues are recognized as revenue when recognition criteria have been met.

16

***Remaining
performance obligation***

Remaining
performance obligations represent the transaction price of contracts for work that have not yet been performed. The amount represents
estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation.

***Cost
of revenue***

The
Company’s cost of revenue consists primarily of (i) direct production costs related to mining operations, including electricity
costs, profit-sharing fees/variable performance fees and/or other relevant costs paid to our hosting facilities, (ii) direct production
costs related to our cloud services, including electricity costs, data center lease costs, data center employees’ wage expenses
and other relevant costs, (iii) direct production costs related to our colocation services, including electricity costs, lease costs,
and other relevant costs, and (iv) direct cost related to ETH staking business, including service fees payable to the service provider.

Cost
revenue excludes depreciation expenses, which are separately stated in the Company’s condensed consolidated statements of operations.

***Foreign
currency***

Accounts
expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S.
dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation
adjustments are recorded as a separate component of accumulated other comprehensive income, net of any related taxes, in total shareholders’
equity. Income statement accounts expressed in functional currencies are translated using average exchange rates during the period. Functional
currencies are generally the currencies of the local operating environment. Financial statement accounts expressed in currencies other
than the functional currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange
gains or losses recorded in other income (expense), net.

***Operating
segments***

Operating
segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the
Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our CODM is composed of the Chief Executive Officer and Chief Financial Officer, who use segment gross profit (loss) to assess the performance
of the business of our reportable operating segments. Asset information is not used by the CODM to evaluate performance or allocate resources.

***Income
taxes***

We
account for current and deferred income taxes in accordance with the authoritative guidance, which requires income tax impact to be recognized
in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred
tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the financial
statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is
more likely than not that a tax benefit will not be realized based on historical and projected future taxable income over the periods
in which the temporary differences are expected to be recovered or settled on each jurisdiction.

In
accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax
positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight
of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than
50% likely of being realized upon ultimate settlement.

17

***Earnings
(loss) per shar****e*

Basic
earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other
contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary share participating
in the earnings of the entity.

Diluted
earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares
were exercised or converted into ordinary shares. Potentially dilutive securities include, but are not limited to, convertible debt instruments,
share-based compensation awards, warrants, and other equity-linked instruments.

The
Company applies the treasury stock method or the if-converted method, as applicable, to determine the dilutive effect of these instruments.

For
periods in which the Company reports a net loss, all potentially dilutive securities are excluded from the computation of diluted loss
per share, as their inclusion would be anti-dilutive. In addition, potentially dilutive securities are excluded from the calculation
of diluted earnings per share when their effect would be anti-dilutive.

***Commitments
and contingencies***

In
the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business,
which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred
and the amount of the assessment can be reasonably estimated.

If
the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be
estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially
material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the
contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee
would be disclosed.

The
Company may also enter into contractual arrangements that result in commitments, including purchase obligations. In addition, the Company
may be subject to contingent consideration obligations related to asset acquisitions, which involve potential future payments contingent
upon the achievement of specified conditions or milestones.

***Share-based
compensation***

The
Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant-date fair
value of the awards. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the
assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent
uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk-free
interest rate, the expected life of the option, and the dividend yield on the underlying stock. Expected volatility is calculated based
on the historical volatility of the Company’s ordinary shares over the expected term of the option. Risk-free interest rates are
calculated based on risk–free rates for the appropriate term. The Company has elected to account for forfeitures of awards as they
occur.

18

The
Company has granted RSUs to certain employees and non-employees. Some of the RSUs contain a performance condition, and vesting is determined
based on achievement of a performance metric. Compensation expense is recognized on a straight-line basis over the service period based
on the expected attainment of a performance metric. At each reporting period, the Company reassesses the probability of the achievement
of the performance metric, and any increase or decrease in share-based compensation expense resulting from an adjustment in the number
of shares expected to vest is treated as a cumulative catch-up in the period of adjustment.

***Treasury
stock***

The
Company accounts for treasury stocks using the cost method. Under this method, the cost incurred to purchase the shares is recorded in
the treasury stocks account on the consolidated balance sheets.

The
Company treats shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted share grants as ordinary
share repurchases because they reduce the number of shares that would have been issued upon vesting.

***Reclassification***

Certain
items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current
period. The reclassification has no impact on the total assets and total liabilities as of March 31, 2026 or on the statements of operations
for the three months ended March 31, 2026.

***Recent
accounting pronouncements***

The
Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting
pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change
to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s condensed
consolidated financial statements properly reflect the change.

In
November 2024, the FASB issued ASU 2024-03, *Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40*) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified
information about certain costs and expenses specified in the updated guidance. ASU 2024-03 is effective for annual reporting periods
beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The
Company is evaluating the impact the updated guidance will have on its disclosures.

In
 May 2025, FASB issued ASU 2025-03, *Business Combinations* (Topic 805) and Consolidation
 (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest
 Entity, which amends the guidance for identifying the accounting acquirer in transactions
 involving the acquisition of a variable interest entity that meets the definition of a business.
 The new standard is effective for the Company for its annual periods beginning January 1,
 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting
 the standard.

19

**3.
Revenue from Contracts with Customers**

The
Company recognizes revenue in accordance with ASC 606, *Revenue from Contracts with Customers* (“ASC 606”).

To
determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract
with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable
consideration to the extent that it is probable that a significant future reversal will *not* occur, (iv) allocate the transaction
price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation.

The
Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which
the Company expects to be entitled in such exchange.

The
Company is a strategic asset company (SAC) focused on active participation in Ethereum (ETH) infrastructure while winding down its digital
asset mining business and through its majority-owned subsidiary, White Fiber, high performance computing (“HPC”) business,
including cloud services and colocation services through its operation of HPC data centers.

In
June 2025, the Company announced that it had initiated a strategic transition to become a pure play ETH staking and treasury company.
In connection with the transition, the Company intends to convert its BTC holdings into ETH over time and has commenced a strategic
alternatives process for its bitcoin mining operations, which is expected to result in a sale or wind-down, with any net proceeds
to be re-deployed into ETH.

*Disaggregation
of revenues*

Revenue
disaggregated by reportable segment is presented in Note 19. *Segment Reporting*.

*Cloud
services*

The
Company provides cloud services to support customers’ generative AI workstreams. We have determined that cloud services are a single
continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e.
distinct days of service).

These
services are consumed as they are received, and the Company recognizes revenue over time using the variable allocation exception as it
satisfies performance obligations. We apply this exception because we concluded that the nature of our obligations and the variability
of the payment terms based on the number of GPUs providing HPC services are aligned and uncertainty related to the consideration is resolved
on a daily basis as we satisfy our obligations. The Company recognizes revenue net of consideration payable to customers, such as service
credits, and accounted for as a reduction of the transaction price in accordance with guidance in ASC 606-10-32-25.

The
Company’s cloud services revenue has been generated from Iceland. Beginning in March 2026, the Company generated an immaterial
amount of revenue in Canada, representing a small portion of total revenue, through services provided to a third-party customer following
the deployment of the GPU server in one of its Canadian data centers.

20

*Data
center/Colocation services*

Colocation
services generate revenue from Canada by providing customers with physical space, power, and cooling within the data center facility.

Our
revenue is primarily derived from recurring revenue streams, mainly (1) colocation, which is the leasing of cabinet space and power and
(2) connectivity services, which includes cross-connects. Additionally, the remainder of our revenue is from non-recurring revenue, which
primarily includes installation services related to a customer’s initial deployment.

Revenues
from recurring revenue streams are billed monthly and recognized ratably over the term of the contract, generally one to five years for
data center colocation customers. Non-recurring installation fees, although generally paid upfront upon installation, are deferred and
recognized ratably over the contract term.

We
guarantee certain service levels, such as uptime, as outlined in individual customer contracts. If these service levels are not achieved
due to any failure of the physical infrastructure or offerings, or in the event of certain instances of damage to customer infrastructure
within our data center, we would reduce revenue for any credits or cash payments given to the customer.

*Digital
asset mining*

The
Company enters in contracts with mining pool operators to provide computing power to digital asset mining pools. Providing computing
power for digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such
computing power is the only performance obligation in the Company’s contracts with mining pool operators.

Contract
inception and the Company’s enforceable right to consideration begin when the Company commences providing hash calculation services
to the mining pool operators. Each party to the contract has the unilateral right to terminate the contract at any time without any compensation
to the other party for such termination. As such, the duration of a contract is less than 24 hours (a day) and may be continuously renewed
throughout the day. The implied renewal option is not a material right because there are no upfront or incremental fees in the initial
contract, and the rate of payments remains the same upon each implied renewal, as the Full-Pay-Per-Share (FPPS) formula remains the same.
The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s
specifications over a 24-hour period beginning 00:00:00 UTC and ending 23:59:59 on a daily basis. In exchange for providing computing
power, the Company is entitled to a fractional share of the fixed digital assets award the mining pool operator receives, for successfully
adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed
to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.
The Company is entitled to its relative share of consideration even if a block is not successfully placed.

The
transaction consideration the Company receives, if any, is noncash consideration in the form of digital assets, net of pool fees charged
by the mining pool operator. The Company estimates the fair value of noncash consideration at contract inception. This non-cash consideration
is variable since the amount of block reward earned depends on the Company’s hash rate provided and transaction fees depend on
the actual Bitcoin Network transaction fees. While the non-cash consideration is variable, the payout is settled the next day on a daily
basis and the Company has the ability to estimate the variable consideration with reasonable certainty, without the risk of significant
revenue reversal because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur
when the uncertainty is subsequently resolved.

Revenue
is recognized on the same day that control of the contracted service transfers to the mining pool operator, which is the same day as
contract inception. Revenue is estimated and recognized based on the spot price of Bitcoin determined using the Company’s Principal
Market at 0:00:00 UTC on the date of contract inception.

21

Below
table presents the Company’s revenues generated from digital asset mining business from Foundry USA Pool by country:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| United States | $3,070,846 | $6,402,463 |
| Iceland | 633,950 | 1,374,500 |
|  | $3,704,796 | $7,776,963 |

*ETH
staking business*  

The
Company generates revenue through ETH staking rewards. The Company commenced both native staking business and liquid staking business
in 2022. In the first quarter of 2024, the Company terminated its liquid staking business. In July 2025, we resumed liquid staking through
Liquid Collective protocol with 5,120 ETH and ceased such activities in October 2025. During the three months ended March 31, 2026, the
Company only participated in native staking.

With
the introduction of staked ETH withdrawals in April 2023, we have reassessed our Ethereum network staking approaches, weighing the advantages
of traditional staking against liquid staking solutions. The withdrawal feature in native staking, coupled with yields that are on par
with those of liquid staking, has encouraged us to expand our collaborations with other service providers in this domain. As a result,
we have terminated all liquid staking activities with StakeWise and Liquid Collection in the third quarter of 2023 and in the first quarter
of 2024, respectively, reclaiming all staked Ethereum along with the accumulated rewards. In the fourth quarter of 2023, the Company
terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon. Subsequently, we have ceased our native
staking with MarsLand in the first quarter of 2024 and initiated our native staking with Figment Inc.

*(a)
Native staking*

The
Company has entered into network-based smart contracts by staking ETH on nodes run by third-party operators or nodes maintained by us
in 2022. Through these contracts, the Company stakes ETH on nodes for the purpose of validating transactions and adding blocks to the
Ethereum blockchain network. The Company is able to withdraw the staked ETH which was previously locked-up in staking contracts since
the Shanghai upgrade was successfully completed on April 12, 2023. In exchange for staking the ETH and validating transactions on blockchain
networks, the Company is entitled to the block rewards and transaction fees for successfully validating or adding a block to the blockchain.
These rewards are received by the Company directly from the Ethereum network and are calculated approximately based on the proportion
of the Company’s stake to the total ETH staked by all validators.

The
provision of validating blockchain transactions is an output of the Company’s ordinary activities. Each separate block creation
or validation under a smart contract with a network represents a performance obligation. The transaction consideration the Company receives,
the digital asset awards, is a non-cash consideration, which the Company measures at fair value on the date received. The fair value
of the ETH reward received is determined using the quoted price of the ETH at the time of receipt. The satisfaction of the performance
obligation for transaction verification services occurs at a point in time when confirmation is received from the network indicating
that the validation is complete, and the awards are deposited to our address. At that point, revenue is recognized.

As
of March 31, 2026 and December 31, 2025, the Company had native staked 96,323 ETH and 138,263 ETH, respectively, on the Ethereum blockchain.

For
the three months ended March 31, 2026 and 2025, the Company earned 949.1 ETH valued at $2,296,509 and 211.0 ETH valued at $560,641,
respectively, from such staking activities and recognized the ETH staking rewards as revenues.

*(b)
Liquid staking*

Liquid
staking is similar to native staking in terms of performance obligations, determination of transaction price and revenue recognition. When
we participated in liquid staking via Portara protocol, the Company received receipt tokens sETH-H to represent the staked ETH at 1:1
ratio. The liquid staking rewards were in the form of rETH-H which could be redeemed for ETH from the liquid staking provider or exchange
for ETH via over-the-counter markets. When we participated in liquid staking via Liquid Collective protocol, the Company received
receipt tokens Liquid Staked ETH (“LsETH”) to represent the staked ETH. LsETH uses a floating conversion rate, or protocol
conversion rate, between the receipt token and staked tokens, reflecting the value of accrued network rewards, penalties, and fees associated
with the staked tokens.

For
the three months ended March 31, 2026 and 2025, the Company generated revenues of $nil and $nil, respectively, from the liquid staking.

*Contract
costs*

The
Company capitalizes commission expenses directly related to obtaining customer contracts, which would not have been incurred if the contract
had not been obtained. As of March 31, 2026, capitalized costs to obtain a contract totaled $24.2 million, and the outstanding commission
expense payable was $12.3 million, which is included within Other payables and accrued liabilities. As of December 31, 2025, capitalized
costs to obtain a contract totaled $25.2 million, and the outstanding commission expense payable was $13.7 million.

22

*Contract
assets*

Contract
assets primarily consist of revenue allocated to complimentary services provided to customers as part of contractual arrangements. As
of March 31, 2026 and December 31, 2025, there were no contract assets.

*Contract
liabilities*

The
Company’s contract liabilities consist of deferred revenue and customer deposits. As of March 31, 2026 and December 31, 2025, contract
liabilities were $144.5 million and $79.6 million, respectively.

During
the three months ended March 31, 2026 and 2025, $0.7 million and $11.1 million, respectively, of the beginning balance of contract liabilities
was recognized as revenue.

*Remaining
performance obligation*

The
following table presents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance
obligation as of March 31, 2026:

| Line item | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Colocation Services | $50,373,785 | $89,772,350 | $91,227,206 | $93,242,351 | $93,505,280 | $502,833,948 | $920,954,920 |
| Other Revenue | 968,965 | 918,966 | 612,206 | 266,899 | 22,574 | - | 2,789,610 |
| Total contract liabilities | $51,342,750 | $90,691,316 | $91,839,412 | $93,509,250 | $93,527,854 | $502,833,948 | $923,744,530 |

The
amounts presented in the table above exclude variable consideration allocated entirely to wholly unsatisfied performance obligations.
Such amounts have been excluded from the disclosure of remaining performance obligations in accordance with ASC 606, as the consideration
is not fixed and determinable.

During
the three months ended March 31, 2026 and 2025, $5.1 million and $2.0 million, respectively, were recognized as revenue as a result of
satisfying performance obligations in previous periods.

**4.
Acquisitions**

***Real
Estate Acquisition – Madison, North Carolina***

On
May 20, 2025, the Company, through WhiteFiber, acquired the building and land, together with all the related improvements owned by Unifi
Manufacturing, Inc. (“Unifi Transaction”) that were located in Madison, North Carolina. The total consideration consisted
of $45.0 million in cash, including the initial deposit of $2.2 million.

The
acquired set of assets did not meet the definition of a business as defined in ASC 805, *Business Combinations*, as no substantive
processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included
in *Property, plant, and equipment, net* on the condensed consolidated balance sheets. The fair value of the tangible assets acquired
was estimated to be $45.0 million. No identifiable intangible assets were acquired, no goodwill was recognized, and no liabilities were
assumed in connection with the transaction.

In
connection with the agreement, additional contingent consideration may become payable to the seller based on the timing and availability
of power at the site (see Note 21. *Commitments and Contingencies*).

***Financière
Louis David and Financière Marjos Asset Acquisition***

On
November 28, 2025, the Company acquired a 100% controlling interest in Financière Louis David (“FLD”) and a 25% controlling
stake in Euronext-listed Financière Marjos SCA (“FM”). The transaction was effected through (i) the acquisition of
100% of the shares and voting rights of FLD, the general partner of FM, which holds a 15.9% controlling interest in FM, a variable interest
entity, and (ii) the direct purchase of an additional 9.1% equity interest in FM.

The
total consideration transferred consisted of approximately $1.6 million in cash. The aggregate fair value of the net liabilities
assumed was estimated to be approximately $0.1 million. The Company recognized an aggregate loss on acquisition of approximately $1.7
million, which represented excess of consideration transferred and net liabilities assumed over identifiable assets acquired as of the
acquisition date. Following the acquisition, FLD was renamed Bit Digital Europe Holding (“BDEH”).

23

FLD
and FM did not meet the definition of a business as defined in ASC 805, *Business Combinations*, as no substantive processes
or employees were acquired. Accordingly, the transactions were accounted for as asset acquisitions. In accordance with ASC 810-10-15-14
and ASC 810-10-25-38A, FM is considered a variable interest entity (“VIE”). Because the Company owns 100% of BDEH, the general
partner of FM, the Company has the power to direct the activities that most significantly impact FM’s economic performance. In
addition, the Company has exposure to variable returns through its direct and indirect equity interests in FM. Accordingly, the Company
is the primary beneficiary of FM as defined in ASC 810-10-25-38A and consolidates FM in its consolidated financial statements, notwithstanding
its minority equity ownership.

Through
December 31, 2025, the Company recognized approximately $0.2 million of acquisition-related costs within “General and administrative
expense” in the consolidated statements of operations. The Company did not recognize additional acquisition-related costs for this
acquisition during the period ended March 31, 2026.

**5.
USDC**

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| USDC | $191,024 | $484,459 |

The
following table presents additional information about USDC for the three months ended March 31, 2026 and 2025, respectively:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Opening balance | $484,459 | $411,413 |
| Receipt of USDC from sales of other digital assets | 276,440 | 1,223,250 |
| Payment of USDC for other expenses | (569,875) | (598,067) |
| Ending balance | $191,024 | $1,036,596 |

**6.
DIGITAL ASSETS HOLDINGS**

***Digital
Assets***

Effective
January 1, 2024, the Company early adopted ASU 2023-08, which requires entities to measure crypto assets at fair value with changes recognized
in net income each reporting period. The Company’s digital assets are within the scope of ASU 2023-08 and the transition guidance
requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any difference between the carrying amount
of the Company’s digital assets and fair value. As a result of the Company’s early adoption of ASU 2023-08, the Company recorded
a $21.2 million increase to digital assets and a $21.2 million decrease to accumulated deficit on the consolidated balance sheets as
of the beginning of the quarter ended March 31, 2024.

The
following table presents the Company’s significant digital assets holdings as of March 31, 2026:

| Line item | Quantity | Cost Basis | Fair Value |
| --- | --- | --- | --- |
| BTC | 1.2 | $74,133 | $77,577 |
| ETH | 140,195.9 | 428,601,968 | 294,918,527 |
| Total digital assets held as of March 31, 2026 |  | $428,676,101 | $294,996,104 |

The
cost basis is equal to the post-impairment value of all BTC and ETH held as of the adoption of ASU 2023-08 on January 1, 2024. For BTC
and ETH earned subsequent to the adoption of ASU 2023-08, the cost basis of the BTC and ETH represents the valuation at the time the
Company determined for revenue recognition purposes.

24

The
following table presents a roll-forward of BTC for the three months ended March 31, 2026, based on the fair value model under ASU 2023-08:

| Line item | Fair value |
| --- | --- |
| BTC fair value as of December 31, 2025 | $350,026 |
| Receipt of BTC from mining services | 3,704,796 |
| Sales of BTC in exchange of cash | (3,353,382) |
| Sales of BTC in exchange of USDC | (276,440) |
| Payment of BTC for service charges from mining facilities | (69,980) |
| Payment of BTC for other expenses | (1,168) |
| Change in fair value of BTC | (276,275) |
| BTC fair value as of March 31, 2026 | $77,577 |

For
the additions of BTC generated by the Company’s mining business, see Note 3. *Revenue from Contracts with Customers*.

Bitcoin
is sold on a FIFO basis. For the three months ended March 31, 2026, losses from the sales of bitcoin are included in change in fair value
of BTC which is included in the consolidated statements of operations under the caption “Losses on digital assets”.

The
following table presents a roll-forward of ETH for the three months ended March 31, 2026, based on the fair value model under ASU 2023-08:

| Line item | Fair value |
| --- | --- |
| ETH fair value as of December 31, 2025 | $415,384,383 |
| Receipt of ETH from native staking business | 2,296,509 |
| Sales of ETH in exchange of cash | (1,967,700) |
| Change in fair value of ETH | (120,794,665) |
| ETH fair value as of March 31, 2026 | $294,918,527 |

For
the additions of ETH generated by the Company’s ETH staking business, see Note 3. *Revenue from Contracts with Customers*.

ETH
is sold on a FIFO basis. For the three months ended March 31, 2026, losses from the sales of ETH are included in change in fair value
of ETH which is included in the consolidated statements of operations under the caption “Losses on digital assets”.

**7.
OTHER CURRENT ASSETS, NET**

Other
current assets were comprised of the following:

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Deposits (a) | $3,779,816 | $4,098,610 |
| Prepaid director and officer insurance expenses | 2,225 | 205,200 |
| Prepaid consulting service expenses | 747,375 | 1,570,653 |
| Deposit for lease | 89,476 | 38,841 |
| Deferred contract costs | 1,813,390 | 2,190,966 |
| Prepayment to third parties (b) | 9,311,640 | 8,824,538 |
| Receivable from third parties | 4,439,143 | 5,408,521 |
| Funds held in escrow | 4,000,000 | 4,000,000 |
| Others | 501,203 | 408,044 |
| Less: Current expected credit losses | (13,789) | (10,389) |
| Total | $24,670,479 | $26,734,984 |

(a) As of March 31, 2026 and December 31, 2025, the balance of deposits represented the deposits made to our service providers, who paid utility charges in mining facilities on behalf of the Company. The deposits are refundable upon expiration of the agreement.

(b) The balance of prepayment to third parties primarily consists of the prepayment to our GPU servers leasing partner.

25

**8.
LEASES**

***Lease
as Lessee***

The Company enters into leases for data center capacity, cloud infrastructure,
office space and general and administrative purposes under non-cancelable lease arrangements. These leases, including a data center lease
acquired as part of the Enovum acquisition in 2024, generally have terms ranging from approximately 2 to 22 years and may include renewal
options, purchase options, or both, depending on the nature of the underlying asset. Certain leases include variable payments based on
usage, particularly for cloud services. Variable lease costs are recognized as incurred and are not included in the measurement of the
right-of-use assets or lease liabilities.

On April 11, 2025, the Company entered into a data center lease agreement
in Saint-Jérôme for its data center colocation services. The initial lease term is for 20 years with two five-year
extension options. The transaction also includes a fixed-price purchase option exercisable until December 31, 2025. In December 2025,
the Company became reasonably certain to exercise the purchase option and remeasured the lease as a finance lease as of December 1, 2025.
As a result of the remeasurement of the lease liability, there was a reduction of approximately $23.5 million to the lease right-of-use
assets and lease liabilities. On December 31, 2025, the Company notified the lessor of its intent to exercise the purchase option. The
Company had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026
and the purchase of MTL-3 was expected to close during the second quarter of 2026. In the first quarter of 2026, the Company remeasured
its finance lease liability and right-of-use asset due to a change in the expected closing date of the underlying purchase, which closed
on May 8, 2026. As a result, the lease liability increased $30,435, and the right-of-use asset increased $30,435, reflecting the extended
term and higher payments. No cash was exchanged in this transaction.

As
of March 31, 2026 and December 31, 2025, right-of-use asset and lease liabilities consisted of the following:

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Operating right-of-use assets | $18,537,889 | $12,052,485 |
| Finance right-of-use assets | 12,270,195 | 12,602,135 |
| Total right-of-use-assets | $30,808,084 | $24,654,620 |
| Operating lease liabilities | 17,235,741 | 10,964,460 |
| Finance lease liabilities | 12,447,671 | 12,911,192 |
| Total lease liabilities | $29,683,412 | $23,875,652 |

Operating
right-of-use assets are recorded net of accumulated amortization of $9.3 million and $7.7 million as of March 31, 2026
and December 31, 2025, respectively.

26

Finance
lease right-of-use assets are recorded net of accumulated amortization of $0.2 million and $0.1 million as of March 31, 2026 and
December 31, 2025, respectively.

For
the three months ended March 31, 2026 and 2025, the Company’s amortization on the operating lease right-of-use assets totaled $1.8 million
and $1.1 million, respectively.

For
the three months ended March 31, 2026 the Company’s interest expense and amortization on the finance lease were $155,509 and
$152,282, respectively. For the three months ended March 31, 2025, the Company’s interest expense and amortization on the finance
lease were $nil.

The
following table presents the components of the Company’s lease expense. GPU lease expenses and data center lease expenses related
to operational data centers are included in cost of revenue; data center lease expenses incurred during construction and office lease
expenses are included in general and administrative expenses:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Operating lease costs | $5,493,235 | $5,088,186 |
| Finance lease costs | 307,791 | - |
| Short-term lease costs | 74,642 | 69,048 |
| Sublease income | (6,560) | (6,254) |
| Total lease costs | $5,869,108 | $5,150,980 |

Additional
information regarding the Company’s leasing activities as a lessee is as follows:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Operating cash outflows from operating leases | $(2,115,674) | $(1,371,364) |
| Operating cash outflows from finance lease | (155,509) | - |
| Financing cash outflows from finance lease | (279,135) | - |
| Weighted average remaining lease term – operating leases | 8.6 | 9.3 |
| Weighted average remaining lease term – finance lease | 0.2 | - |
| Weighted average discount rate – operating leases | 8.5% | 9.2% |
| Weighted average discount rate – finance leases | 5.0% | - |

27

The
following table represents our future minimum operating lease payments as of March 31, 2026:

| Year | Amount |
| --- | --- |
| 2026 | $5,433,868 |
| 2027 | 4,378,121 |
| 2028 | 2,423,979 |
| 2029 | 2,273,511 |
| 2030 | 2,328,577 |
| Thereafter | 5,857,988 |
| Total undiscounted lease payments | 22,696,044 |
| Less: present value discount | (5,460,303) |
| Present value of operating lease liabilities | $17,235,741 |

The
following table represents our future minimum finance lease payments as of March 31, 2026:

| Year | Amount |
| --- | --- |
| 2026 | $12,511,937 |
| Total undiscounted lease payments | 12,511,937 |
| Less: present value discount | (64,266) |
| Present value of finance lease liability | $12,447,671 |

The
Company entered into a GPU server lease agreement effective January 2024 for its cloud services designed to support generative AI workstreams.
The lease payment depends on the usage of the GPU servers and the Company concludes that the lease payments are variable and will be
recognized when they are incurred. For the three months ended March 31, 2026 and 2025, the GPU server lease expense amounted to $3.7
million and $3.7 million, respectively.

***Lease
as Lessor***

The
Company enters into sales-type leases for data storage and cloud service equipment. These leases typically have terms ranging from approximately 2 to 6 years.

The
Company also enters into sublease arrangements for portions of its leased data center capacity. These subleases generally include fixed
payments with automatic renewal options, unless sub-tenant provides at least 90 days’ notice of non-renewal prior to the end of
the then-current term.

Lease
income from sales-type leases is primarily recognized as interest income over the lease term. The Company’s exposure to credit
risk is limited to net investment in leases.

The
components of lease income for the sales-type lease were as follows:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Interest income related to net investment in lease | $383,358 | $280,567 |

Interest
income is included in the consolidated statements of operations under the caption “Revenue – Other”.

28

The
components of net investment in sales-type leases were as follows:

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Net investment in lease - lease payment receivable | $12,941,152 | $13,947,826 |

The
following table illustrates the Company’s future minimum receipts for sales-type lease as of March 31, 2026:

| Year | Sales-Type Lease |
| --- | --- |
| 2026 | $4,213,772 |
| 2027 | 3,636,831 |
| 2028 | 3,636,831 |
| 2029 | 3,428,121 |
| 2030 | 848,915 |
| Total future minimum receipts | 15,764,470 |
| Unearned interest income | (2,789,610) |
| Less: Current expected credit losses | (33,708) |
| Net investment in lease, net | $12,941,152 |

The
present value of minimum sales-type receipts of $12.9 million is included in the consolidated balance sheets under the caption “Net
investment in lease”.

The
following table illustrates the future lease payments to be received from the Company’s sublease tenant as of March 31, 2026 were
as follows:

| Year | Operating Lease |
| --- | --- |
| 2026 | $19,403 |
| 2027 | 25,871 |
| 2028 | 25,871 |
| 2029 | 25,871 |
| 2030 | 25,871 |
| Thereafter | 47,096 |
| Total future receipts | $169,983 |

**9.
PROPERTY, PLANT, AND EQUIPMENT, NET**

Property,
plant and equipment, net was comprised of the following:

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Miners for Bitcoin | $48,785,348 | $48,785,348 |
| Cloud service equipment | 100,226,239 | 146,589,318 |
| Colocation service equipment | 33,552,061 | 31,874,970 |
| Purchased and internally developed software | 5,775,894 | 4,633,157 |
| Land | 6,449,885 | 6,510,574 |
| Leasehold improvements | 31,296,699 | 30,088,308 |
| Vehicle | 235,576 | 235,576 |
| Other property and equipment | 58,918 | 36,069 |
| Less: Accumulated depreciation | (68,732,749) | (65,552,951) |
|  | 157,647,871 | 203,200,369 |
| Construction in progress | 294,321,529 | 157,042,649 |
| Property, plant, and equipment, net | $451,969,400 | $360,243,018 |

For
the three months ended March 31, 2026 and 2025, depreciation expenses were $9.9 million and $7.1 million, respectively. Construction
in progress represents assets received but not placed into service as of March 31, 2026 and December 31, 2025.

29

During
2024 and 2025, the Company purchased data storage and network equipment that was subsequently derecognized from property, plant and equipment
upon entering into sales-type lease arrangements, with the related assets recorded as net investments in leases, totaling approximately
$10.6 million and $7.9 million, respectively. No such transactions occurred during 2026.

*Disposals
of Property, Plant and Equipment*

For
the three months ended March 31, 2026, the Company sold 126 H200s GPU for a total consideration of approximately $26.1 million. On the
date of the transaction, the carrying amount of these GPUs was $24.3 million. The Company recognized a gain of $1.8 million from the
sale which was recorded within net gain from disposal of property, plant and equipment. As of the date of this Form 10-Q, the Company
has collected the full cash consideration of $26.1 million.

**10.
INVESTMENT SECURITIES**

Investment
securities were comprised of the following:

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Investment in Digital Future Alliance Limited (“DFA”) (a) | $94,534 | $94,534 |
| Investment in Nine Blocks Offshore Feeder Fund (“Nine Blocks”) (b) | 3,026,715 | 3,036,434 |
| Investment in Auros Global Limited (c) | 1,999,987 | 1,999,987 |
| Investment in Ingonyama Ltd (d) | 100,000 | 100,000 |
| Investment in Cysic Inc. (e) | 100,000 | 100,000 |
| Investment in a SAFE (f) | 1,000,000 | 1,000,000 |
| Investment in AI Innovation Fund I (“AI fund”) (g) | 17,426,600 | 17,501,600 |
| Investment in Innovation Fund I (“Innovation fund”) (h) | 32,180,278 | 45,206,266 |
| Investment in Odiot Holding (i) | 80,058 | 81,950 |
| Total | $56,008,172 | $69,120,771 |

*(a)
Investment in Digital Future Alliance Limited (“DFA”)*

DFA
is a privately held company, over which the Company has neither control nor significant influence through investment in ordinary shares.
The Company accounted for the investment in DFA using the measurement alternative at cost, less impairment, with subsequent adjustments
for observable price changes resulting from orderly transactions for identical or similar investments of the same issuer.

For
the three months ended March 31, 2026 and 2025, the Company did not record upward adjustments or downward adjustments on the investment.
The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the
fair value of the equity security. As of March 31, 2026 and December 31, 2025, the Company did not recognize impairment against the investment
security.

*(b)
Investment in Nine Blocks Offshore Feeder Fund (“Nine Blocks”)*

On
August 1, 2022, the Company entered into a subscription agreement with Nine Blocks for investment of $2.0 million. The investment includes
a direct investment into the Nine Blocks Master Fund, a digital assets market neutral fund using basis trading, relative value,
and special situations strategies.

As
a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment
in the fund. For the three months ended March 31, 2026 and 2025, the Company recorded cumulative downward adjustments of $9,719 and $76,000,
respectively, on the investment.

30

*(c)
Investment in Auros Global Limited (“Auros”)*

On
February 24, 2023, the Company closed an investment of $1,999,987 in Auros, which is a leading crypto-native algorithmic trading and
market making firm that delivers best-in-class liquidity for exchanges and token projects. The Company has neither control nor significant
influence through investment in ordinary shares. The Company accounted for the investment in Auros using the measurement alternative
at cost, less impairment, with subsequent adjustments for observable price changes resulting from orderly transactions for identical
or similar investments of the same issuer.

For
the three months ended March 31, 2026 and 2025, the Company did not record upward adjustments or downward adjustments on the investment.
The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the
fair value of the equity security. As of March 31, 2026 and December 31, 2025, the Company did not recognize impairment against the investment
security.

*(d)
Investment in Ingonyama Ltd. (“Ingonyama”)*

In
September 2023, the Company closed an investment of $100,000 in Ingonyama, a semiconductor company focusing on Zero Knowledge Proof hardware
acceleration. The Company has neither control nor significant influence through investment in preferred shares. The Company accounted
for the investment in Ingonyama using the measurement alternative at cost, less impairment, with subsequent adjustments for observable
price changes resulting from orderly transactions for identical or similar investments of the same issuer.

For
the three months ended March 31, 2026 and 2025, the Company did not record upward adjustments or downward adjustments on the investment.
The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the
fair value of the equity security. As of March 31, 2026 and December 31, 2025, the Company did not recognize impairment against the investment
security.

*(e)
Investment in Cysic Inc (“Cysic”)* 

On
April 2, 2024, the Company closed an investment of $100,000 in Cysic, a ZK hardware acceleration company and ZK prover network to provide
ZK Compute-as-a-Service. The Company has neither control nor significant influence through investment in preferred shares. The Company
accounted for the investment in Cysic using the measurement alternative at cost, less impairment, with subsequent adjustments for observable
price changes resulting from orderly transactions for identical or similar investments of the same issuer.

For
the three months ended March 31, 2026 and 2025, the Company did not record upward adjustments or downward adjustments on the investment.
The Company’s impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the
fair value of the equity security. As of March 31, 2026 and December 31, 2025, the Company did not recognize impairment against the investment
security.

*(f)
Investment in a SAFE*

On
June 30, 2024 (the “Effective Date”), the Company entered into a simple agreement for future equity (“SAFE”)
agreement for an initial investment amount of $1 million in exchange for a right to participate in a future equity financing of preferred
stock to be issued by Canopy Wave Inc. (“Canopy”). Alternatively, upon a liquidity event such as a change in control, a direct
listing or an initial public offering, the Company is entitled to receive the greater of (i) the SAFE investment amount plus 15% annual
accrued interest (the “cash-out amount”) or (ii) the SAFE investment amount divided by a discount to the price per share
of Canopy’s ordinary shares. In a dissolution event, such as a bankruptcy, the Company is entitled to receive the cash-out amount.
If the SAFE is outstanding on the three-year anniversary of the Effective Date, then the SAFE will expire and the Company will be entitled
to receive the cash-out amount. In the event of a qualifying equity financing, the number of shares of preferred stock received by the
Company would be determined by dividing the SAFE investment amount by a discounted price per share of the preferred stock issued in the
respective equity financing. The Company recorded an investment of $1 million as an investment in the SAFE on the consolidated balance
sheets. Additionally, per the terms of the SAFE arrangement, the Company may be obligated to invest up to an additional $2 million into
the SAFE arrangement if Canopy satisfies certain milestones prior to the expiration of the SAFE, or if an equity financing event occurs.

The
Company accounted for this investment under ASC 320, *Investments - Debt Securities* and elected the fair value option for the SAFE
investment pursuant to ASC 825, *Financial Instruments*, which requires financial instruments to be remeasured to fair value each
reporting period, with changes in fair value recorded in the consolidated statements of operations. The fair value estimate includes
significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision
to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized,
is applied to the entire instrument, and is irrevocable once elected. For instruments measured at fair value, embedded conversion or
other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at
fair value are not deferred and are recognized as incurred on the consolidated statements of operations.

On
March 31, 2026, the Company performed a qualitative assessment to identify if events or circumstances indicate that the investment is
impaired or that an observable price change has occurred. We considered available information about Canopy’s operations and industry
conditions. No events or circumstances were identified that would indicate the investment is impaired or that an observable price change
occurred. As of March 31, 2026, the investment continues to be reported at its original cost of $1,000,000. For the three months ended
March 31, 2026, the Company did not record upward adjustments or downward adjustments on the investment.

31

*(g)
Investment in AI Innovation Fund I (“AI fund”)*

On
July 15, 2024, the Company entered into a subscription agreement with Pleasanton Ventures Innovation Master Fund SPC Limited for investment
of $15.9 million in its AI Innovation Fund I. The investment includes a direct investment into private equity and fund of fund opportunities
within the AI industry. On May 20, 2025 the Company invested an additional $2.0 million into the fund.

As
a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment
in the fund. For the three months ended March 31, 2026, the Company recorded cumulative downward adjustments of $75,000 in the investment.

*(h)
Investment in Innovation Fund I (“Innovation fund”)*

After
the Company disposed its BVI entities for its previous fund operation, the Company no longer consolidates the investment in the fund.
As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the investment
in the fund.

In
March 2025, the Company invested an additional 3,400 ETH into the fund, equivalent to approximately $7.0 million based on the ETH-to-USD
exchange rate at the time of investment.

In
August 2025, the Company invested an additional 9,000 ETH into the fund, equivalent to approximately $40.6 million based on the ETH-to-USD
exchange rate at the time of investment.

For
the three months ended March 31, 2026 and 2025, the Company recorded cumulative downward adjustments of $13,025,988 and $4,541,248, respectively,
in the investment.

*(i)
Investment in Odiot Holding (“Odiot Holding”)*

In
connection with the acquisition of Bit Digital Europe Holding (“BDEH”) on November 28, 2025, the Company acquired an indirect
minority equity interest in Odiot Holding, a publicly traded company in France. The Company does not have control or significant influence
over Odiot Holding.

Accordingly,
the investment is accounted for as an equity security under ASC 321, *Investments — Equity Securities*, The investment was
initially recorded at fair value on the acquisition date and is subsequently measured at fair value using quoted market prices in an
active market (Level 1 inputs), with changes in fair value recognized in earnings.

For the three months ended March 31, 2026, the change in the fair value
of the investment in Odiot Holding was not material to the condensed consolidated financial statements.

**11.
OTHER NON-CURRENT ASSETS, NET**

Other
non-current assets were comprised of the following:

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Deposits (a) | $5,519,936 | $5,170,268 |
| Deferred contract costs | 22,365,149 | 22,969,613 |
| Others | 518,812 | 480,284 |
| Less: Current expected credit losses | (41,522) | (40,519) |
| Total | $28,362,375 | $28,579,646 |

(a) As of March 31, 2026 and December 31, 2025, the balance of deposits primarily consisted of the deposits made to a utility company related to our colocation services and to our service providers who paid utility charges in mining facilities on behalf of the Company. The deposits are refundable upon expiration of the agreement.

32

**12.
DEBT**

*2030
Convertible notes*

In
October 2025, we issued $150,000,000 aggregate principal amount of 4.00% convertible senior notes due 2030 (the “2030
Notes”), including the exercise in full by the initial purchasers of the 2030 Notes of their option to purchase up to an additional
$15,000,000 principal amount of the 2030 Notes.

The
Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”), dated as of October 2, 2025, between
the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as supplemented by a first supplemental
indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”),
dated as of October 2, 2025, between the Company and the Trustee. The net proceeds from the 2030 Notes offering, after deducting underwriting
discounts and commissions and estimated offering expenses, were approximately $143.7 million, including the proceeds from the Underwriters’
exercise of their over-allotment option in full.

The
2030 Notes are senior and unsecured obligations and bear interest at a coupon rate of 4.00% per annum, with interest payable semi-annually
in arrears on April 1 and October 1 of each year, beginning on April 1, 2026. The 2030 Notes will mature on October 1, 2030, unless earlier
converted, redeemed or repurchased in accordance with their terms. The unamortized debt issuance costs as of December 31, 2025 was $6.3 million
and were reported as a direct deduction from the face amount of the 2030 Notes. While the 2030 Notes bear a 4.00% stated interest
rate, the effective interest rate for the notes as of March 31, 2026 was 11.7%, primarily reflecting the accretion of debt issuance
costs.

Noteholders
may convert their 2030 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding
the maturity date. The conversion rate is initially 240.3846 ordinary shares per $1,000 principal amount of the 2030 Notes
(equivalent to an initial conversion price of $4.16 per ordinary share), which represents an approximately 30% conversion premium
over the last reported sale price of $3.20 per ordinary share on the Nasdaq Capital Market on September 29, 2025. The conversion
rate is subject to customary adjustments upon the occurrence of certain events, such as the interest make-whole conversion rate adjustment,
or conversion upon a make-whole fundamental change, as described in the Indenture.

Holders
of the 2030 Notes have a one-time noncontingent right to require the Company to repurchase for cash all or any portion of their respective
notes at a repurchase price equal to 100% of the principal amount of such notes to be repurchased, plus any accrued and unpaid interest
to, but excluding the repurchase date on October 1, 2028.

Under
the interest make-whole conversion rate adjustment, the holders of the 2030 Notes are able to convert at any time during the period from,
and including, the date that is six months after the last date of original issuance of the notes until the close of business on the business
day immediately preceding September 15, 2028 (other than a conversion in connection with a make-whole fundamental change), the Company
will increase the conversion rate per US$1,000 principal amount of the 2030 Notes to be converted by a number of ordinary shares.

We
may not redeem the 2030 Notes prior to October 6, 2028. We may redeem for cash all or any portion of the 2030 Notes, at our option, on
or after October 6, 2028 and prior to the 31st scheduled trading day immediately preceding the maturity date, if the
last reported sale price of our ordinary shares has been at least 130% of the conversion price for the 2030 Notes then in effect
for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including
the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice
of optional redemption at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued
and unpaid interest to, but excluding, the redemption date.

If
a “Fundamental Change” (as defined in the Indenture) occurs, then, subject to certain conditions and except as set forth
in the Indenture, noteholders may require the Company to repurchase their 2030 Notes at a cash repurchase price equal to the principal
amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase
date. The definition in the Indenture of a Fundamental Change includes certain business combination transactions involving the Company
and certain de-listing events with respect to the ordinary shares.

The
Indenture contains customary terms and covenants, including that upon certain events of default either the Trustee or the holders of
at least 25% in aggregate principal amount of the outstanding 2030 Notes may declare 100% of the principal of, and accrued and unpaid
interest, if any, on, all the 2030 Notes to be due and payable.

The
conversion features embedded in the 2030 Notes met the criteria to be bifurcated from the debt host contract under ASC 815 and recognized
separately at fair value. The total proceeds received were first allocated to the fair value of the derivative liability, and the remaining
proceeds allocated to the host. The host is subsequently measured using the effective interest method, and the derivative liability is
measured at fair value, with changes in fair value recorded as derivative gain in the consolidated statements of operations. The estimated
fair value of the entire 2030 Notes was determined to be approximately $115.14 million as of March 31, 2026 based on quoted prices in
markets that are not active, which is considered a Level 2 valuation input. The 2030 Notes are classified as non-current liabilities
as of March 31, 2026.

*2031
Convertible notes*

On
January 26, 2026, WhiteFiber issued $230,000,000 aggregate principal amount of 4.50% convertible senior notes due 2031 (the “2031
Notes”), including the exercise in full by the initial purchasers of the 2031 Notes of their option to purchase up to an additional
$20,000,000 principal amount of the 2031 Notes. The 2031 Notes bear interest at a rate of 4.500% per year, payable semiannually in arrears
beginning on February 1 and August 1 of each year, beginning on August 1, 2026. The 2031 Notes will mature on February 1, 2031, unless
earlier converted, redeemed or repurchased in accordance with their terms. The Notes were issued pursuant to, and are governed by, an
indenture (the “Indenture”), dated as of January 26, 2026, between WhiteFiber and U.S. Bank Trust Company, National Association,
as trustee (the “Trustee”).

33

The
net proceeds from the 2031 Notes offering, after deducting initial purchasers’ discounts and offering expenses, were approximately
$222.1 million, including the proceeds from the exercise in full of initial purchasers’ option to purchase an additional $20.0
million aggregate principal amount of 2031 Notes. The unamortized debt issuance costs as of March 31, 2026 were $7.7 million. WhiteFiber
used approximately $120 million of the proceeds of the 2031 Notes offering to enter into a zero-strike call option transaction. The estimated
fair value of the 2031 Notes was determined to be approximately $190.60 million as of March 31, 2026 based on quoted prices in markets
that are not active, which is considered a Level 2 valuation input. While the 2031 Notes bear a 4.500% fixed interest rate, the effective
interest rate for the notes as of March 31, 2026 was 5.37%, primarily reflecting the accretion of debt issuance costs.

Noteholders
may convert their 2031 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding
the maturity date. Upon conversion, WhiteFiber will satisfy its conversion obligation by paying or delivering, as the case may be, cash,
its ordinary shares, or a combination of cash and ordinary shares, at WhiteFiber’s election, in the manner and subject to the terms
and conditions set forth in the Indenture. The conversion rate is initially 38.5981 ordinary shares per $1,000 principal amount of the
2031 Notes (equivalent to an initial conversion price of approximately $25.91 per ordinary share), which represents an approximately
27.50% conversion premium over the last reported sale price of $20.32 per ordinary share on the Nasdaq Capital Market on January 21,
2026. The conversion rate is subject to customary adjustments upon the occurrence of certain events, as described in the Indenture.

On
February 6, 2029, and if WhiteFiber undergoes a “Fundamental Change” (as defined in the Indenture), then, subject to certain
conditions and except as set forth in the Indenture, noteholders may require WhiteFiber to repurchase for cash all or any portion of
their 2031 Notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid
interest, if any, to, but excluding, the relevant repurchase date.

WhiteFiber
may not redeem the 2031 Notes prior to February 6, 2029. WhiteFiber may redeem for cash all or any portion of the 2031 Notes, at our
option, on or after February 6, 2029 and prior to the 41st scheduled trading day immediately preceding the maturity date,
if the last reported sale price of our ordinary shares has been at least 130% of the conversion price for the 2031 Notes then in effect
for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day
of such period) ending on, and including, the trading day immediately preceding the date on which WhiteFiber provides notice of optional
redemption. However, WhiteFiber may not redeem less than all of the outstanding 2031 Notes at its option unless at least $75.0 million
aggregate principal amount of 2031 Notes are outstanding and not called for optional redemption as of the time it sends the related notice
of optional redemption (and after giving effect to the delivery of such notice of optional redemption). WhiteFiber may also redeem for
cash, in whole but not in part, the 2031 Notes, subject to certain conditions, upon the occurrence of certain changes to the laws, rules
or regulations of a relevant taxing jurisdiction (as defined in the Indenture). The redemption price is equal to 100% of the principal
amount of the 2031 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The
Indenture contains customary terms and covenants, including certain bankruptcy and insolvency-related events of default, the occurrence
of which will result in the outstanding 2031 Notes automatically becoming due and payable, and certain non-bankruptcy and insolvency-related
events of default, upon the occurrence of which either the Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding 2031 Notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the 2031 Notes to be due
and payable.

WhiteFiber
accounts for the 2031 Notes as a single instrument. As of March 31, 2026, none of the conditions permitting the holders of the 2031 Notes
to convert their notes early had been met, and to require WhiteFiber to repurchase the 2031 Notes for cash. Therefore, the 2031 Notes
are classified as long-term.

*Zero-Strike
Call Option Transaction*

In
connection with the issuance of the 2031 Notes, WhiteFiber entered into a zero-strike call option transaction (“Zero-Strike Call
Option”) with one of the initial purchasers or its affiliate (the “Option Counterparty”). Pursuant to the Call Option
Transaction, WhiteFiber paid a premium equal to approximately $120.0 million for the right to receive, without further payment, 5,905,511
ordinary shares (subject to customary adjustment), with delivery thereof by the Option Counterparty at expiry, subject to early settlement
of the Zero-Strike Call Option in whole or in part at the Option Counterparty’s discretion. The Zero-Strike Call Option expires
on the 40th non-disrupted day (as defined in the Zero-Strike Call Option) following February 1, 2031, or earlier if the Option Counterparty
requests early settlement. The settlement method of the Zero-Strike Call Option is physical settlement. WhiteFiber will receive the fixed
number of ordinary shares determined at the commencement date of the transaction upon expiration or for the portion thereof being settled
early, provided that the Zero-Strike Call Option is exercised. The Zero-Strike Call Option is recognized as permanent equity at its fair
value at inception as a reduction to additional paid in capital in the condensed consolidated balance sheet.

The
following table summarizes the balances of the convertible notes (in thousands):

| Line item | As of March 31, 2026 | As of December 31, 2025 |
| --- | --- | --- |
| 2030 Convertible notes | $150,000 | $150,000 |
| 2031 Convertible notes | 230,000 | - |
| Less: unamortized debt discount | (45,811) | (39,709) |
| Subtotal | 334,189 | 110,291 |
| Less: Current portion | - | - |
| Convertible notes, net of current portion | $334,189 | $110,291 |
| Accrued cumulative interest | $4,773 | $1,500 |

Included in the unamortized debt discount as of
March 31, 2026 was approximately $32 million related to the embedded conversion feature of the 2030 Convertible Notes, which was bifurcated
and recognized as a derivative liability upon issuance. The derivative liability is subsequently remeasured at fair value at each reporting
period, with changes in fair value recognized in earnings. See *Note 13. Fair Value of Financial Instruments*, for additional information
regarding the fair value measurement of the derivative liability.

34

*Iceland
Facility Agreement*

On
March 25, 2026, WhiteFiber Iceland ehf. (the “Borrower”), a subsidiary of WhiteFiber, Inc., entered into a secured term loan
facility agreement (the “Facility”) with Landsbankinn hf, which provides for borrowings of up to $20 million. The obligations
under the Facility are guaranteed by WhiteFiber, Inc. and WhiteFiber AI, Inc. (collectively, the “Guarantors”).

Borrowings
under the Facility bear interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark),
and (ii) an applicable margin of 4.25% per annum. The base interest rate is subject to a floor of 0%, such that it will not be less than
zero.

The
Facility has an initial maturity of two years from the date of the agreement, with the option to extend the maturity up to an additional
two years, for a maximum term of four years, subject to the terms and conditions of the agreement.

Principal
repayments are required to be made in quarterly installments commencing three months after the initial drawdown date, with all remaining
outstanding amounts due at the maturity date.

The
Facility is secured by first-ranking security over (i) 100% of the Company’s shareholding in WhiteFiber Iceland ehf., (ii) designated
assets (including GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement, and (iii) material assets
acquired thereafter (to be secured within 60 days), in each case until all obligations are fully satisfied. The Facility also includes
customary events of default, the occurrence of which could result in the acceleration of amounts outstanding.

The
Facility may be drawn in multiple tranches during an availability period, with up to two drawdowns permitted and a minimum draw amount
of $5 million per draw. Any undrawn commitments are canceled at the end of the availability period. As of March 31, 2026, the Company
had not yet drawn on the Facility. Subsequently, on April 24, 2026, the Company drew down $18 million.

In
connection with the entry into the Facility, the Borrower is required to pay an arrangement fee to the lender. The Facility also includes
customary financial maintenance covenants, including leverage, equity, and loan to value ratios.

The
Facility permits voluntary prepayments, subject in certain cases to prepayment fees, and includes mandatory prepayment provisions in
connection with specified events, including certain asset disposals and insurance proceeds, all as set out in the facility agreement.

**13.
FAIR VALUE OF FINANCIAL INSTRUMENTS**

In connection with the issuance of the 2030 Notes,
the Company recognized a derivative liability related to the embedded conversion feature. See Note 12. *Debt* for further details
on the accounting treatment of the 2030 Notes and associated derivative liability.

The
fair value of the embedded conversion feature at issuance of the 2030 Notes and each reporting period was estimated based on significant
inputs not observable in the market, which represent Level 3 measurements within the fair value hierarchy.

The
fair value of the derivative liability was determined using the Black-Scholes model. The model incorporates the following key inputs
and assumptions:

| Maturity date | At December 31, 2025 / October 1, 2030 | At March 31, 2026 / October 1, 2030 |
| --- | --- | --- |
| Debt price | 89.65 | 76.58 |
| Volatility rate | 55% | 55% |
| Share price | $1.89 | $1.31 |
| Dividend yield | 0% | 0% |
| Stock borrow cost | 1% | 1% |
| Credit Spread | 10.00% | 14.50% |

The
following table provides a roll forward of the aggregate fair values of the derivative liability for the three months ended March 31,
2026 (in thousands):

| Line item | Embedded Derivative |
| --- | --- |
| Balance as of January 1, 2026 | $19,260 |
| Change in fair value | (9,252) |
| Balance as of March 31, 2026 | $10,008 |

35

**14.
SHARE-BASED COMPENSATION**

Share-based compensation such as restricted stock
units (“RSUs”), incentive and non-statutory stock options, restricted shares, share appreciation rights and share payments
may be granted to any directors, employees and consultants of the Company or affiliated companies under the 2021 Omnibus Equity Incentive
Plan (“2021 Plan”), 2021 Second Omnibus Equity Incentive Plan (“2021 Second Plan”), 2023 Omnibus Equity Incentive
Plan (“2023 Plan”), and 2025 Omnibus Equity Incentive Plan (“2025 Plan”) (collectively, “Bit Digital Incentive
Plan”). An aggregate of 2,415,293 RSUs were granted under the 2021 Plan and no ordinary shares remain reserved for issuance under
the 2021 Plan. There are 5,000,000 ordinary shares reserved for issuance under the Company’s 2021 Second Plan, under which 4,211,372
RSUs and 356,875 share options have been granted as of March 31, 2026. There are 5,000,000 ordinary shares reserved for issuance under
the Company’s 2023 Plan, under which 4,215,635 RSUs have been granted as of March 31, 2026. There are 8,000,000 ordinary shares
reserved for issuance under the Company’s 2025 Plan, under which 7,850,545 RSUs have been granted as of March 31, 2026.

On
February 6, 2025, the Board of Directors of WhiteFiber adopted the 2025 Omnibus Equity Incentive Plan (the “WhiteFiber 2025 Plan”).
The WhiteFiber 2025 Plan provides share-based compensation such as restricted stock units (“RSUs”), incentive and non-statutory
stock options, restricted shares, share appreciation rights and share payments may be granted to any directors, employees and consultants
of the Company or affiliated companies and up to 4,000,000, as amended, ordinary shares. There have been 1,104,569 RSUs granted as of
March 31, 2026.

From
time to time, WhiteFiber grants equity awards under the WhiteFiber 2025 Plan to employees of the Company as consideration for services
rendered to WhiteFiber. These awards are settled in shares of WhiteFiber’s ordinary shares and might be accounted for as share-based
compensation to non-employee consultants and included within general and administrative expenses.

*Restricted
Stock Units (“RSUs”)*

As
of December 31, 2025, the Company had 112,228 awarded and unvested RSUs.

On
February 19, 2026, the Company granted 400,000 RSUs to each of the Company’s Chief Executive Officer and Chief Financial Officer
in accordance with their compensation arrangements. All of these RSUs were immediately vested.

On
March 25, 2026, the Company granted 750,000 and 150,000 RSUs to the Company’s Chief Financial Officer and Chief Executive Officer,
respectively, in accordance with his compensation arrangements. All of these RSUs were immediately vested.

On
March 25, 2026, the Company granted 1,094,340 RSUs to employees. All of these RSUs were immediately vested. 

As
of March 31, 2026, the Company had 111,097 awarded and unvested RSUs.

For
the three months ended March 31, 2026 and 2025, the Company recognized share-based compensation expenses of $4,611,248, and $215,798
in connection with the above RSU awards. As of March 31, 2026, the Company had $85,711 unrecognized compensation costs related to unvested
RSUs.

*Share
Options*

For
the three months ended March 31, 2026 and 2025, the Company did not grant any options.

The
Company recognizes compensation expenses related to options on a straight-line basis over the vesting periods. For the three months ended
March 31, 2026 and 2025, the Company recognized share-based compensation expenses of $nil and $36,592, respectively. As of March 31,
2026, there were no unrecognized compensation costs related to all outstanding share options.

36

*Other
share-based compensation*

For the three months ended March 31, 2026 and
2025, the Company recognized share-based compensation expenses of $nil and $1.6 million, respectively for the RSUs issued to consultants
under Bit Digital Incentive Plan.

For
the three months ended March 31, 2026, the Company granted 75,000 RSUs to a consultant under the 2025 Plan as consideration for service
rendered. The RSUs vest upon satisfaction of specified conditions and are expected to vest in May 2026.

For the three months ended March 31, 2026 and 2025, WhiteFiber recognized
share-based compensation expenses of $59,460 and $138,013, respectively for the RSUs issued to WhiteFiber employees and directors
under the Bit Digital Plan.

For the three months ended March 31, 2026, WhiteFiber
granted 152,444 RSUs to consultants under WhiteFiber 2025 Omnibus Equity Incentive Plan as consideration for services rendered. Of these,
139,225 shares were fully vested upon issuance, and the remainder of 13,219 shares will vest in May 2026 for one consultant. WhiteFiber
recognized share-based compensation expense of $2,150,510 in connection with these grants.

As of March
31, 2026, WhiteFiber had 263,500 awarded and unvested RSUs.

**15.
SHARE CAPITAL**

Ordinary
shares

As
of December 31, 2025, there were 324,322,214 ordinary shares issued and 324,192,228 ordinary shares outstanding.

In
May 2022, the Company entered into an At-the-Market Offering Agreement with H.C. Wainwright & Co., LLC relating to the Company’s
ordinary shares. In accordance with the terms of the sales agreement, the Company may offer and sell ordinary shares having an aggregate
offering price of up to $500,000,000. During the three months ended March 31, 2026, the Company sold 2,372,035 ordinary shares for an
aggregate purchase price of $4.1 million net of offering costs pursuant to this at-the-market offering.

On
April 29, 2025, the Company filed a registration statement on Form S-3 (No. 333-286841) to register up to $500 million of its ordinary
shares, preference shares, debt securities, warrants, units and subscription rights (the “Registration Statement”).

In
June 2025, the Company completed an underwritten public offering of its ordinary shares registered under the Registration Statement.
In accordance with the terms of the underwriting agreement entered into with B. Riley Securities, Inc., as representative of the several
underwriters, the Company sold 75,000,000 ordinary shares at a price to the underwriters of $1.90 per share. The Company received net
proceeds of approximately $141.6 million, after deducting the underwriting discount and offering expense. On July 1, 2025, the underwriters
related to this public offering fully exercised their option to purchase an additional 11,250,000 ordinary shares, resulting in additional
net proceeds to the Company of $21.3 million, after deducting the underwriting discount and offering expenses.

37

In
July, 2025, the Company entered into a placement agency agreement (the “Placement Agent Agreement”) with B. Riley Securities,
Inc. (the “Placement Agent”), pursuant to which the Placement Agent agreed to serve as the sole placement agent for the Company
in connection with a registered direct offering (the “Registered Direct Offering”) of an aggregate of 22,000,000 ordinary
shares of the Company at an offering price of $3.06 per share. The gross proceeds to the Company from the Registered Direct Offering
were approximately $67.3 million before deducting placement agent fees and other estimated offering expenses.

On
September 29, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Barclays Capital
Inc., Cantor Fitzgerald & Co. and B. Riley Securities, Inc. as representatives of the several underwriters named in Schedule I thereto,
in connection with the issuance and sale of $150 million aggregate principal amount of the Company’s 4.00% Convertible Senior Notes
due 2030 (the “Notes”), including the exercise in full on September 30, 2025 of the underwriters’ option to purchase
an additional $15 million aggregate principal amount of Notes. The Notes were offered and sold in an offering registered under the Securities
Act pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-286841).

On
October 2, 2025, the Company issued the Notes. The Notes were issued pursuant to, and are governed by, an indenture (the “Base
Indenture”), dated as of October 2, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee (the
“Trustee”), as supplemented by a supplemental indenture (the “Supplemental Indenture,” and the Base Indenture,
as supplemented by the Supplemental Indenture, the “Indenture”), dated as of October 2, 2025, between the Company and the
Trustee.

During
the three months ended March 31, 2026, 2,870,471 ordinary shares were issued to the Company’s employees, directors, and consultants
in settlement of an equal number of fully vested restricted share units awarded to such individuals and companies by the Company pursuant
to grants made under the Company’s 2023 Plan and 2025 Plan.

As
of March 31, 2026, there were 331,564,720 ordinary shares issued and 331,434,734 ordinary shares outstanding.

Preferred
shares

As
of March 31, 2026 and December 31, 2025, there were 1,000,000 preferred shares issued and outstanding.

The
preference shares are entitled to the following preference features: 1) an annual dividend of 8% when, and if, declared by the Board
of Directors; 2) a liquidation preference of $10.00 per share; 3) convert on a one for one basis for ordinary shares, subject to a 4.99%
conversion limitation; 4) rank senior to ordinary shares in insolvency; and 5) solely for voting purposes vote 50 ordinary shares, for
each preference share.

On
December 20, 2024, the Board of Directors declared an 8% ($800,000) dividend on the preference shares to Geney Development Ltd. (“Geney”).
Erke Huang, our Chief Financial Officer, is the President of Geney and the beneficial owner of 30% of the equity of Geney, with the remaining
70% held by Zhaohui Deng, a Director and the Company’s former Chairman of the Board. The Company fully paid the declared dividend
in January 2025.

On
February 19, 2026, the Board of Directors declared an eight (8%) percent ($800,000) dividend on the preference shares to Geney. The Company
fully paid the declared dividend in March 2026.

Treasury
stock

The
Company treats ordinary shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted share grants
as ordinary share repurchases because they reduce the number of ordinary shares that would have been issued upon vesting. For the three
months ended March 31, 2026 and 2025, the Company withheld nil ordinary shares that were surrendered to the Company for withholding taxes
related to restricted stock vesting valued at $nil, based on fair value of the withheld shares on the vesting date.

As
of March 31, 2026 and December 31, 2025, the Company had treasury stock of $1,171,679 and $1,171,679, respectively.

38

**16.
GOODWILL AND INTANGIBLE ASSETS**

Goodwill

The
components of goodwill as of March 31, 2026 are as follows:

_As of March 31, 2026_

|  |  |
| --- | --- |
| Enovum Data Centers Corp. | $19,809,807 |
| Total goodwill | $19,809,807 |

Finite-lived
intangible assets

Finite-lived
intangible assets consist of customer relationships. Intangible assets with definite lives are amortized over their estimated useful
lives.

The
following table presents the Company’s finite-lived intangible assets as of March 31, 2026:

_As of March 31, 2026_

| Line item | Cost | Accumulated amortization | Net |
| --- | --- | --- | --- |
| Customer relationships | $13,486,184 | $(1,056,491) | $12,429,693 |
| Total | $13,486,184 | $(1,056,491) | $12,429,693 |

The
following table presents the Company’s finite-lived intangible assets as of December 31, 2025:

_As of December 31, 2025_

| Line item | Cost | Accumulated amortization | Net |
| --- | --- | --- | --- |
| Customer relationships | $13,486,184 | $(665,610) | $12,820,574 |
| Total | $13,486,184 | $(665,610) | $12,820,574 |

The
following table presents the Company’s estimated future amortization of finite-lived intangible assets as of March 31, 2026:

| 2026 | 519,994 |
| --- | --- |
| 2027 | 693,325 |
| 2028 | 693,325 |
| 2029 | 693,325 |
| 2030 | 693,325 |
| Thereafter | 9,136,399 |
| Total | $12,429,693 |

Amortization
expense for finite-lived intangible assets for the three months ended March 31, 2026 and March 31, 2025 was $0.2 million and $0.2 million,
respectively. The Company did not identify any impairment of its finite-lived intangible assets during the three months ended March 31,
2026.

39

**17.
INCOME TAXES**

The
following table provides details of income taxes:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Loss before income taxes | $(149,857,788) | $(57,039,929) |
| Provision for income taxes | $421,523 | $671,716 |
| Effective tax rate | (0.3 | (1.2 |

Our
income tax provision was $0.4 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively. The income tax
provision was lower during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher
pretax loss, geographic mix earning impacts and Net CFC Tested Income or NCTI (a.k.a GILTI) impact. Also, in both periods presented,
we were not able to benefit from current year foreign loss before taxes due to foreign valuation allowance from certain foreign operations.

**18.
LOSS PER SHARE**

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Net loss | $(146,669,036) | $(57,711,645) |
| Weighted average number of ordinary share outstanding |  |  |
| Basic | 325,638,843 | 181,413,307 |
| Diluted | 325,638,843 | 181,413,307 |
| Loss per share |  |  |
| Basic | $(0.45) | $(0.32) |
| Diluted | $(0.45) | $(0.32) |

Basic
loss per share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. The computation of diluted net loss per share does not include dilutive ordinary share equivalents in
the weighted average shares outstanding, as they would be anti-dilutive.

For
the three months ended March 31, 2026, 111,097 unvested RSUs, 350,000 stock options and 1,000,000 shares of convertible preferred shares
were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

For the three months ended March 31, 2026, approximately
36 million shares of the Company’s ordinary shares issuable upon conversion of the 2030 Notes at a conversion price of $4.16 per
share were excluded from the calculation of diluted loss per share because they were anti-dilutive.

For
the three months ended March 31, 2025, 1,036,831 unvested RSUs, 360,000 stock options and 1,000,000 shares of convertible preferred shares
were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

**19.
SEGMENT REPORTING**

The
Company has four reportable segments digital asset mining, cloud services, colocation services, and ETH Staking. The reportable segments
are identified based on the types of service performed.

Gross
profit (loss) is the segment performance measure the chief operating decision maker (“CODM”) uses to assess the Company’s
reportable segments.

The
digital asset mining segment generates revenue from the bitcoin the Company earns through its mining activities. Cost of revenue consists
primarily of direct production costs of mining operations, including electricity, management fee and maintenance cost but excluding depreciation
and amortization.

40

The
cloud services segment generates revenue from providing high performance computing services to support generative AI workstreams. Cost
of revenue consists of direct production costs, including electricity costs, data center lease expense, GPU servers lease expense, third-party
customer support fees and other relevant costs, but excluding depreciation and amortization.

Colocation
services generate revenue by providing customers with physical space, power and cooling within the data center facility. Cost of revenue
consists of direct production costs related to our HPC data center services, including electricity costs, lease costs, data center employees’
wage expenses and other relevant costs, but excluding depreciation and amortization.

The
Ethereum staking segment generates revenue from both native staking and liquid staking. Cost of revenue consists of direct cost related
to ETH staking business including service fee and reward-sharing fees to the service providers.

The
CODM analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue. No operating
segments have been aggregated to form the reportable segments.

Other
than the $19.8 million of goodwill from the Enovum acquisition allocated to the colocation services, the Company does not allocate all
assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose the
total assets of its reportable operating segments.

All *Other revenue* is generated from equipment leases with external customers.

The
following tables present segment revenue and segment gross profit reviewed by the CODM:

**Three
Months Ended March 31, 2026**

| Line item | Digital asset mining | Cloud services | Colocation services | ETH staking | Total |
| --- | --- | --- | --- | --- | --- |
| Revenue from external customers | $3,704,796 | $16,766,543 | $4,773,550 | $2,296,509 | $27,541,398 |
| Intersegment revenue | - | - | 8,679 | - | 8,679 |
| Segment revenue | 3,704,796 | 16,766,543 | 4,782,229 | 2,296,509 | 27,550,077 |
| Reconciliation of revenue |  |  |  |  |  |
| Other revenue (a) |  |  | 383,358 |  | 383,358 |
| Elimination of intersegment revenue |  |  |  |  | (8,679) |
| Total consolidated revenue |  |  |  |  | 27,924,756 |
| Less: |  |  |  |  |  |
| Electricity costs | 2,205,139 | 905,552 | 831,189 | - | 3,941,880 |
| Profit sharing fees | 616,905 | - | - | - | 616,905 |
| Datacenter lease expense | - | 1,395,148 | 467,177 | - | 1,862,325 |
| GPU lease expense | - | 3,715,232 | - | - | 3,715,232 |
| Wage expense | - | - | 204,911 | - | 204,911 |
| Service costs - ETH staking | - | - | - | 121,334 | 121,334 |
| Third-party customer support fees | - | 147,753 | - | - | 147,753 |
| Other segment items (b) | 429,455 | 615,598 | 449,506 | - | 1,494,559 |
| Intersegment cost of revenue | - | 8,679 | - | - | 8,679 |
| Segment cost of revenue | 3,251,499 | 6,787,962 | 1,952,783 | 121,334 | 12,113,578 |
| Reconciliation of cost of revenue |  |  |  |  |  |
| Elimination of intersegment cost of revenue |  |  |  |  | (8,679) |
| Total consolidated cost of revenue |  |  |  |  | 12,104,899 |
| Segment gross profit | $453,297 | $9,978,581 | $2,829,446 | $2,175,175 | $15,436,499 |

(a) Other revenue is primarily attributable to equipment leasing revenue and is therefore not included in the total for segment gross profit.

(b) All amounts included within other segment items are individually insignificant.

41

**Three
Months Ended March 31, 2025**

| Line item | Digital asset mining | Cloud services | Colocation services | ETH staking | Total |
| --- | --- | --- | --- | --- | --- |
| Revenue from external customers | $7,776,963 | $14,842,286 | $1,644,663 | $560,641 | $24,824,553 |
| Reconciliation of revenue |  |  |  |  |  |
| Other revenue (a) |  |  |  |  | 280,567 |
| Total consolidated revenue |  |  |  |  | 25,105,120 |
| Less: |  |  |  |  |  |
| Electricity costs | 4,233,082 | 569,937 | 223,058 | - | 5,026,077 |
| Profit sharing fees | 1,190,300 | - | - | - | 1,190,300 |
| Datacenter lease expense | - | 1,274,054 | - | - | 1,274,054 |
| GPU lease expense | - | 3,747,386 | - | - | 3,747,386 |
| Datacenter rent expense | - | - | 150,537 | - | 150,537 |
| Service costs - ETH staking | - | - | - | 32,568 | 32,568 |
| Other segment items (b) | 700,507 | 496,623 | 172,241 | - | 1,369,371 |
| Segment gross profit | $1,653,074 | $8,754,286 | $1,098,827 | $528,073 | $12,034,260 |

(a) Other revenue is primarily attributable to equipment leasing revenue and is therefore not included in the total for segment gross profit.

(b) All amounts included within other segment items are individually insignificant.

The
following table presents the reconciliation of segment gross profit to net (loss) income before taxes:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Segment gross profit | $15,436,499 | $12,034,260 |
| Reconciling Items: |  |  |
| Other profit (a) | 383,358 | 280,567 |
| Depreciation and amortization expenses | (10,035,581) | (7,241,989) |
| General and administrative expenses | (27,627,296) | (8,235,923) |
| Losses on digital assets | (121,070,273) | (49,205,227) |
| Net gain (loss) from disposal of property, plant and equipment | 1,821,729 | (333,620) |
| Other expense, net | (3,681,246) | (4,337,997) |
| Interest expense | (5,084,978) | - |
| Net loss before taxes | (149,857,788) | (57,039,929) |

(a) Other profit is primarily attributable to equipment leasing and is therefore not included in the total for segment gross profit.

42

**20.
RELATED PARTIES**

*Related-party
transactions*

On
December 20, 2024, the Board of Directors declared an eight (8%) percent ($800,000) dividend on the preference shares to Geney Development
Ltd. (“Geney”). Erke Huang, our Chief Financial Officer, is the President of Geney and the beneficial owner of 30% of
the equity of Geney, with the remaining 70% held by Zhaohui Deng, a director and the Company’s former Chairman of the Board.
The Company fully paid the declared dividend in January 2025.

On
February 19, 2026, the Board of Directors declared an eight (8%) percent ($800,000) dividend on the preference shares to Geney. The Company
fully paid the declared dividend in March 2026.

WhiteFiber
AI’s subsidiary, WhiteFiber Iceland ehf, appointed Daniel Jonsson as its part-time Chief Executive Officer starting November 7,
2023, for a six-month term with a three-month probation. After the initial period, the employment shall be automatically renewed for
successive period(s) of 6 months each, unless agreed otherwise in writing or unless terminated earlier in accordance with the terms of
the employment agreement. His compensation includes a monthly salary of $8,334, a $6,440 signing bonus, and eligibility for performance-based
RSU. Prior to February 2026, Daniel Jonsson is part of the management team at GreenBlocks ehf which not only provides bitcoin mining
hosting services but also benefits from a facility loan agreement extended by Bit Digital USA Inc., an affiliate of WhiteFiber Iceland
ehf. In February 2026, the commercial relationship between Bit Digital USA Inc. and GreenBlocks ehf was terminated. Nonetheless, WhiteFiber
Iceland ehf continues to engage GreenBlocks ehf under contract for consulting services pertaining to our high performance computing services
in Iceland.

*Corporate
Restructuring and Capital Contributions*

Prior
to the consummation of the Offering, the Company entered into a Contribution Agreement with WhiteFiber, pursuant to which the Company
contributed its HPC business through the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI,
Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf,
to WhiteFiber in exchange for 27,043,749 ordinary shares of WhiteFiber. The Contribution became effective on August 6, 2025,
when the Registration Statement on Form S-1, as amended (File No. No. 333-288650) (the “Registration Statement”), of WhiteFiber
was declared effective by the Securities and Exchange Commission.

On
August 8, 2025, WhiteFiber, a subsidiary of the Company, completed its initial public offering (the “Offering”) of 9,375,000 ordinary
shares, at a public offering price of $17.00 per share. All ordinary shares in the Offering were sold by WhiteFiber. The gross proceeds
to WhiteFiber from the Offering were $159,375,000, before deducting underwriting discounts and commissions and offering expenses payable
by WhiteFiber. On September 2, 2025, the Underwriters fully exercised their option to purchase the additional 1,406,250 Ordinary
Shares at the public offering price of $17.00 per share. Prior to the consummation of the Offering, the Company held all of the
issued and outstanding ordinary shares of WhiteFiber. After giving effect to the Offering, and the underwriters’ exercise of their
over-allotment option in full, the Company held approximately 71.5% of the issued and outstanding ordinary shares of WhiteFiber.
As of the date of this Form 10-Q, the Company owns approximately 70.1% of WhiteFiber.

*Transition
Services Agreement*

In addition, prior to the consummation of the
Offering, the Company entered into a Transition Services Agreement with WhiteFiber, pursuant to which the Company will provide certain
services to WhiteFiber, on a transitional basis which will generally be up to 24 months following the effective date of WhiteFiber’s
IPO registration statement. The Transition Services Agreement provides for the performance of certain services by the Company for the
benefit of WhiteFiber, or in some cases certain services provided by WhiteFiber for the benefit of the Company, for a limited period of
time after the Offering, including certain services provided by Sam Tabar, our Chief Executive Officer, and Erke Huang, our Chief Financial
Officer and a Director. During such transition period, Messrs. Tabar and Huang will continue to hold the same position with the Company
as well as WhiteFiber. Messrs. Tabar and Huang have committed to provide the requisite time and effort to fulfil their responsibilities
as a full-time officer of WhiteFiber, supervising a full staff and are expected to provide certain services, representing not more than
approximately 30% of their working time, in respect of the Company’s operations. The services to be provided will include financial
reporting, tax, legal, human resources, information technology and other general and administrative functions. All services are to be
provided at cost, except if otherwise agreed to. For the three months ended March, 31, 2026, the fees for these services were $1.5 million.
As of March 31, 2026, the fees payable by WhiteFiber to Bit Digital are $4.7 million.

*Consulting
Agreement with Affiliate of Director*

On
June 18, 2025, the Company entered into a consulting agreement with Serotonin Inc. (“Serotonin”). Amanda Cassatt, a director
of the Company, is a principal of Serotonin and has an ownership interest in the entity. Under the consulting agreement, Serotonin provides
consulting and advisory services to the Company. The agreement has an initial term of six months, expiring on December 18, 2025, and
automatically renews for successive six-month periods unless terminated by either party upon at least thirty (30) days’ prior written
notice. The agreement may also be terminated for cause, as defined in the agreement. Pursuant to the agreement, Serotonin assigned to
the Company all right, title and interest worldwide in any work product developed in connection with the services. The agreement also
contains a non-solicitation provision that remains in effect for one year following termination. The Company pays Serotonin a monthly
cash retainer of $30,000 for services provided under the agreement.

43

*Administrative
Services Agreement with Affiliate of Management*

On
December 1, 2025, Financière Marjos SCA, an indirect subsidiary of the Company, entered into an administrative services agreement
with Le Square SARL (“Square”). Square is wholly owned by Philippe Gellman, who also serves as the Manager of Financière
Marjos, and therefore the agreement constitutes a related party transaction.

Pursuant
to the agreement, Square provides administrative support services to Financière Marjos, including coordinating with external advisors,
assisting with the preparation and centralization of information for financial reporting and annual closings, supporting the preparation
of forecasts and budgets, monitoring relationships with banking institutions, and assisting with the management of disputes and other
administrative matters. Square may perform these services directly or in coordination with the executives, employees and service providers
of Financière Marjos.

In
consideration for the services provided under the agreement, Square receives a monthly fee of €8,000 (inclusive of VAT), invoiced
quarterly and payable within thirty days following receipt of the invoice.

The
agreement became effective on December 1, 2025 and continues for an indefinite term. The agreement may be terminated by Financière
Marjos at any time without prior notice or by Square upon two months’ prior written notice. The agreement also includes customary
confidentiality, non-solicitation and non-disparagement provisions.

**21.
COMMITMENTS AND CONTINGENCIES**

***Legal
Proceedings***

The
Company from time to time may become involved in legal proceedings in the ordinary course of the Company’s business. The Company
may also pursue litigation to assert its legal rights and assets, and such litigation may be costly and divert the efforts and attention
of its management and technical personnel, which could adversely affect its business. Due to the uncertainty of litigation and depending
on the amount and the timing, an unfavorable resolution of some or all of such matters may materially affect the Company’s business,
results of operations, financial position, or cash flows.

Although
the Company cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility
that a loss may have been incurred, U.S. GAAP requires the Company to disclose an estimate of the reasonably possible loss or range of
loss or make a statement that such an estimate cannot be made. The Company follows a thorough process in which it seeks to estimate the
reasonably possible loss or range of loss, and only if it is unable to make such an estimate does it conclude and disclose that an estimate
cannot be made. Accordingly, unless otherwise indicated below in the Company’s discussion of legal proceedings, a reasonably possible
loss or range of loss associated with any individual legal proceeding cannot be estimated.

*Bit
Digital USA, Inc v. Blockfusion USA, Inc. – Superior Court of Delaware*

On
June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion, Inc. (“Blockfusion”) alleging claims
for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to
Blockfusion, the return of which is owed to the Company. The Company was seeking in excess of $4.3 million. On October 22, 2024, Blockfusion
denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Following limited discovery, the
Company sought leave to file a Second Amended Complaint asserting additional tort and equitable claims, including fraud-based claims,
and adding Blockfusion’s Chief Executive Officer as an individual defendant. On September 19, 2025, Blockfusion moved to dismiss
the Second Amended Complaint. The Company filed its opposition to the motion on October 17, 2025, and the Court held a hearing on the
motion on January 6, 2026. Following the hearing, the Court granted the motion to dismiss. The Court dismissed the claims against the
individual defendant without prejudice on the ground that it lacked personal jurisdiction, and did not reach the merits of certain substantive
issues raised in the motion. The Company’s contract-based claims and related claims for contractual recovery against Blockfusion
were not dismissed and remain pending.

On
March 18, 2026, the Company moved to dismiss some of the Blockfusion’s counterclaims. That motion remains pending and is currently
set for hearing on June 12, 2026.

44

The
litigation is ongoing and remains in an active pretrial phase. The Company seeks recovery of its original investment, allegedly improper
invoice payments, unpaid contractual amounts, and other damages, and may seek equitable or other relief as the proceedings continue. The aggregate damages sought exceed $5.0 million.

At
this time, the Company cannot reasonably estimate a possible loss, range of loss, or expected recovery associated with this litigation.

*Bit
Digital USA, Inc. v. Alex Martini-Lo Manto, et. al. – New York Supreme Court, New York County, Commercial Division*

On
March 4, 2026, the Company filed suit against Alex Martini-Lo Manto, CEO of Blockfusion; and two Blockfusion-related entities alleging
that the defendants had designed a Special Purpose Acquisition Company (“SPAC”) merger to avoid paying the Company for its
prejudgment liabilities. The suit alleges claims under New York Uniform Voidable Transactions Act, as well as fraud claims against defendant
Alex Martini-Lo Manto and other related claims.

Upon
filing, the Company also moved for a preliminary injunction enjoining the SPAC transaction. On April 15, 2026, the Court denied that
motion. The Company has appealed that ruling.

On
April 29, 2026, Defendants moved to dismiss the Company’s claims. That motion remains pending.

The litigation is ongoing and remains in an active pretrial phase.

At
this time, the Company cannot reasonably estimate a possible loss, range of loss, or expected recovery associated with this litigation.

*Bit
Digital USA, Inc. v. Alex Martini-Lo Manto, et. al. – New York Supreme Court, Appellate Division, First Department*

On
April 22, 2026, the Company appealed the Commercial Division’s denial of the preliminary injunction. The Company also filed a request
for interim appellate injunctive relief. That request and the appeal remain pending.

At
this time, the Company cannot reasonably estimate a possible loss, range of loss, or expected recovery associated with this litigation.

***Contingent
Consideration Liabilities***

*Unifi
Transaction*

As
part of the Unifi Transaction (See Note 4. *Acquisition*), WhiteFiber may be required to make additional contingent payments to
the seller based on the timing and availability of electric service to the property, as follows:

- A contingent payment of $8 million may become payable if, within two years of the acquisition date, WhiteFiber uses commercially reasonable efforts and obtains from the local energy provider an Electric Service Agreement for at least 99 megawatts (MW), or if the property otherwise receives 99MW of power within that timeframe.
- If an Electric Service Agreement for at least 99MW is provided, or the property receives 99MW of power within three years, WhiteFiber may instead be required to make a contingent payment of $5 million.
- If an Electric Service Agreement is provided, or the property receives more than 99MW of power within four years, WhiteFiber may be required to make an additional payment of $200,000 per MW in excess of 99MW, up to a maximum of $5 million.

As
at March 31, 2026, WhiteFiber has not received an Electric Service Agreement of more than 99 MW. As a result no contingent payment is
payable as of the reporting date.

45

***Royal
Bank of Canada Facility Agreement***

*Agreement
executed on June 18, 2025*

On
June 18, 2025, WhiteFiber entered into a definitive credit agreement with the Royal Bank of Canada (“RBC”), to finance its
data center business. The credit agreement provides for an aggregate amount of up to approximately USD $43.9 million of financing. The
agreement is non-recourse and comprised of three separate facilities:

- Non-revolving three year lease facility in the amount of $18.5 million. The lease facility provides for straight-line amortization of six years and capital moratorium of six months after disbursement is complete.
- Non-revolving term loan facility in the amount of $19.6 million to refinance WhiteFiber’s purchase of the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center in Montreal Canada. Payment of principal and interest is due 30 days after drawdown and is repayable in full on the last day of the three-year term.
- Revolver by way of letters of credit and letters of guaranty with fees to be determined on a transaction-by-transaction basis. This facility will be available for the 36-month term in the amount of $5.8 million.

As of March 31, 2026, WhiteFiber agreed to certain financial covenants
that were not yet in effect. The facilities had not yet been authorized for use by the lender, as certain conditions precedent had not
yet been satisfied. Accordingly, no amounts were drawn, and no borrowings were available as of March 31, 2026.

*Amended
Agreement executed on April 27, 2026*

On
April 27, 2026, WhiteFiber entered into an amended credit agreement with RBC. This agreement replaces the original credit agreement dated
June 18, 2025, as subsequently amended on July 4, 2025. The amended credit agreement provides for an authorized credit facility of CAD
$28 million (approximately $20 million). The proceeds have been used as a real estate acquisition bridge loan to finance the acquisition
of the MTL-3 facility, at a purchase price of CAD $24.2 million (approximately USD $17.4 million). The closing date occurred on May 8,
2026.

Borrowings
under the facility bear interest, at WhiteFiber’s option, at either Daily Simple CORRA plus 2.75% per annum or Royal Bank Prime
plus 1.00% per annum, with the prime-based rate serving as the default option.

The
facility has a six-month term from the date of drawdown and requires interest-only payments during the term, with the outstanding principal
due in full at maturity. The specific borrowing terms are established at the time of each drawdown pursuant to a borrowing request submitted
by WhiteFiber and accepted by the lender.

Additionally,
RBC is providing a CAD $8 million (approximately $5.8 million) revolving facility in the form of Letters of Credit and Letters of Guarantee.
The fees will be determined on a transaction-by-transaction basis, and the facility will be available for a 12-month term.

WhiteFiber
has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio.

As
of the reporting date, the April 27, 2026 bridge loan has been authorized and funded by RBC for the MTL-3 facility acquisition. WhiteFiber
and RBC are currently in discussions regarding new syndicated credit facilities, including (i) a delayed draw term loan facility of CAD
$115 million (approximately $82.5 million), which includes the CAD $24.2 million (approximately $17.4 million) bridge loan, (ii) an accordion
facility of CAD $25 million (approximately $17.9 million) and (iii) the CAD $8 million (approximately $5.7million) revolving facility.

*Electric
Service Agreement with Duke Energy*

An
existing Electric Service Agreement (“ESA”) with Duke Energy Carolinas, LLC (“Duke Energy”) for the provision
of electric power to the facility located at 805 Island Drive, Madison, North Carolina was assigned to WhiteFiber’s wholly owned
subsidiary, Enovum NC-1 Bidco LLC, from Unifi as of August 4, 2025.

The
ESA establishes a minimum monthly bill for electric service, based on Duke Energy’s Rate of $8,754, irrespective of actual usage
levels. In addition to standard service, Duke Energy has installed and maintains “Extra Facilities” (including overhead lines,
substations, transformers, breakers, and metering equipment). The cost of these Extra Facilities totals approximately $1,137,975, for
which WhiteFiber pays a monthly facilities charge of $11,405.

The
ESA represents a continuing commitment to purchase power at or above the established minimum levels throughout the contract term. As
such, WhiteFiber is obligated to pay the minimum monthly charges regardless of operational activity.

Under
the termination clause, either party may cancel the ESA with at least 60 days’ written notice. In the event of early termination,
WhiteFiber remains liable for all amounts due under the ESA through the termination date and may incur additional charges associated
with the Extra Facilities if service is discontinued prior to the expiration of the facilities term.

As
of March 31, 2026, management has no present intention to reduce operations at Madison or terminate the ESA. Accordingly, no liability
has been recognized in the financial statements in connection with the ESA.

46

**22.
 SUBSEQUENT EVENTS**

*At
the market offering*

Subsequent to March 31, 2026, the Company sold 22,761,994 ordinary
shares for aggregate proceeds of approximately $34.6 million pursuant to the at-the-market offering agreement with H.C. Wainwright &
Co., LLC. The Company received net proceeds of $33.9 million, net of offering costs.

*Iceland
Facility Agreement*

On April
24, 2026, WhiteFiber drew down $18.0 million under its existing credit facility with Landsbankinn hf. See Note 12. *Debt* for additional
information.

*Amendment
to RBC Facility Agreement*

On
April 27, 2026, WhiteFiber entered into an amended credit agreement with RBC that provides for an authorized credit facility of CAD $28
million (approximately $20 million). The proceeds have been used for the acquisition of the MTL-3 facility which was closed on May 8,
2026. For further details, refer to Note 21. *Commitments and Contingencies*.

**Forward
Looking Statements**

*The
discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed financial
statements and the related notes included elsewhere in this report. Except for the statements of historical fact, this report contains
“forward-looking information” and “forward-looking statements reflecting our current expectations that involve risks
and uncertainties (collectively, “forward-looking information”) that is based on expectations, estimates and projections
as at the date of this Form 10-Q. All statements, other than statements of historical fact, included herein are “forward-looking
statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,”
“intends,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the
Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks
and uncertainties, and these expectations may prove to be incorrect. Investing in our securities involves a high degree of risk. Before
making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under
“Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report) and any
subsequently filed Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. Investors should not place undue reliance on these
forward-looking statements, which speak only as of the date of this report.* 

*The
following discussion may contain forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s
actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors,
including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available
on its website at http://www.sec.gov. If any material risk were to occur, our business, financial condition or results of operations
would likely suffer. In that event, the value of our securities could decline and you could lose part of all of your investment. Additional
risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial
performance may not be a reliable indicate of future performance, and historical trends should not be used to anticipate results in the
future. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety
by these factors. Other than as required under the securities laws, the company does not assume a duty to update these forward-looking
statements.*

47

**Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.**

*The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed
consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended
March 31, 2026 as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our
Form 10-K for the year ended December 31, 2025 (“Form 10-K”). This discussion contains forward-looking statements reflecting
our current expectations that involve risks and uncertainties. See “Forward Looking Statements and Risk Factor Summary” for
a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could
differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under
“Risk Factors” and elsewhere in this Quarterly Report.*

**Overview**

Bit
Digital, Inc. (“BTBT” or the “Company” or “We”), is a holding company incorporated on February
17, 2017, under the laws of the Cayman Islands. The Company is a strategic asset company focused on active participation in Ethereum
(ETH)-native treasury and staking strategies. Through our majority equity stake in WhiteFiber Inc. (Nasdaq: WYFI), the Company also engages
in high performance computing (“HPC”) business, including cloud services and HPC data center services.

**HPC
Business**

The
Company’s HPC business operates under the WhiteFiber brand. WhiteFiber believes it is a leading provider of artificial intelligence
(“AI”) infrastructure solutions. WhiteFiber owns high-performance computing (“HPC”) data centers and provides
cloud-based HPC graphics processing units (“GPU”) services, which it terms cloud services, for customers such as AI application
and machine learning (“ML”) developers (the “HPC Business”). Its Tier-3 data centers provide hosting and colocation
services. WhiteFiber cloud services support generative AI workstreams, especially training and inference.

WhiteFiber’s
business model integrates its data center infrastructure and cloud services to provide scalable, high-performance computing solutions
for enterprises, research institutions, and AI and ML driven businesses. Its integrated approach aligns specialized data center operations
with GPU-focused cloud services, addressing the unique requirements of AI and ML workloads. These workloads demand greater power density,
advanced cooling solutions, and robust bandwidth to handle large-scale data transfers. By operating its data centers, it is able to provide
the power to support its cloud services and WhiteFiber believes it can better meet the needs of AI and ML workloads and reduce the complexity
associated with procuring power and connectivity from external vendors. WhiteFiber can also design its facilities to accommodate the
higher heat loads generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of
their computing infrastructure. From a financial standpoint, WhiteFiber’s vertically integrated solution allows it to capture additional
margin for both its data center and cloud services businesses, avoiding expenses that would otherwise be due to third-party providers.

*Colocation/Data
center services*

WhiteFiber
designs, develops, and operates data centers, through which it offers its hosting and colocation services. WhiteFiber’s operational
data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible
power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than
1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density
and robust bandwidth, and infrastructure to support AI workloads.

Based
on their collective industry experience, WhiteFiber’s data center team is adept at bringing new sites online on an accelerated
timeline. WhiteFiber is aggressively pursuing the development pipeline and intend to achieve an estimated 76 MW (gross) of total data
center capacity by the end of the fourth quarter of 2026, a target that is underpinned by assets including the MTL-2, MTL-3, and NC-1
facilities. As of March 31, 2026, its pipeline of potential data center projects represents approximately 1,500 MW (gross) under management
review. WhiteFiber follows a disciplined process prioritizing projects that are backed by customer lease commitments. In select cases,
WhiteFiber may pursue early-stage acquisitions based on strong customer demand signals and defined commercialization pathways. Accordingly,
the foregoing timelines and capacities are subject to change based on many factors, many of which are outside of WhiteFiber’s control.

48

WhiteFiber
uses a well-defined set of criteria to select their data center sites. WhiteFiber typically target sites with proximity to metro areas
and partial infrastructure in place, where it is retrofitting rather than developing greenfield projects. Metropolitan areas are positioned
for low-latency to address long-term, specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing
and acquiring an existing industrial building with underutilized, in-place power connectivity. The period of time from when a site is
purchased until construction can begin varies from location to location depending upon, among other things, obtaining required permits
and the availability of construction supplies and contractors. Average build time for retrofits is intended to be approximately six months
from commencement of construction, which WhiteFiber believes is approximately one-third to one-half of the industry average development
timeline for greenfield projects. This average building time is based upon senior management’s experience at Enovum prior to its
acquisition by the Company, as well as their experience prior to Enovum. WhiteFiber also prioritize sites offering opportunities to increase
site power over time, enabling its data centers to grow with customer demand. In addition, WhiteFiber selectively targets certain larger
opportunities with 50 MW (gross) of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, WhiteFiber
prioritize sites powered by sustainable, green energy sources and locked-in power when available. Additionally, to enhance sustainability
of certain WhiteFiber data center projects, WhiteFiber is undertaking heat repurposing projects in connection with sustainability and
commercial and residential projects.

WhiteFiber
acquired Enovum on October 11, 2024. The transaction included the lease of MTL-1, its 4 MW (gross) Tier-3 high-performance computing
(“HPC”) data center in Montreal, Canada, which was fully operational and fully leased to customers at the time of acquisition.

On
December 27, 2024, WhiteFiber acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center expansion project
near Montreal, Canada which it refers to as MTL-2. MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing
facility, is located in Pointe-Claire, Quebec. WhiteFiber initially funded the purchase of CAD 33.5 million (approximately $23.3 million)
with cash on hand. WhiteFiber expected to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial
load of 5 MW (gross). However, WhiteFiber has prioritized other builds and preserved capital for more time sensitive projects.

On
April 11, 2025, WhiteFiber entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, MTL-3. The
MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed into a 7 MW (gross) Tier-3 data center. It
will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals.
The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately
$17.3 million) exercisable by December 2025. The lease term is 20 years, with two 5-year extensions at the Company’s option. In
December 2025, WhiteFiber became reasonably certain to exercise the purchase option and notified the lessor of its intent to exercise
the purchase option. WhiteFiber had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised
on January 14, 2026 and the purchase of MTL-3 closed on May 8, 2026. The facility has been retrofitted to Tier-3 standards and was completed
and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately
979 thousand USD) monthly for the duration of the five-year contract.

On May 20, 2025, WhiteFiber completed the purchase
of a former industrial/manufacturing building from UMI. Pursuant to the Purchase Agreement WhiteFiber agreed to purchase from UMI, an
industrial/manufacturing building together with the underlying land located in Madison, North Carolina, which WhiteFiber refers to as
“NC-1”, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase
price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at
least 99 MW (gross) within two years of May 20, 2025, or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services
Agreement providing for, at least 99 MW (gross) more than two years but less than three years after May 20, 2025. Additionally, the purchase
price will increase by an additional $200,000 per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually
delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of May
20, 2025. Separately, the Company entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially
reasonable efforts to achieve 24 MW (gross) of service to NC-1 by September 1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross)
within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study,
that NC-1 may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure
upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco LLC, a subsidiary of WhiteFiber,
entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum
assumed Unifi’s rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke
Energy consented to the assignment. Refer to Note 21. *Commitments and contingencies* to our condensed consolidated financial statements
for further detail.

49

*RBC
Facility Agreement Executed on June 18, 2025*

On
June 18, 2025, WhiteFiber entered into the Credit Facility with RBC. The Credit Facility provides for an aggregate of up to approximately
CAD 60 million (approximately $43.8 million) of financing. The proceeds are to be used primarily to refinance the buildout of MTL-2 as
well as $5.8 million of revolving term financing (the “Revolver”). The Credit Facility is non-recourse to the Company. WhiteFiber
entered into a three-year USD $18.5 million non-revolving lease facility to finance equipment costs and building improvements to build
out the site. The lease facility provides for straight-line amortization of six years and capital moratorium of six months after disbursement
is complete. RBC may cancel any unutilized portion of the Credit Facility after March 31, 2026. The interest rate is fixed based on the
rental rate determined by RBC for the three-year term of the lease.

As
part of the Credit Facility, WhiteFiber entered into a three-year $19.6 million non-revolving real estate term loan facility. The purpose
of this facility is to refinance WhiteFiber’s purchase of MTL-2. The interest rate of the real estate term loan facility will be
determined at the time of borrowing, or a floating interest rate ranging from RBP plus 0.75% to CORRA (“Canadian Overnight Repo
Rate Average”) plus 250 bps. Payment of principal and interest is due 30 days after drawdown and is repayable in full on the last
day of the three-year term.

The
Revolver is being provided by RBC by way of Letters of Credit and Letters of Guaranty with fees to be determined on a transaction by
transaction basis. This facility will be available for the 36 month term subject to the issuance of the EDC (Export and Development Canada)
Performance Security Guaranty in the amount of $5.8 million and other related supporting documents. WhiteFiber agreed to certain financial
covenants included maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than 1.20:1 and a ratio
of Net Funded Debt to EBITDA of not greater than 4.25:1 and decreasing to 3.50:1 from December 31, 2027.

*RBC
Facility Agreement amended on April 27, 2026*

On
April 27, 2026, WhiteFiber entered into an amended credit agreement with RBC. This agreement replaces the original credit agreement dated
June 18, 2025, as subsequently amended on July 4, 2025. The amended credit agreement provides for an authorized credit facility of CAD
$28 million (approximately $20 million). The proceeds have been used as a real estate acquisition bridge loan to finance the acquisition
of the MTL-3 facility, at a purchase price of CAD $24.2 million (approximately USD $17.4 million). The closing date occurred on May 8,
2026.

Borrowings
under the facility bear interest, at WhiteFiber’s option, at either Daily Simple CORRA plus 2.75% per annum or Royal Bank Prime
plus 1.00% per annum, with the prime-based rate serving as the default option.

The
facility has a six-month term from the date of drawdown and requires interest-only payments during the term, with the outstanding principal
due in full at maturity. The specific borrowing terms are established at the time of each drawdown pursuant to a borrowing request submitted
by WhiteFiber and accepted by the lender.

Additionally,
RBC is providing a CAD $8 million (approximately $5.8 million) revolving facility in the form of Letters of Credit and Letters of Guarantee.
The fees will be determined on a transaction-by-transaction basis, and the facility will be available for a 12-month term.

WhiteFiber
has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio.

50

As
of the reporting date, the April 27, 2026 bridge loan has been authorized and funded by RBC for the MTL-3 facility acquisition. WhiteFiber
and RBC are currently in discussions regarding new syndicated credit facilities, including i) a delayed draw term loan facility of CAD
$115 million (approximately $82.5 million), which includes the CAD $24.2 million (approximately $17.4 million) bridge loan ii) an accordion
facility of CAD $25 million (approximately $17.9 million) and iii) the CAD $8 million (approximately $5.7million) revolving facility.

*Nscale
Services Agreement*

In November 2025, WhiteFiber’s wholly owned
subsidiary, Enovum NC-1 Bidco, LLC, entered into the Services Agreement with Nscale Services US Inc. and Nscale Global Holdings Limited
(collectively, “Nscale”) for the provision of colocation and related services at its NC-1 facility. The agreement represents
a significant commercial milestone for the high-density data center platform and provides long-term contracted revenue visibility. The
initial Service Order pursuant to the Services Agreement represents approximately $865 million in total contracted revenue over a 10-year
term, inclusive of contractual annual rate escalators and non-recurring installation services (“NRCs”). Electricity and certain
other operating costs are structured as pass-through charges to Nscale. Billing is expected to commence during the second quarter, subject
to completion of construction and commissioning. As a result, WhiteFiber expects full revenue contribution from this agreement to begin
during the third quarter of 2026 as the facility reaches its contractual capacity.

*Cloud
Services*

WhiteFiber
provides specialized cloud services to support generative AI workstreams, especially training and inference, emphasizing cost-effective
utility and tailor-made solutions for each client. WhiteFiber is an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network
(“NPN”), an authorized partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider (“CSP”)
with Dell (through Dell’s exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and
a commercial relationship with Quanta Computer Inc. (“QCT”). Based on management’s knowledge of the industry, WhiteFiber
is proud to be among the first service providers to offer H200, B200, and GB200 servers. WhiteFiber provides a high-standard service
lease with an Uptime percentage> 99.5%.

WhiteFiber
expects to leverage a global network of data centers for hosting capacity for its GPU business, in many instances, by negotiating with
third-party providers to seamlessly integrate its cloud services at data centers across key regions in Europe, North America and Asia.
WhiteFiber’s initial data center partnership through which it leases capacity is at Blönduós Campus, Iceland, offering
a world-class operations team with certified technicians and reliable engineers. The facility has a 45 kW rack density and 6 MW (gross)
total capacity. WhiteFiber has executed contracts for 5.5 MW IT load at the data center. The center’s energy source is 100% renewable
energy, mainly from Blanda Hydro PowerStation, the winner of an IHA Blue Planet Award in 2017. In addition, WhiteFiber has leased additional
capacity to install our data center in Atlanta, Georgia, USA to expand its cloud services offering. The capacity leases commenced in
February 2026. WhiteFiber also intend to lease additional capacity to expand its cloud services offering.

In
April 2025, WhiteFiber received its first shipment of NVIDIA GB200 Grace Blackwell Superchip powered NVIDIA GB200 NVL72 system chips,
from Quanta Cloud Technology, a leading provider of data center solutions. WhiteFiber believes that support with proof of concept (POC)
access from Quanta will enable it to meet and exceed expectations around delivery and timeline, performance and reliability.

The
following summaries reflect selected GPU cloud service agreements that WhiteFiber considers to be material or representative. WhiteFiber
has entered into additional agreements that are not individually material and are not included below.

On
October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the “Initial
Customer”) to support the customer’s GPU workloads. On December 12, 2023, WhiteFiber finalized a Master Services and Lease
Agreement (“MSA”), as amended, with its Initial Customer for the provision of cloud services from a total of 2,048 GPUs over
a three-year period. To finance this operation, WhiteFiber entered into a sale-leaseback agreement with a third party, selling 96 AI
servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated
2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent
to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately
an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.

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In
the second quarter of 2024, WhiteFiber finalized an agreement to supply its Initial Customer with an additional 2,048 GPUs over a three-year
period. To finance this operation, WhiteFiber entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers
(equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer’s request, WhiteFiber agreed with
the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently,
WhiteFiber and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million
for the services to be rendered under this agreement.

In
January 2025, WhiteFiber entered into a new agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months.
This new agreement replaces the prior agreement whereby WhiteFiber was to provide the customer with an incremental 2,048 H100 GPUs. The
contract represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. The customer
elected to defer the commencement date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced
on August 20, 2025, using WhiteFiber’s inventory of B200 GPUs.

In
October 2025, Bit Digital’s existing guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November
2025, the customer will provide a service deposit to WhiteFiber in lieu of the Bit Digital parent guaranty. The deposit will be funded
through fifteen consecutive monthly payments of approximately $0.24 million each, totaling $3.6 million, payable from November 2025 through
January 2027. The deposit will serve as security for the customer’s performance obligations under the amended service agreements.
Each monthly payment is expected to be invoiced on the first day of the month and paid within thirty days. WhiteFiber will be required
to return the deposit in cash upon termination or expiration of the service agreements, provided that all obligations have been fully
satisfied and no payment defaults or material breaches exist.

As
of the date of this Form 10-Q, WhiteFiber and the Initial Customer are engaged in discussions regarding a potential resolution of the
existing service agreements following the agreed pause of services. No definitive termination or settlement agreement has been executed.
In connection with these discussions, the parties are negotiating the treatment of the remaining non-refundable prepayment, service deposit,
outstanding receivables, and a potential early termination fee, which WhiteFiber believes would be equal to 40% of the fees that would
have accrued for services during the remainder of the term of the MSA and applicable purchase orders. Following the service pause, WhiteFiber
has redeployed the GPUs previously allocated to the Initial Customer to three other customers and continues to evaluate the related financial
and operational implications. There can be no assurance as to the timing, terms, or final outcome of these discussions.

On November 6, 2024, WhiteFiber entered into
a Master Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order,
from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six-month period,
representing total contracted value of approximately $160,000 for the term. The deployment commenced on November 7, 2024, using WhiteFiber’s
existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, WhiteFiber
signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, which were terminated in January 2026.

In
February 2026, WhiteFiber entered into another service order with the customer to provide services utilizing a total of 10 H200 GPU servers.
The service order has an initial term of 14 months beginning on the services commencement date. The service order represents an aggregate
revenue opportunity of approximately $1.3 million. The deployment and revenue generation began in March 2026.

In
March 2026, WhiteFiber entered into another service order with the customer to provide services utilizing a total of 256 H100 GPU servers.
The service order has an initial term of 24 months beginning on the services commencement date, with an option to renew for an additional
twelve months. The service order represents an aggregate revenue opportunity of approximately $50.2 million. The deployment and revenue
generation is expected to begin in April 2026.

52

On
December 30, 2024, WhiteFiber entered into a Master Services Agreement (“MSA”) with an AI Compute Fund managed by DNA Holdings
Venture Inc. (“DNA Fund”). The MSA had a minimum purchase commitment of 32 GPUs, along with an associated purchase order.
The purchase order provides for services utilizing a total of 576 H200 GPUs over a 25-month period and terminable by either party upon
at least 90 days’ written notice prior to any renewal date. Concurrently, WhiteFiber placed a purchase order for 130 H200 servers
for approximately $30 million. The deployment commenced in February 2025.

In
April 2025, WhiteFiber signed two additional cloud services agreements with DNA Fund. The first agreement includes 104 NVIDIA H200 GPUs
under a 23-month term and was deployed in May 2025. The second agreement includes 512 H200 GPUs under a 24-month term and was deployed
in July 2025. With these additions, DNA Fund’s total contracted deployment increased to 1,192 GPUs.

In
November 2025, WhiteFiber terminated the MSA and all related purchase orders with DNA Fund in accordance with the terms of the contract.
At the time of termination, WhiteFiber had approximately $7.3 million in outstanding accounts receivable. Pursuant to the termination
agreement, the customer agreed to repay the outstanding balance. As of the date of this Form 10-Q, WhiteFiber has collected $2.2 million
of the outstanding amount.

On
January 6, 2025, WhiteFiber entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 32 GPUs,
along with an associated purchase order, from a new customer. The purchase order provided for services utilizing a total of 32 H200 GPUs
over a minimum of six-month period, representing total revenue of approximately $300,000 for the term. The deployment commenced and revenue
generation began on January 8, 2025, using WhiteFiber’s existing inventory of H200 GPUs. The service under the purchase order concluded
in April 2025 following a change in the customer’s ownership, and the customer paid the remaining contract value as an early termination
penalty.

In
January 2025, WhiteFiber entered into a Master Services Agreement (“MSA”), along with two associated purchase orders, from
a new customer. The purchase orders provide for services utilizing a total of 24 H200 GPUs over a minimum 12-month period, representing
total revenue of approximately $450,000 for the term. The deployment commenced and revenue generation began on January 27, 2025, using
WhiteFiber’s existing inventory of H200 GPUs. The service under the purchase order concluded in March 2025 after the customer ceased
operations.

On January 30, 2025, WhiteFiber entered into
a Master Services Agreement (“MSA”) with a minimum purchase commitment of 40 GPUs, along with an associated purchase order,
from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing
total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using
WhiteFiber’s existing inventory of H200 GPUs. In October 2025, the purchase order was amended to reduce the number of H200 GPUs
from 40 to 8 and to extend the term of service through May 2027. This contract was terminated in January 2026. Between April and July
2025, WhiteFiber signed four additional agreements on a month-to-month basis for a total of 184 H200 GPUs, which were terminated in August
2025.

In
March 2025, WhiteFiber entered a strategic partnership with Shadeform, Inc., the premier multi-cloud GPU marketplaces, to bring on-demand
NVIDIA B200 GPUs to customers beginning in May 2025.

In
August and September 2025, WhiteFiber entered into three service orders with a new customer. Each order form provides for services utilizing
a total of 64 B200 GPUs on a weekly basis, which either party may terminate by not extending it with mutual written agreement. In September,
the customer renewed one order form for an additional week for services utilizing a total of 64 B200 GPUs. As of the reporting date,
no additional renewals have occurred.

In
September 2025, WhiteFiber entered into a service order with a new customer, which provides services utilizing a total of 16 B200 GPUs
on a monthly basis, automatically renewing for an additional one month period unless and until otherwise terminated upon at least seven
days’ prior written notice. The deployment commenced and revenue generation began on September 23, 2025. The agreement was not
renewed after the initial term.

In
October 2025, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 48 H200 GPUs. The
service order had an initial term of 36 months. The deployment commenced and revenue generation began on October 21, 2025. The contract
was terminated in December 2025.

53

In October 2025, WhiteFiber entered into a two-week
service order with a new customer to provide services utilizing a total of 72 B200 GPUs. In January 2026, WhiteFiber entered into an
additional two-week service order with this customer for 72 B200 GPUs. These contracts were terminated as of February 2026.

In
February 2026, WhiteFiber entered into a further service order with this customer to provide services utilizing a total of 384 B200 GPUs.
This service order has an initial term of 24 months commencing on the service commencement date, after which it will automatically renew
for successive one-month periods unless terminated by either party. The service order represents an aggregate revenue opportunity of
approximately $18.1 million. Deployment and revenue generation commenced on January 27, 2026.

In
November 2025, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 128 B200 GPUs. The
service order has an initial term of 12 months, representing total contracted value of approximately $3.0 million, after which it automatically
renews for successive one-month periods unless terminated by either party. Deployment and revenue generation began on December 1, 2025.

In
February 2026, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 256 GPUs. The service
order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive
one-month periods unless terminated by either party. The deployment and revenue generation began on February 1, 2026.

In
March 2026, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 72 GB200 GPUs. The service
order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive
one-month periods unless terminated by either party. The deployment and revenue generation began on March 7, 2026.

In
February 2026, WhiteFiber entered into a service order with a new customer to provide services utilizing a total of 80 H200 GPUs. The
service order has an initial term of 12 months beginning on the services commencement date. The deployment and revenue generation began
on February 1, 2026.

In
August 2024, WhiteFiber executed a binding term sheet with Boosteroid Inc. (“Boosteroid”), a global cloud gaming provider
pursuant to which, WhiteFiber finalized initial orders of 489 GPUs, projected to generate approximately $7.9 million in contracted value
in the aggregate through November 2029. The GPUs were delivered to respective data centers across the U.S. and Europe and began earning
fees in November 2024. On October 9, 2024, WhiteFiber executed a Master Services and Lease Agreement (the “MSA”) with Boosteroid,
pursuant to which Boosteroid may, from time to time, lease certain equipment, including GPUs, from the Company upon delivery of a purchase
order. The MSA provides the general terms and conditions for such equipment leases. Pursuant to the MSA, WhiteFiber is granted a right
of first refusal with respect to the next 5,000 servers that Boosteroid leases during the term of the MSA. The MSA provides Boosteroid
with the option to expand in increments of 100 servers, up to 50,000 servers, representing a potential contract value of approximately
$700 million over the five-year term assuming Boosteroid utilizes the GPUs and services at full capacity for the duration of the contract.
Expansion depends upon the internal development roadmap of Boosteroid, Boosteroid has full discretion to decide when and the quantity
to pursue separate source orders (for GPU servers) under the MSA. In the third quarter of 2025, WhiteFiber finalized additional purchase
orders for 302, 120, and 279 GPUs, totaling approximately $10.4 million in contracted value over a five-year term. 

54

**Digital
Asset Business**

The
digital asset business is comprised primarily of two distinct but highly complementary operations: (i) ETH staking (the “ETH Staking
Operations”); and (ii) digital asset mining (the “Digital Asset Mining Operations”).

In
June 2025, the Company announced that it had initiated a strategic transition to become a pure play ETH staking and treasury company.
In connection with the transition, the Company has been converting its BTC holdings into ETH over time and has been winding
down its bitcoin mining operations, with any net proceeds to be re-deployed into ETH.

*ETH Staking Business*

In the fourth quarter of 2022, we formally commenced
Ethereum staking operations. We delegate or stake our ETH holdings to an Ethereum validator node to help secure and strengthen the blockchain
network. Stakers are compensated for this commitment in the form of a reward of the native network token.

We initiated our native staking operations with
MarsLand Global Limited (“MarsLand”) in August 2023. Subsequently, we have ceased our native staking with MarsLand in the
first quarter of 2024 and initiated our native staking with Figment Inc.

We started participating in liquid staking via
Liquid Collective protocol on the Coinbase platform in the first quarter of 2023. Liquid staking allows participants to achieve greater
capital efficiency by utilizing their staked ETH as collateral and trading their staked ETH tokens on the secondary market. In the first
quarter of 2024, we have reclaimed all the liquid staked ETH from Liquid Collective protocol. In July 2025, we resumed liquid staking
through the Liquid Collective protocol with 5,120 ETH. This approach provided flexibility to engage in both staking and restaking through
a broader range of strategies and platforms. Subsequently, we ceased our liquid staking activities with Liquid Collective protocol in
October 2025.

*Digital
Asset Mining Business*

We
commenced our bitcoin (“BTC”) mining business in February 2020. We initiated limited Ethereum mining operations in January
2022, however discontinued the operations by September 2022 due to Ethereum blockchain switching from proof-of-work (“PoW”)
consensus mechanism to proof-of-stake (“PoS”) validation. Our mining operations, hosted by third-party providers, use specialized
computers, known as miners, to generate digital assets. Our miners use application specific integrated circuit (“ASIC”) chips.
These chips enable the miners to apply high computational power, expressed as “hash rate”, to provide transaction verification
services (generally known as “solving a block”) which helps support the blockchain. For every block added, the blockchain
provides an award equal to a set number of digital assets per block. Miners with a greater hash rate generally have a higher chance of
solving a block and receiving an award.

We
operate our mining assets with the primary intent of accumulating digital assets which we may sell for fiat currency from time to time
depending on market conditions and management’s determination of our cash flow needs, and/or exchange into ETH or USD Coin (“USDC”).
Our mining strategy has been to mine bitcoins as quickly and as many as possible given the fixed supply of bitcoins. In view of historically
long delivery lead times to purchase miners from manufacturers like Bitmain Technologies Limited (“Bitmain”) and MicroBT
Electronics Technology Co., Ltd (“MicroBT”), and other considerations, we have chosen to acquire miners on the spot market,
which can typically result in delivery within a relatively short time.

We
have signed service agreements with third-party hosting partners in North America and Iceland. These partners operate specialized mining
data centers, where they install and operate the miners and provide IT consulting, maintenance, and repair work on site for us. Our mining
facilities in New York are maintained by Digihost Technologies Inc. (“Digihost”). Our mining facilities in Texas are maintained
by Dory Creek, LLC, a subsidiary of Bitdeer Technologies Group (“Bitdeer”) and Digital Energy Partner LLC (“DEP”).
Soluna Computing, Inc. and DVSL ComputeCo, LLC (collectively, “Soluna”) previously maintained our mining facilities in Kentucky
and Texas, and GreenBlocks ehf, an Icelandic private limited company (“GreenBlocks”), previously maintained our mining facility
in Iceland. The Company’s partnership with Soluna and GreenBlocks concluded at the end of February 2026.

55

From
time to time, the Company may change partnerships with hosting facilities to recalibrate its bitcoin mining operations. These terminations
are strategic, targeting reduced operational costs, enhanced energy efficiency for a smaller carbon footprint, increased flexibility
in operational control, and minimized geopolitical risks. While a short-term decrease in mining output might occur, we expect these changes
to yield long-term operational improvements.

We
are a sustainability-focused digital asset mining company. On June 24, 2021, we signed the Crypto Climate Accord, a private sector-led
initiative that aims to decarbonize the crypto and blockchain sectors. On December 7, 2021, we became a member of the Bitcoin Mining
Council (“BMC”), joining MicroStrategy and other founding members to promote transparency, share best practices, and educate
the public on the benefits of bitcoin and bitcoin mining.

*Miner
Deployments*

During
the three months ended March 31, 2026, we continued to work with our hosting partners to deploy our miners in North America.

As
of March 31, 2026, the Company’s active hash rate totals approximately 1.1 EH/s, with operations in North America.

*Power
and Hosting Overview*

The
Company’s subsidiary, Bit Digital Canada, Inc., entered into a Mining Services Agreement effective September 1, 2022, for Blockbreakers,
Inc. to provide five (5) MW of incremental hosting capacity at its facility in Canada. The facility utilizes an energy source that is
primarily hydroelectric.

On
May 8, 2023, the Company entered into a Master Mining Services Agreement with Blockbreakers, pursuant to which Blockbreakers agreed to
provide the Company with four (4) MW of additional mining capacity at its hosting facility in Canada. The agreement is for two (2) years
automatically renewable for additional one (1) year terms unless either party gives at least 60 days’ advance written notice. The
performance fee is 15% of the net profit. This new agreement brought the Company’s total contracted hosting capacity with Blockbreakers
to approximately 9 MW. Our service agreement with Blockbreakers expired in November 2024. A portion of the miners were transferred to
other hosting facilities, and the inefficient units were sold.

On
June 7, 2022, we entered into a Master Mining Services Agreement (the “MMSA”) with Coinmint LLC, pursuant to which Coinmint
will provide the required mining colocation services for a one-year period automatically renewing for three-month periods unless earlier
terminated. The Company will pay Coinmint electricity costs, plus operating costs required to operate the Company’s mining equipment,
as well as a performance fee equal to 27.5% of the net profit, subject to a 10% reduction if Coinmint fails to provide uptime of 98%
percent or better for any period. We are not privy to the emissions rate at the Coinmint facility or at any other hosting facility. However,
the Coinmint facility operated in an upstate New York region that reportedly utilized power that is 99% emissions-free, as determined
based on the 2023 Load & Capacity Data Report published by the New York Independent System Operator, Inc. (“NYISO”).

On
April 5, 2023, the Company entered into a letter agreement and MMSA Amendment, as subsequently amended, with Coinmint pursuant to which
Coinmint agreed to provide the Company with up to ten (10) MW of additional mining capacity to energize the Company’s mining equipment
at Coinmint’s hosting facility in Plattsburgh, New York. The agreement is for two (2) years automatically renewing for three (3)
months unless terminated by either party on at least ninety (90) days prior written notice. The performance fees under this letter agreement
range from 30% to 33% of the net profit. This new agreement brings the Company’s total contracted hosting capacity with Coinmint
to approximately 30 MW at this facility.

56

On
April 27, 2023, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide
the Company with up to 10 MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting
facility in Massena, New York. The agreement was for one year automatically renewing for three (3) months unless terminated by either
party on at least 90 days prior written notice. The performance fees under this letter agreement are 33% of the net profit. This new
agreement brought the Company’s total contracted hosting capacity with Coinmint to approximately 40 MW.

On
January 26, 2024, the Company entered into a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide
the Company with up to six MW of additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting
facility in Massena, New York. The agreement was for one year automatically renewing for three months unless terminated by either party
on at least 90 days prior written notice. The performance fees under this letter agreement are 28% of the net profit. This agreement
brought the Company’s total contracted hosting capacity with Coinmint to approximately 46 MW.

On
September 5, 2024, the Company received a 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which
informed the Company of its intent not to renew 27 MW of the 36 MW total contracted capacity at its Massena, New York site, effective
December 7, 2024. Subsequently, on October 29, 2024, the Company received an additional 90-days notice of non-renewal of colocation mining
services agreement from Coinmint, which informed the Company of its intent to not renew the remaining 9 MW of the 36 MW total contracted
capacity at its Massena, New York site, effective January 28, 2024. On January 3, 2025, the Company received an additional 90-days notice
of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent not to renew the 10 MW
total contracted capacity at its Plattsburgh, New York site, effective April 5, 2025. After the contracts with Coinmint expired, a portion
of the miners were transferred to other hosting facilities, and the inefficient units were sold.

In
June 2021, we entered into a strategic co-mining agreement with Digihost Technologies in North America. Pursuant to the terms of the
agreement, Digihost provides certain premises to Bit Digital for the purpose of the operation and storage of a twenty (20) MW bitcoin
mining system to be delivered by Bit Digital. Digihost provides services to maintain the premises for a term of two (2) years. Digihost
shall also be entitled to 20% of the net profit generated by the miners.

In April 2023, we renewed the co-mining agreement
with Digihost, previously executed in June 2021. Pursuant to the terms of the new agreement, Digihost provides certain premises to Bit
Digital for the purpose of the operation and storage of an up to 20 MW bitcoin mining system to be delivered by Bit Digital. Digihost
also provides services to maintain the premises for a term of two years, automatically renewing for a period of one (1) year. Digihost
shall also be entitled to 30% of the net profit generated by the miners. As of March 31, 2026, Digihost provided approximately 6.0 MW
of capacity for our miners at their facility. Our partnership with Digihost concluded in May 2026, and the Company is currently evaluating
alternative hosting arrangements for the miners previously deployed at the Digihost facility.

On
May 9, 2023 (“Effective Date”), the Company entered into a Term Loan Facility and Security Agreement (the “Loan Agreement”)
with GreenBlocks. Pursuant to the Loan Agreement, GreenBlocks has requested the Company to extend one or more loans (“Advances”)
under a senior secured term loan facility in an aggregate outstanding principal amount not to exceed $5 million. The interest rate of
the Loan Agreement is 0% and Advances are to be repaid on the maturity date, which is the thirty-nine-month anniversary of the Effective
Date. GreenBlocks will exclusively use the Advances to buy miners that will be operated for the benefit of the Company at a facility
in Iceland, with an overall capacity of 8.25 MW. To secure the prompt payment of Advances, the Company has been granted a continuing
first priority lien and security interest in all of GreenBlocks’s rights, title and interest to the financed miners. The miners
are the sole property of GreenBlocks, of which they are responsible for the purchase, installation, operation, and maintenance.

57

On
May 9, 2023, the Company entered into a Computation Capacity Services Agreement (the “Services Agreement”) with GreenBlocks.
Pursuant to the Agreement, GreenBlocks will provide computational capacity services and other necessary ancillary services, such as operation,
management, and maintenance, at the facility in Iceland for a term of two years. GreenBlocks will own and operate the miners financed
through the Loan Agreement for the purpose of providing computational capacity of up to 8.25 MW. The Company will pay power costs of
$0.05 per kilowatt hour, a pod fee of $22,000 per pod per month, and a depreciation fee equal to 1/36 of the facility size per month.
The performance fees under this agreement are 20% of the net profit. The Company submitted to Greenblocks a deposit in the amount of
$1,052,100, which was exclusively for the purpose of paying the landlord of the facility for hosting space.

On
June 1, 2023, the Company and GreenBlocks entered the Omnibus Amendment to Loan Documents and Other Agreements (“Omnibus Amendment”).
This amendment revised both the Loan Agreement and the Services Agreement previously entered on May 9, 2023. While the core terms remained
consistent, notable modifications pertained to the facility size and contracted capacity. Specifically, the facility size was increased
from $5 million to $6.7 million. Moreover, GreenBlocks agreed to expand the computation capacity to approximately 10.7 MW. Advances of
$6.4 million have been financed by the Company to GreenBlocks.

In
May 2025, we amended the Services Agreement with Greenblocks, originally executed in May 2023 and previously amended in June 2023. Pursuant
to the terms of the amended agreement, Greenblocks shall provide services to support 8.9 MW of power capacity from March 1, 2025 through
April 30, 2025 and 5 MW of computational capacity starting May 1, 2025 through December 31, 2025. The Company will pay power costs of
$0.067 per kilowatt hour and a pod fee of $10,000 per pod per month, subject to pro rata adjustment if usage falls below 2 MW. All other
provisions of the original agreement and previous appendices remain in effect. The amended terms may be modified by mutual agreement,
and either party may terminate with one month’s notice. Our partnership with GreenBlocks concluded in February 2026, and the Company
is currently evaluating alternative hosting arrangements for the miners previously deployed at the GreenBlocks facility. As of the date
of this report, these miners are in storage.

In
October 2023, we entered into a strategic co-location agreement with Soluna Computing, Inc. for a term of one year automatically renewing
on a month-to-month basis unless terminated by either party. Pursuant to the terms of the agreement, Soluna provided certain required
mining colocation services at their hosting facility in Murray, Kentucky to the Company for the purpose of the operation and storage
of up to 4.4 MW bitcoin mining system to be delivered by Bit Digital. Soluna was also entitled to 42.5% of the net profit generated by
the miners. This agreement expired at the end of October 2024.

In
October 2024, we entered into a co-location agreement with Soluna SW, Inc. to continue our business relationship. Under this agreement,
Soluna provides certain required mining colocation services to the Company at their hosting facility in Murray, Kentucky for the purpose
of the operation and storage of bitcoin mining system to be delivered by the Company up to 6.6 MW (3.3 MW for terms of nine months and
3.3 MW for terms of one (1) year), automatically renewing on a month-to-month basis unless terminated by either party. Soluna shall also
be entitled to 35% of the net profit generated by the miners.

In
December 2024, we entered into two additional co-location agreements with Soluna DVSL ComputerCo, LLC. pursuant to which Soluna agreed
to provide the Company with up to 11 MW (5.5 MW and 5.5 MW, respectively) at their hosting facility in Silverton, Texas. Both agreements
are for one (1) year automatically renewing on a month-to-month basis unless terminated by either party on at least 60 days prior written
notice. Soluna shall also be entitled to 35% and 27.5%, respectively, of the net profit generated by the miners. These new agreements
bring the Company’s total contracted hosting capacity with Soluna to approximately 17.6 MW. Our partnership with Soluna concluded
in February 2026. The Company has since relocated approximately 2,050 miners to a third-party hosting facility and is evaluating alternative
deployment options for the remaining miners, which are currently in storage.

In
November 2023, we entered into a hosting services agreement, which was amended on March 7, 2024, with Dory Creek, LLC, a subsidiary of
Bitdeer Technologies Group (“Bitdeer”), for a term of one (1) year automatically renewing on an annual basis unless terminated
by either party by giving a 30-day prior notice to the other Party in writing. Pursuant to the terms of the agreement, Bitdeer provides
maintenance and operation services to Bit Digital to support 17.5 MW of capacity. Bitdeer shall also be entitled to 30% of the net profit
generated by the miners. Bit Digital shall have the first right, but not obligation, to accept services for any extra capacity under
the terms of this Agreement. As of March 31, 2026, Bitdeer provided approximately 15.5 MW of capacity for our miners at their facility.
Our partnership with Bitdeer will be concluded in mid-May 2026, and the Company is currently evaluating alternative hosting arrangements
for the miners previously deployed at the Bitdeer facility.

58

In
February 2025, we entered into two hosting services agreements with A.R.T. Digital Holdings Corp (“KaboomRacks”) for terms
of nine (9) months and three years automatically renewing on an annual basis unless terminated by either party. Pursuant to the terms
of the agreements, KaboomRacks provides maintenance and operation services to Bit Digital to support 6 MW and 13 MW of capacity. In accordance
with the agreements, we paid a refundable advance of $1.3 million, which will be applied against monthly hosting charges over an 18-month
period.

On
July 1, 2025, we entered into the first amendment to the hosting service agreement for 13 MW of capacity. The amendment modified the
existing agreement, identifying the two facilities that will provide maintenance and operations service to Bit Digital to support 5 MW
and 8 MW of capacity. KaboomRacks shall also be entitled to respective 40%, 14.75% and 22.5% of the net profit generated by the miners.
On November 12, 2025, we received communication regarding a change in the contracting entity under its existing hosting arrangements.
Effective immediately, Digital Energy Partners LLC (“DEP”) replaced KaboomRacks as the sole contracting counterparty. Under
the updated terms, KaboomRacks will return all deposits previously held by it, and we will remit a one-month deposit related to electricity
costs to DEP. In connection with the transition, DEP assumed the remaining portion of the $1.3 million loan, with an outstanding balance
of approximately $0.8 million as of March 31, 2026. As of March 31, 2026, DEP provided approximately 17.1 MW of capacity for our miners
at their facility.

In May 2022, our hosting partner Blockfusion
advised us that the substation at its Niagara Falls, New York facility was damaged by an explosion and fire, and power was cut off to
approximately 2,515 of the Company’s bitcoin miners and approximately 710 ETH miners that had been operating at the site immediately
prior to the incident. The explosion and fire are believed to have been caused by faulty equipment owned by the power utility. Blockfusion
and the Company have entered into a common interest agreement to jointly pursue any claims evolving from the explosion and fire. Prior
to the incident, our facility with Blockfusion in Niagara Falls, provided approximately 9.4 MW to power our miners. Power was restored
to the facility in September 2022. However, we received a notice dated October 4, 2022 (the “Notice”), from the City of Niagara
Falls, which ordered the cease and desist from any cryptocurrency mining or related operations at the facility until such time as Blockfusion
complies with Section 1303.2.8 of the City of Niagara Falls Zoning Ordinance (the “Ordinance”), in addition to all other
City ordinances and codes. Blockfusion has advised us that the Ordinance came into effect on October 1, 2022, following the expiration
of a related moratorium on September 30, 2022. Blockfusion has further advised that it has submitted applications for new permits based
on the Ordinance’s new standards and that the permits may take several months to process. Pursuant to the Mining Services Agreement
between Bit Digital and Blockfusion dated August 25, 2021, Blockfusion represents, warrants and covenants that it “possesses, and
will maintain, all licenses, registrations, authorizations and approvals required by any governmental agency, regulatory authority or
other party necessary for it to operate its business and engage in the business relating to its provision of the Services.” On
October 5, 2022, Bit Digital further advised Blockfusion that it expects it to comply with the directives of the Notice. Our service
agreement with Blockfusion ended in September 2023. Legal proceedings involving Blockfusion are currently ongoing. See Note 21. *Commitments
and contingencies* to our condensed consolidated financial statements for further information.

*Miner
Fleet Update and Overview*

As
of December 31, 2025, we had 21,354 miners owned or operating for bitcoin mining with a total maximum hash rate of 2.8 EH/s.

As
of March 31, 2026, we had 21,354 miners owned or operating for bitcoin mining with a total maximum hash rate of 2.8 EH/s.

59

*Bitcoin
Production*

From
the inception of our bitcoin mining business in February 2020 to March 31, 2026, we earned an aggregate of 7,598.9 bitcoins.

The
following table presents our bitcoin mining activities for the three months ended March 31, 2026:

| Line item | Number of bitcoins | Amount (1) |
| --- | --- | --- |
| Balance at December 31, 2025 | 4.0 | $350,026 |
| Receipt of BTC from mining services | 48.1 | 3,704,796 |
| Exchange of BTC into USDC | (4.0) | (276,440) |
| Sales of and payments made in BTC | (46.9) | (3,424,530) |
| Change in fair value of BTC | - | (276,275) |
| Balance at March 31, 2026 | 1.2 | $77,577 |

(1) Receipt of digital assets  from mining services are the product of the number of bitcoins received multiplied by the bitcoin price obtained from Coinbase, calculated  on a daily basis. Sales of bitcoin represent the carrying value of bitcoin at the time of sale.

*ETH
Staking Business*

In
the fourth quarter of 2022, we formally commenced Ethereum staking operations. We delegate or stake our ETH holdings to an Ethereum validator
node to help secure and strengthen the blockchain network. Stakers are compensated for this commitment in the form of a reward of the
native network token.

Our
native staking operations are enhanced by a partnership with Blockdaemon, the leading institutional-grade blockchain infrastructure company
for node management and staking. In the fourth quarter of 2022, following a similar mechanism to native Ethereum staking, we also participated
in liquid staking via Portara protocol (formerly known as Harbour), the liquid staking protocol developed by Blockdaemon and StakeWise
and the first of its kind tailored to institutions. With the introduction of staked ETH withdrawals in April 2023, we have reassessed
our Ethereum network staking approaches, weighing the advantages of traditional staking against liquid staking solutions. The withdrawal
feature in native staking, coupled with yields that are on par with those of liquid staking, has encouraged us to expand our collaborations
with other service providers in this domain. As a result, we terminated all liquid staking activities with StakeWise in the third quarter
of 2023, reclaiming all staked Ethereum along with the accumulated rewards. In the fourth quarter of 2023, the Company terminated the
native staking activities and reclaimed all staked Ethereum with Blockdaemon.

Our
native staking operations with MarsProtocol Technologies Pte. Ltd. (“Marsprotocol”) commenced in the first quarter of 2023
and concluded in July 2023. After ceasing operations with Marsprotocol, we initiated our native staking with MarsLand Global Limited
(“MarsLand”) in August 2023. Subsequently, we have ceased our native staking with MarsLand in the first quarter of 2024 and
initiated our native staking with Figment Inc.

We
started participating in liquid staking via Liquid Collective protocol on the Coinbase platform in the first quarter of 2023. Liquid
staking allows participants to achieve greater capital efficiency by utilizing their staked ETH as collateral and trading their staked
ETH tokens on the secondary market. In the first quarter of 2024, we have reclaimed all the liquid staked ETH from Liquid Collective
protocol. In July 2025, we resumed liquid staking through the Liquid Collective protocol with 5,120 ETH. This approach provides
flexibility to engage in both staking and restaking through a broader range of strategies and platforms. Subsequently, we ceased our
liquid staking activities with Liquid Collective protocol in October 2025.

60

**Results
of Operations for the Three Months Ended March 31, 2026 and 2025**

The
following table summarizes the results of our operations during the three months ended March 31, 2026 and 2025, respectively, and provides
information regarding the dollar increase or (decrease) during the period. This information should be read together with our condensed
consolidated financial statements and related notes included elsewhere in this Form 10-Q.

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 | Variance in / Amount |
| --- | --- | --- | --- |
| Revenues |  |  |  |
| Digital asset mining | $3,704,796 | $7,776,963 | $(4,072,167) |
| Cloud services | 16,766,543 | 14,842,286 | 1,924,257 |
| Colocation services | 4,773,550 | 1,644,663 | 3,128,887 |
| ETH staking | 2,296,509 | 560,641 | 1,735,868 |
| Other | 383,358 | 280,567 | 102,791 |
| Total revenues | 27,924,756 | 25,105,120 | 2,819,636 |
| Operating costs and expenses |  |  |  |
| Cost of revenue (exclusive of depreciation shown below) |  |  |  |
| Digital asset mining | (3,251,499) | (6,123,889) | 2,872,390 |
| Cloud services | (6,779,283) | (6,088,000) | (691,283) |
| Colocation services | (1,952,783) | (545,836) | (1,406,947) |
| ETH staking | (121,334) | (32,568) | (88,766) |
| Depreciation and amortization expenses | (10,035,581) | (7,241,989) | (2,793,592) |
| General and administrative expenses | (27,627,296) | (8,235,923) | (19,391,373) |
| Losses on digital assets | (121,070,273) | (49,205,227) | (71,865,046) |
| Total operating expenses | (170,838,049) | (77,473,432) | (93,364,617) |
| Loss from operations | (142,913,293) | (52,368,312) | (90,544,981) |
| Net gain (loss) from disposal of property, plant and equipment | 1,821,729 | (333,620) | 2,155,349 |
| Change in fair value of derivative liability | 9,252,000 | - | 9,252,000 |
| Interest expense | (5,084,978) | - | (5,084,978) |
| Other expense, net | (12,933,246) | (4,337,997) | (8,595,249) |
| Total other expense, net | (6,944,495) | (4,671,617) | (2,272,878) |
| Loss before income taxes | (149,857,788) | (57,039,929) | (92,817,859) |
| Income tax expenses | (421,523) | (671,716) | 250,193 |
| Net loss | $(150,279,311) | $(57,711,645) | $(92,567,666) |

*Revenue*

We
generate revenues from cloud services, colocation services, digital asset mining, and ETH staking businesses. Refer to Note 3. *Revenue
from Contracts with Customers* for further information.

*Revenue
from cloud services*

In
the fourth quarter of 2023, we established our cloud-based HPC graphics processing unit services, which we term cloud services, a new
business line to provide services to support generative AI workstreams. The Company commenced offering cloud services to customers in
January 2024.

Our
revenue from cloud services increased by $1.9 million, or 13.0%, to $16.8 million for the three months ended March 31,
2026 from $14.8 million for the three months ended March 31, 2025. The increase was primarily due to an increase in deployed
GPU servers to new and existing customers in the first quarter of 2026.

61

*Revenue
from colocation services*

In
the fourth quarter of 2024, we acquired Enovum which holds our data center business that provides customers with physical space, power,
and cooling within data center facilities.

Our
revenue from colocation services was $4.8 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively.
The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025.

*Revenue
from digital asset mining*

We
provide computing power to digital asset mining pools, and receive consideration in the form of digital assets, the value of which is
determined using the market price of the related digital asset at the time of receipt. By providing computing power to successfully add
a block to the blockchain, the Company is entitled to a fractional share of the digital assets award from the mining pool operator, which
is based on the proportion of computing power the Company contributed to the mining pool to the total computing power contributed by
all mining pool participants in solving the current algorithm.

For
the three months ended March 31, 2026, we received 48.1 bitcoins from the Foundry mining pool. As of March 31, 2026, our active hash
rate was at an aggregate of 1.1 EH/s for our bitcoin miners. For the three months ended March 31, 2026, we recognized revenue of $3.7
million from bitcoin mining services.

For
the three months ended March 31, 2025, we received 83.3 bitcoins from the Foundry mining pool. As of March 31, 2025, our active hash
rate was at an aggregate of 1.5 EH/s for our bitcoin miners. For the three months ended March 31, 2025, we recognized revenue of $7.8
million from bitcoin mining services.

Our
revenues from digital asset mining services decreased by $4.1 million, or 52.4%, to $3.7 million for the three months ended March 31,
2026 from $7.8 million for the three months ended March 31, 2025. The decrease was primarily due to lower BTC generated from our mining
business and lower average BTC price in the first quarter of 2026, compared to the same period in 2025.

*Revenue
from ETH staking*

During
the fourth quarter of 2022, we commenced ETH staking business, in both native staking and liquid staking.

For
the ETH native staking business, we previously partnered with Blockdaemon, Marsprotocol and MarsLand. Currently, we stake ETH with Figment,
using network-based smart contracts, on a node for the purpose of validating transactions and adding blocks to the network. Through these
contracts, the Company stakes ETH on nodes for the purpose of validating transactions and adding blocks to the Ethereum blockchain network.
The Company is able to withdraw staked ETH under contracted staking since April 12, 2023 when the previously announced Shanghai upgrade
was completed. In exchange for staking the ETH and validating transactions on blockchain networks, the Company is entitled to block rewards
and transaction fees for successfully validating or adding a block to the blockchain. These rewards are received by the Company directly
from the Ethereum network and are calculated approximately based on the proportion of the Company’s stake to the total ETH staked
by all validators.

In
the fourth quarter of 2023, the Company terminated the native staking activities and reclaimed all staked Ethereum with Blockdaemon.
Our native staking operations with Marsprotocol commenced in the first quarter of 2023 and concluded in July 2023. After ceasing operations
with Marsprotocol, we initiated our native staking operations with MarsLand in August 2023. In the first quarter of 2024, we concluded
our operations with MarsLand and initiated our native staking operations with Figment. Since December 31, 2024, all of native staking
operations are with Figment.

For
the liquid staking business, the Company has deployed ETH into Portara protocol (formerly known as Harbour) supported by liquid staking
solution provider under the consortium of Blockdaemon and Stakewise, and Liquid Collective protocol supported by Coinbase. By staking,
we receive receipt tokens for the ETH staked which could be redeemed to ETH or can be traded or collateralized elsewhere, at any time.
In addition, we receive rETH-h for rewards earned from Portara protocol. With the introduction of staked ETH withdrawals in April 2023,
we have reassessed our Ethereum network staking approaches, weighing the advantages of traditional staking against liquid staking solutions.
The withdrawal feature in native staking, coupled with yields that are on par with those of liquid staking, has encouraged us to expand
our collaborations with other service providers in this domain. As a result, we terminated all liquid staking activities with StakeWise
in the third quarter of 2023, reclaiming all staked Ethereum along with the accumulated rewards. In the first quarter of 2024, we ceased
our liquid staking activities with Liquid Collective protocol and reclaimed all our staked Ethereum. In July 2025, we resumed liquid
staking through the Liquid Collective protocol with 5,120 ETH. Subsequently, we ceased our liquid staking activities with Liquid Collective
protocol in October 2025.

62

In
the first quarter of 2024, the Company has restaked 3,008 ETH into EigenLayer, a protocol built on Ethereum that enables restaking of
the already-staked ETH, through Figment. To mitigate potential risks, we restake our ETH without delegating to any operator and the Company
received 33,568 EigenLayer in the fourth quarter of 2024 from this restaking activity. As of the date of this report, the reward earned
in 2025 from this restaking activity is not significant.

For
the three months ended March 31, 2026, we earned 949.1 ETH and nil ETH in native staking and liquid staking, respectively. For the three
months ended March 31, 2026, we recognized revenues of $2,296,509 and $nil from native staking and liquid staking, respectively.

For
the three months ended March 31, 2025, we earned 211.0 ETH and nil ETH in native staking and liquid staking, respectively. For the three
months ended March 31, 2025, we recognized revenues of $560,641 and $nil from native staking and liquid staking, respectively.

Our
revenues from ETH native staking increased by $1,735,868, or 309.6% to $2,296,509 for the three months ended March 31, 2026 from $560,641
for the three months ended March 31, 2025. The increase was primarily due to an increase of 738.1 ETH earned from staking services, partially
offset by a decrease in the average price of ETH for the three months ended March 31, 2026 compared, to the three months ended March
31, 2025.

*Cost
of revenue*

We
incur cost of revenue from digital asset mining, cloud services, colocation services, and ETH staking businesses.

The
Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation
and amortization, which are separately stated in the Company’s condensed consolidated statements of operations. Specifically, these
costs consist of:

i. cloud services operations  - electricity costs, data center lease expense, GPU servers lease expense, third-party customer support fees and other relevant costs

ii. colocation services - electricity  costs, lease costs, data center employees’ wage expenses, and other relevant costs

iii. mining operations - electricity  costs, profit-sharing fees and other relevant costs

iv. ETH staking business -  service fee and reward-sharing fees to the service providers.

*Cost
of revenue - cloud services*

For
the three months ended March 31, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Electricity costs | $905,552 | $569,937 |
| Data center lease expenses | 1,395,148 | 1,274,054 |
| GPU servers lease expenses | 3,715,232 | 3,747,386 |
| Third-party customer support fees | 147,753 | - |
| Other costs | 615,598 | 496,623 |
| Total | $6,779,283 | $6,088,000 |

63

***Electricity
costs***. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of
deployed GPU servers.

For
the three months ended March 31, 2026, electricity costs increased by $0.3 million, or 58.9%, compared to the electricity costs
incurred for the three months ended March 31, 2025. The increase primarily resulted from an increase in the number of GPU servers
deployed.

***Data
center lease expenses***. We entered into data center lease agreements for fixed monthly recurring costs.

For
the three months ended March 31, 2026, data center lease expenses increased by $0.1 million, or 9.5%, compared to the data
center lease expenses incurred for the three months ended March 31, 2025 due to a new lease entered in March 2025.

***GPU
servers lease expenses***. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends
on the usage of the GPU servers.

For
the three months ended March 31, 2026, GPU server lease expenses remained consistent with the three months ended March 31, 2025.

***Third-party
customer support fees***. We engaged a third party to provide customer support services.

For
the three months ended March 31, 2026, third-party customer support fees were $0.1 million.

*Cost
of revenue - Colocation Services*

In
the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the three months ended March 31, 2026 and 2025,
the cost of revenue from colocation services was comprised of the following:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Electricity costs | $831,189 | $223,058 |
| Lease expenses | 467,177 | 150,537 |
| Wage expenses | 204,911 | - |
| Other costs | 449,506 | 172,241 |
| Total | $1,952,783 | $545,836 |

***Electricity
costs****.* These expenses were closely correlated with the number of deployed servers hosted by the data center.

For
the three months ended March 31, 2026, electricity costs increased by $0.6 million, or 272.6%, compared to the electricity costs incurred
for the three months ended March 31, 2025, Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3
facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period
ended March 31, 2026 but not operational during the period ended March 31, 2025.

***Lease
expenses***. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.

For
the three months ended March 31, 2026, data center lease expenses increased by $0.3 million, or 210.3%, compared to the data center lease
expenses incurred for the three months ended March 31, 2025. The increase primarily resulted from the new MTL-3 lease entered in the
second quarter of 2025.

***Wage
expenses***. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.

For
the three months ended March 31, 2026, wage expenses were $0.2 million.

64

*Cost
of revenue - digital asset mining*

For
the three months ended March 31, 2026 and 2025, the cost of revenue from digital asset mining was comprised of the following:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Electricity costs | $2,205,139 | $4,233,082 |
| Profit-sharing fees | 616,905 | 1,190,300 |
| Other costs | 429,455 | 700,507 |
| Total | $3,251,499 | $6,123,889 |

***Electricity
costs.*** These expenses were incurred by mining facilities for the miners in operation and were closely correlated with the number
of deployed miners.

For
the three months ended March 31, 2026, electricity costs decreased by $2.0 million, or 47.9%, compared to the electricity costs incurred
for the three months ended March 31, 2025. The decrease primarily resulted from a decrease in the number of deployed miners.

***Profit-sharing
fees.*** We enter into hosting agreements with certain mining facilities, which included performance fees calculated as a fixed
percentage of net profit generated by the miners. We refer to these fees as profit-sharing fees.

For
the three months ended March 31, 2026, profit-sharing fees decreased by $0.6 million, or 48.2%, compared to profit-sharing fees incurred
in the three months ended March 31, 2025. The decrease in profit-sharing fees was primarily due to lower bitcoin production and lower
average BTC price in the first quarter of 2026, compared to the same period in 2025.

*Cost
of revenue - ETH staking*

For
the three months ended March 31, 2026, cost of revenue from ETH staking business increased by $88,766, or 272.6%, compared to the cost
of revenue incurred for the three months ended March 31, 2025. The increase was primarily driven by an increased number of staked ETH
from 21,568 ETH in the three months ended March 31, 2025 to 96,323 ETH in the three months ended March 31, 2026.

*Depreciation
and amortization expenses*

For
the three months ended March 31, 2026 and 2025, depreciation and amortization expenses were $10.0 million and $7.2 million, respectively,
based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization
expenses is attributable to additional assets placed in service since March 31, 2025, specifically cloud equipment, resulting in higher
expense being recognized.

*General
and administrative expenses* 

For the three months ended March 31, 2026, our
general and administrative expenses, totaling $27.6 million, were primarily comprised of professional and consulting expenses of $6.1
million, share-based compensation expenses of $13.0 million, salary and bonus expenses of $2.3 million, marketing expenses of $1.2 million,
travel expenses of $0.2 million, directors and officers insurance expenses of $0.4 million and transport cost of $0.5 million.

For the three months ended March 31, 2025, our
general and administrative expenses, totaling $8.2 million, were primarily comprised of share-based compensation expenses of $0.3 million,
salary and bonus expenses of $1.5 million, professional and consulting expenses of $4.3 million, directors and officers insurance expenses
of $0.2 million, marketing expenses of $0.4 million, and travel expenses of $0.2 million.

65

*Loss
on digital assets*

For
the three months ended March 31, 2026, a loss of $121.1 million was recognized, primarily attributable to the decrease in the prices
of bitcoin and ETH as of March 31, 2026.

For
the three months ended March 31, 2025, a loss of $49.2 million was recognized, primarily attributable to the decreases in the prices
of bitcoin and ETH as of March 31, 2025.

*Net
gain (loss) from disposal of property, plant and equipment*

For
the three months ended March 31, 2026, WhiteFiber sold 126 H200s GPU for a total consideration of approximately $26.1 million. On the
date of the transaction, the carrying amount of these GPUs was $24.3 million. The Company recognized a gain of $1.8 million from the
sale which was recorded within Net gain (loss) from disposal of property, plant and equipment. As of the date of this report, WhiteFiber
has collected the full cash consideration of $26.1 million.

For
the three months ended March 31, 2025, the Company sold 4,828 miners for a total consideration of $906,016. On the dates of the transaction,
the total original cost and accumulated depreciation of these miners were $5,362,720 and $4,123,084, respectively. The Company recognized
a loss of $333,620 from the sale of miners which was recorded within Net gain (loss) from disposal of property, plant and equipment.
As of the date of this report, the Company has not collected the cash considerations.

*Change
in fair value of derivative liability*

Change
in fair value of derivative liability during the three months ended March 31, 2026 and 2025 were $9.3 million and $nil, respectively,
related to the conversion feature of the 2030 Convertible Notes which was originally accounted for separately as a derivative liability.

*Interest
expense*

For the three
months ended March 31,2026 and 2025, interest expense was $5.1 million and $nil, respectively, primarily related to accrued interest
on the Company’s 2030 Convertible Notes and 2031 Convertible Notes.

*Other
expense, net*

For
the three months ended March 31, 2026, our other expense, totaling $12.9 million, was primarily comprised of unrealized losses on digital
assets held in the fund of $13.0 million, non-income foreign tax expense of $0.4 million, unrealized losses on foreign currency exchange
of $0.3 million and partially offset by the interest income of $0.8 million and other miscellaneous income of $0.2 million.

For
the three months ended March 31, 2025, our other expense, totaling $4.3 million, was primarily comprised of unrealized losses on digital
assets held in the fund of $4.5 million, non-income state tax expense of $0.2 million and partially offset by the interest income of
$0.3 million and dividend income of $0.3 million.

*Income
tax provisions*

Provision
for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended March 31, 2026
is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance
applied to the Company’s deferred tax assets in Canada, Japan, France and Hong Kong. We continue to maintain a valuation allowance
against the deferred tax assets in Canada, Japan, France and Hong Kong as the Company does not expect those deferred tax assets are “more
likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomy, politics and profitability
of the business.

Our
income tax provision was $0.4 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively. The income tax
provision was lower during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher
pretax loss, geographic mix earning impacts and Net CFC Tested Income or NCTI (a.k.a GILTI) impact. Also, in both periods presented,
we were not able to benefit from current year foreign loss before taxes due to foreign valuation allowance from certain foreign operations.

*Net
loss and loss per share*

For
the three months ended March 31, 2026, our net loss was $150.3 million, representing a change of $92.6 million from a net loss of $57.7
million for the three months ended March 31, 2025.

Basic
and diluted loss per share was $0.45 and $0.45 for the three months ended March 31, 2026, respectively. Basic and diluted loss per share
was $0.32 and $0.32 for the three months ended March 31, 2025, respectively.

Basic
and diluted weighted average number of shares was 325,638,843 and 325,638,843 for the three months ended March 31, 2026, respectively. Basic
and diluted weighted average number of shares was 181,413,307 and 181,413,307 for the three months ended March 31, 2025, respectively.

66

**Discussion
of Certain Balance Sheet Items**

The
following table sets forth selected information from our condensed consolidated balance sheets as of March 31, 2026 and December 31,
2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere
in this Form 10-Q.

| Line item | March 31, 2026 | December 31, 2025 | Variance in / Amount |
| --- | --- | --- | --- |
| ASSETS |  |  |  |
| Current Assets |  |  |  |
| Cash and cash equivalents | $79,529,572 | $118,356,299 | (38,826,727) |
| Restricted cash | 4,323,022 | 3,856,819 | 466,203 |
| Accounts receivable, net | 91,724,864 | 23,921,591 | 67,803,273 |
| USDC | 191,024 | 484,459 | (293,435) |
| Digital assets | 294,996,104 | 415,734,409 | (120,738,305) |
| Net investment in lease – current, net | 3,897,530 | 4,260,877 | (363,347) |
| Loans receivable | 400,000 | 400,000 | - |
| Other current assets, net | 24,670,479 | 26,734,984 | (2,064,505) |
| Total Current Assets | 499,732,595 | 593,749,438 | (94,016,843) |
| Non-Current Assets |  |  |  |
| Deposits for property, plant, and equipment | 67,983,795 | 52,838,419 | 15,145,376 |
| Property, plant, and equipment, net | 451,969,400 | 360,243,018 | 91,726,382 |
| Goodwill | 19,809,807 | 20,145,663 | (335,856) |
| Intangible assets, net | 12,429,693 | 12,820,574 | (390,881) |
| Right-of-use assets | 30,808,084 | 24,654,620 | 6,153,464 |
| Net investment in lease - non-current, net | 9,043,622 | 9,686,949 | (643,327) |
| Investment securities | 56,008,172 | 69,120,771 | (13,112,599) |
| Deferred tax asset | 4,537,209 | 2,579,034 | 1,958,175 |
| Other non-current assets, net | 28,362,375 | 28,579,646 | (217,271) |
| Total Non-Current Assets | 680,952,157 | 580,668,694 | 100,283,463 |
| Total Assets | $1,180,684,752 | $1,174,418,132 | 6,266,620 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |
| Current Liabilities |  |  |  |
| Accounts payable | $8,798,632 | $8,874,530 | (75,898) |
| Current portion of deferred revenue | 18,730,619 | 7,997,054 | 10,733,565 |
| Current portion of lease liabilities | 18,375,500 | 18,460,194 | (84,694) |
| Income tax payable | 788,157 | 1,546,876 | (758,719) |
| Other payables and accrued liabilities | 31,853,843 | 56,067,289 | (24,213,446) |
| Total Current Liabilities | 78,546,751 | 92,945,943 | (14,399,192) |
| Non-Current Liabilities |  |  |  |
| Non-current portion of deferred revenue | 125,776,956 | 71,554,398 | 54,222,558 |
| Non-current portion of lease liabilities | 11,307,912 | 5,415,458 | 5,892,454 |
| Convertible note payable, net | 334,189,318 | 110,290,945 | 223,898,373 |
| Derivative liability | 10,008,000 | 19,260,000 | (9,252,000) |
| Deferred tax liabilities | 12,170,831 | 9,690,586 | 2,480,245 |
| Total Non-Current Liabilities | 493,453,017 | 216,211,387 | 277,241,630 |
| Total Liabilities | $571,999,768 | $309,157,330 | 262,842,438 |

67

*Cash
and cash equivalents*

Cash
and cash equivalents primarily consist of funds deposited with banks, which are highly liquid and are unrestricted to withdrawal or use.
The total balance of cash and cash equivalents were $79.5 million and $118.4 million as of March 31, 2026 and December 31, 2025, respectively.
The decrease in the balance of cash and cash equivalents was a result of net cash of $105.1 million provided by financing activities,
partially offset by net cash of $1.1 million used in operating activities, and net cash of $142.7 million used in investing activities.

*Restricted
cash*

Restricted
cash represents cash balances that support outstanding letters of credit to third parties related to security deposits and other purposes
and are restricted from withdrawal. As of March 31, 2026 and December 31, 2025, restricted cash, which includes amounts supporting the
letter of credit, was $4.3 million and $3.9 million, respectively.

*Accounts
receivable, net*

Accounts receivable, net consists of amounts due from our customers.
The total balance of accounts receivable, net was $91.7 million and $23.9 million as of March 31, 2026 and December 31, 2025, respectively.
The increase in the balance of accounts receivable is attributable to unpaid invoices from our customers due to the timing of invoicing
and cash collections. The increase further included activity with a new customer, including certain non-recurring charges recognized during
the period.

*USDC*

USD
Coin (“USDC”) is accounted for as a financial instrument; one USDC can be redeemed for one U.S. dollar on demand from the
issuer. The balance of USDC was $0.2 million and $0.5 million as of March 31, 2026 and December 31, 2025, respectively. The decrease
in the balance of USDC was primarily due to the receipt of USDC from sales of other digital assets of $0.3 million and partially offset
by the payment of USDC for other expenses of $0.6 million.

*Digital
assets*

Digital
assets primarily consist of BTC and ETH. For the three months ended March 31, 2026, we earned digital assets from mining services and
ETH staking services. We exchanged BTC into ETH or USDC, exchanged BTC and ETH into cash, or used BTC and ETH to pay certain operating
costs and other expenses. Digital assets held are accounted for as intangible assets measured at fair value, with changes in fair value
recorded in net income in each reporting period.

As
compared with the balance as of December 31, 2025, the balance of digital assets as of March 31, 2026 decreased by $120.7 million, which
was primarily attributable to the generation of bitcoins of $3.7 million from our mining business, generation of ETH of $2.3 million
from our native staking business, partially offset by the change in fair value of $121.1 million, exchange of bitcoins of $3.4 million
into cash, exchange of BTC into USDC of $0.3 million, exchange of ETH into cash of $2.0 million.

*Loans
receivable*

Loans
receivable consist of a loan issued by the Company to a third party. The total balance of loans receivable was $0.4 million and $0.4
million as of March 31, 2026 and December 31, 2025, respectively.

*Net
investment in lease, net*

Net
investment in lease, net represents the present value of the lease payments not yet received from lessee. The current and non-current
balance of net investment in lease was $3.9 million and $9.0 million, respectively as of March 31, 2026 due to sales-type lease agreements
as a lessor for its cloud service equipment. The current and non-current balance of net investment in lease was $4.3 million and
$9.7 million, respectively as of December 31, 2025. The decrease in the balance of net investment in lease was a result of $1.4 million
of lease payments collected from equipment leasing customers, partially offset by $0.4 million in interest income earned.

*Other
current assets, net*

Other
current assets, net were $24.7 million and $26.7 million as of March 31, 2026 and December 31, 2025, respectively. The
decrease in the balance of other current assets was mainly attributable to a decrease in receivable from third parties of $1.0 million,
prepaid consulting service of $0.8 million, deferred contract costs of $0.4 million and deposits made to our service provider of $0.3
million, partially offset by an increase in prepayment to third parties of $0.5 million.

*Deposits
for property, plant, and equipment*

The
deposits for property, plant, and equipment consists of advance payments for property, plant, and equipment. The balance is derecognized
once the control of the property, plant, and equipment is transferred to and obtained by us.

Compared
with December 31, 2025, the balance as of March 31, 2026 increased $15.1 million, mainly due to the reclassification of property, plant
and equipment of $6.5 million offset by the prepayment of $21.6 million for property, plant and equipment.

68

*Property,
plant, and equipment, net*

Property,
plant, and equipment primarily consist of service equipment used in our Cloud services and Colocation businesses, digital asset businesses,
internally developed software used in our Cloud services business, and construction in progress (“CIP”) representing assets
received but not yet put into service in our Cloud services and Colocation businesses.

As
of March 31, 2026, we had 21,354 bitcoin miners with net book value of $19.9 million. As of December 31, 2025, we had 21,354 bitcoin
miners with net book value of $23.4 million. Compared with December 31, 2025, the decrease in the net book value of our bitcoin miners
from $23.4 million as of December 31, 2025 to $19.9 million as of March 31, 2026 was primarily attributable to depreciation expense recognized
during the three months ended March 31, 2026.

As of March 31, 2026, the Cloud service equipment and internally developed
software had a net book value, including CIP, of $100.0 million. As of December 31, 2025, the Cloud service equipment and internally
developed software had a net book value, including CIP, of $124.0 million. Compared with December 31, 2025, the balance as of March
31, 2026 decreased by $24.1 million, mainly due to the sale of H200 servers with carrying value of $24.3 million.

As
of March 31, 2026, the Colocation service equipment had a net book value, including CIP, of $332.0 million. As of December 31, 2025,
the Colocation service equipment had a net book value, including CIP, of $212.6 million. Compared with December 31, 2025, the balance
as of March 31, 2026 increased by $119.4 million, mainly due to $117.8 million of development costs for the construction of NC-1 facility
as well as infrastructure costs incurred for MTL-3 in Montreal of $2.5 million, in part, by an increase in accumulated depreciation of
$0.9 million.

*Lease
right-of-use assets and lease liabilities*

As
of March 31, 2026, right-of-use assets and lease liabilities were $30.8 million and $29.7 million, respectively. As of December 31, 2025,
the Company’s right-of-use assets and lease liabilities were $24.7 million and $23.9 million, respectively.

The
increase in right-of-use assets of $6.1 million was due to the addition of $8.1 million for five operating leases, partially offset by
the amortization of the right-of-use assets totaling $1.7 million for the three months ended March 31, 2026.

The
increase in lease liabilities of $5.8 million, was due to the addition of $8.1 million for five operating leases as well as increase
in interest accrued on lease liabilities of $0.5 million offset by the lease payments totaling $2.6 million for the three months ended
March 31, 2026.

*Other
non-current assets, net*

Other
non-current assets, net were $28.4 million as of March 31, 2026, compared to $28.6 million as of December 31, 2025, a decrease of $0.2
million. The decrease was primarily due to $0.6 million decrease in deferred contract costs due to the reclassification to other current
assets partially offset by increase of $0.4 million in deposits.

*Investment
securities*

As
of March 31, 2026, our portfolio consists of investments in three funds, a privately held company via a simple agreement for future equity
(“SAFE”), four privately held companies, and a publicly traded company over which the Company neither has control nor significant
influence. The total balance of investment securities was $56.0 million and $69.1 million as of March 31, 2026, and December 31, 2025,
respectively. The $13.1 million decrease in the balance of our investment securities was primarily driven by a downward fair value adjustment.

*Goodwill*

Goodwill
represents the excess of the purchase price over the fair value of the net assets acquired in relation to the Enovum acquisition. As
of March 31, 2026 and December 31, 2025, the Company recorded goodwill in the amount of $19.8 million and $20.1 million,
respectively, with the change attributable to foreign currency translation adjustments.

*Intangible
assets, net*

Intangible
assets pertain to customer relationships acquired in connection with the acquisition of Enovum. Refer to Note 16. *Goodwill and
Intangible Assets* to our condensed consolidated financial statements for further information. As of March 31, 2026 and December 31,
2025, the total balance of intangible assets was $12.4 million and $12.8 million, respectively, with the change attributable
to accumulated amortization.

69

*Accounts
payable*

Accounts
payable primarily consists of amounts due for costs related to our digital asset mining, cloud services, colocation services and ETH
staking. Compared with December 31, 2025, the balance of accounts payable as of March 31, 2026 remained consistent.

*Deferred
revenue*

As
of March 31, 2026, the Company’s current and non-current portion of deferred revenue was $18.7 million and $125.8 million,
respectively, compared to $8.0 million and $71.6 million, respectively, as of December 31, 2025. The increase in deferred
revenue of $65.0 million reflects the recognition of $0.7 million in revenue related to the successful fulfilment of performance
obligations from our cloud services and data center services, and partially offset by $65.7 million prepayments from customers for
cloud services and data center services to be rendered in the future.

*Other
payables and accrued liabilities*

Other
payables and accrued liabilities were $31.9 million as of March 31, 2026, compared to $56.1 million as of December 31, 2025, a decrease
of $24.2 million. The decrease was primarily due to the decrease in payables of $27.0 million related to the NC-1 facility from unpaid
invoices to our vendors due to the timing of invoicing and cash payments, partially offset by deferred share based compensation liability
of $3.1 million.

*Convertible
notes payable, net*

The
convertible notes payable relates to the purchase agreement entered into by the Company in connection with the issuance of its convertible
senior notes.

In
October 2025, the Company issued an aggregate principal amount of $150.0 million of 4.0% convertible senior notes due 2030 (the “2030
Notes”), which included the full exercise by the initial purchasers of their option to purchase up to an additional $15.0 million
principal amount of the 2030 Notes.

In
January 2026, the Company issued $230.0 million aggregate principal amount of 4.5% convertible senior notes due 2031 (the “2031
Notes”).

As
of March 31, 2026 and December 31, 2025, the carrying amount of the Company’s convertible note payable was $334.2 million and $110.3
million, respectively. Refer to Note 12. *Debt,* for more information.

*Derivative
liability* 

Derivative
liability relates to the conversion feature embedded in the 2030 Notes. Refer to Note 13. *Fair Value of Financial Instruments,* for
more information.

As
of March 31, 2026 and December 31, 2025, the Company’s derivative liability was $10.0 million and $19.3 million, respectively.
The decrease was primarily attributable to changes in the fair value of the derivative liability during the three months ended March
31, 2026.

**Non-GAAP
Financial Measures** 

In
addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial
measures, such as EBITDA and Adjusted EBITDA. These non-GAAP financial measures have not been calculated in accordance with GAAP and
should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior
to, GAAP results. In addition, EBITDA and Adjusted EBITDA should not be construed as indicators of our operating performance, liquidity
or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail
to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions.
Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results
of other companies.

EBITDA
is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as our
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 the Company’s core
business operations. The adjustments currently include fair value adjustments such as investment securities value changes and non-cash
share-based compensation expenses, in addition to other income and expense items.

70

We
believe Adjusted EBITDA can be an important financial 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.

Adjusted
EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measures
under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings
per share or any other performance measure derived in accordance with U.S. 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 such measures either
in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations
of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for historical periods are presented in the table below:

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Reconciliation of non-GAAP loss from operations: |  |  |
| Net loss | $(150,279,311) | $(57,711,645) |
| Depreciation and amortization expenses | 10,035,581 | 7,241,989 |
| Interest expense | 5,084,978 | - |
| Income tax expenses | 421,523 | 671,716 |
| EBITDA | (134,737,229) | (49,797,940) |
| Adjustments: |  |  |
| Net (gain) loss from disposal of property, plant and equipment | (1,821,729) | 333,620 |
| Share-based compensation expenses | 15,303,825 | 252,390 |
| Changes in fair value of long-term investments | 13,110,707 | 4,692,428 |
| Change in fair value of derivative liability | (9,252,000) | - |
| Adjusted EBITDA | $(117,396,426) | $(44,519,502) |

**Liquidity
and capital resources**

As
of March 31, 2026, we had working capital of $421.2 million which includes USDC of $0.2 million, digital assets of $295.0 million as
compared with working capital of $500.8 million as of December 31, 2025. Working capital is the difference between the Company’s
current assets and current liabilities.

To
date, we have financed our operations primarily through cash flows from operations, sales of our equity securities and the issuance of
convertible notes. We plan to support our future operations primarily from cash generated from our operations and equity financings.
We may also consider debt, including secured debt which may include pledges of our ETH, preferred and convertible financing on favorable
terms.

We
believe our existing cash will be sufficient to fund our anticipated operating cash requirements for at least 12 months following the
date of this filing.

On
April 29, 2025, the Company filed a registration statement on Form S-3 (No. 333-286841) with the SEC to register up to $500 million of
its ordinary shares, preference shares, debt securities, warrants, units and subscription rights (the “Registration Statement”),
which included a sales agreement prospectus covering the offering, issuance and sale by the Company of up to a maximum aggregate offering
price of $500 million of the Company’s ordinary shares that may be issued and sold under an At The Market Offering Agreement we
entered into with H.C. Wainwright & Co., LLC, as sales agent (as amended from time to time, the “Sales Agreement”). In
the first quarter of 2026, the Company sold an aggregate of 2,372,035 ordinary shares in connection with the at-the-market offering.
The Company received net proceeds of $4.1 million, net of offering costs.

71

In
June 2025, the Company completed an underwritten public offering of its ordinary shares registered under the Registration Statement.
In accordance with the terms of the underwriting agreement entered into with B. Riley Securities, Inc., as representative of the several
underwriters, the Company sold 75,000,000 ordinary shares at a price to the underwriters of $1.90 per share. The Company received net
proceeds of approximately $141.6 million, after deducting the underwriting discount and offering expenses. On July 1, 2025, the underwriters
related to this public offering fully exercised their option to purchase an additional 11,250,000 ordinary shares, resulting in additional
net proceeds to the Company of $21.3 million, after deducting the underwriting discount and offering expenses.

On
July 15, 2025, the Company entered into a registered direct offering with B. Riley Securities, Inc. relating to its ordinary shares.
In accordance with the terms of the sales agreement, the Company agreed to issue and sell 22,000,000 ordinary shares having an aggregate
purchase price of $63.6 million, net of offering costs. The registered direct offering closed on July 15, 2025. The Company intends to
use the net proceeds from the registered direct offering to purchase Ethereum.

On
October 31, 2025, the Company filed an automatically effective shelf registration statement on Form S-3 (File No. 333-291205) with the
SEC to register an indeterminate amount of its ordinary shares, which included a sales agreement prospectus supplement covering the offering,
issuance and sale by the Company of up to a maximum aggregate offering price of up to $2.5 billion of the Company’s ordinary shares
that may be issued and sold from time to time pursuant to the Sales Agreement.

*2030
Convertible notes*

On
September 29, 2025, the Company entered into an underwriting agreement with certain financial institutions (collectively the “Underwriters”),
pursuant to which the Company agreed to sell $135 million aggregate principal amount of its 4.00% Convertible Notes due 2030. Subsequently,
the greenshoe option was exercised under which additional $15 million was sold to the Underwriters, making a total of $150 million aggregate
principal amount of the Convertible Notes. The Convertible Notes closed on October 1, 2025 and will mature on October 1, 2030, unless
earlier converted, redeemed or repurchased in accordance with their terms as stipulated in the Agreement.

The
Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”), dated as of October 2, 2025, between
the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), as supplemented by a first supplemental
indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”),
dated as of October 2, 2025, between the Company and the Trustee. The net proceeds from the 2030 Notes offering, after deducting underwriting
discounts and commissions and estimated offering expenses, were approximately $143.7 million, including the proceeds from the Underwriters’
exercise of their over-allotment option in full.

*2031
 Convertible notes*

In
January 2026, WhiteFiber issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031, resulting in net
proceeds of approximately $102.5 million after deducting the Zero Strike Call Option premium, initial purchasers’ discounts and
offering expenses. The issuance enhances its liquidity and provides additional capital to fund upcoming development projects, including
construction activities and other strategic growth initiatives.

The
2031 Notes bear interest at 4.50% per annum, payable semiannually in arrears on February 1 and August 1 of each year, beginning August
1, 2026, and mature on February 1, 2031, unless earlier converted, redeemed, or repurchased. The Notes increase its long-term indebtedness
and will require annual cash interest payments of approximately $10.4 million.

72

*Iceland
facility agreement*

WhiteFiber
Iceland ehf., a subsidiary of WhiteFiber, entered into a secured term loan facility with Landsbankinn hf. in March 2026, providing up
to $20 million of available borrowings. The Facility bears interest at a floating rate per annum equal to the sum of (i) three month
CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum and has an initial two-year term, extendable
up to four years. The loan is guaranteed by WhiteFiber, Inc. and WhiteFiber AI, Inc.

The
Facility allows for up to two drawdowns (minimum $5 million each), with quarterly principal repayments beginning three months after initial
borrowing. As of March 31, 2026, WhiteFiber had not yet drawn on the Facility. Subsequently, on April 24, 2026, WhiteFiber drew down
$18 million. The Facility is secured by first-ranking security over (i) 100% of WhiteFiber’s shareholding in WhiteFiber Iceland
ehf., (ii) designated assets (including GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement,
and (iii) material assets acquired thereafter (to be secured within 60 days), in each case until all obligations are fully satisfied.

*Royal
Bank of Canada Credit Facility*

On
April 27, 2026, WhiteFiber entered into an amended credit agreement with RBC. This agreement replaces the original credit agreement dated
June 18, 2025, as subsequently amended on July 4, 2025. The amended credit agreement provides an authorized credit facility of CAD $28
million (approximately $20 million). The proceeds have been used as a real estate acquisition bridge loan to finance the acquisition
of the MTL-3 facility, at a purchase price of CAD $24.2 million (approximately USD $17.4 million). The closing date occurred on May 8,
2026.

Additionally,
RBC is providing a CAD $8 million (approximately $5.8 million) revolving facility in the form of Letters of Credit and Letters of Guarantee.
The fees will be determined on a transaction-by-transaction basis, and the facility will be available for a 12-month term.

As
of the reporting date, the April 27, 2026 bridge loan has been authorized and funded by RBC for the MTL-3 facility acquisition. WhiteFiber
and RBC are currently in discussions regarding new syndicated credit facilities, including i) a delayed draw term loan facility of CAD
$115 million (approximately $82.5 million), which includes the CAD $24.2 million (approximately $17.4 million) bridge loan ii) an accordion
facility of CAD $25 million (approximately $17.9 million) and iii) the CAD $8 million (approximately $5.7million) revolving facility.

***Cash
flows***

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Net Cash (Used in) Provided by Operating Activities | $(1,094,839) | $17,401,915 |
| Net Cash Used in Investing Activities | (142,685,671) | (64,961,231) |
| Net Cash Provided by Financing Activities | 105,146,632 | 9,377,238 |
| Net decrease in cash, cash equivalents and restricted cash | (38,633,878) | (38,182,078) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 273,354 | 535,754 |
| Cash, cash equivalents and restricted cash, beginning of period | 122,213,118 | 98,934,127 |
| Cash, cash equivalents and restricted cash, end of period | $83,852,594 | $61,287,803 |

73

*Operating
Activities*

Net
cash used in operating activities was $1.1 million for the three months ended March 31, 2026, derived mainly from (i) a net loss of $150.3
million for the three months ended March 31, 2026 adjusted for digital assets mined of $3.7 million from our mining services, depreciation
expenses and amortization expense of $10.0 million, gain from disposal of property, plant and equipment of $1.8 million, loss on digital
assets of $121.1 million, amortization of discount on debts issued of $1.8 million, share based compensation expenses of $15.3 million,
changes in fair value of investment security of $13.1 million, changes in fair value of derivative liability of $9.3 million, digital
assets earned from staking of $2.3 million and (ii) net changes in our operating assets and liabilities, principally comprising of an
increase in digital assets and stable coins of $5.3 million, an increase in deferred revenue of $65.0 million, a decrease in accounts
receivable of $67.8 million, a decrease in other payable and accrued liabilities of $0.2 million, an increase in other current assets
of $1.6 million, an increase in other non-current assets of $0.2 million, an increase in right-of-use assets of $1.7 million, an increase
in net investment in lease of $1.0 million, an increase in account payable of $0.1 million, an increase in deferred tax liability of
$0.6 million, a decrease in income tax payable of $0.8 million and a decrease in lease liability of $1.8 million.

Net
cash provided by operating activities was $17.4 million for the three months ended March 31, 2025, derived mainly from (i) a net loss
of $57.7 million for the three months ended March 31, 2025 adjusted for digital assets mined of $7.8 million from our mining services,
depreciation expenses and amortization expense of $7.2 million, and loss on digital assets of $49.2 million, share based compensation
expenses of $0.3 million, loss from disposal of property, plant, and equipment of $0.3 million, and changes in fair value of investment
security of $4.7 million, and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in digital
assets and stable coins of $32.5 million, decrease in deferred revenue of $9.5 million, a decrease in accounts receivable of $2.7 million,
an increase in other payable and accrued liabilities of $4.9 million, a decrease in net investment in lease of $0.6 million, a decrease
in accounts payable of $0.9 million, an increase in other current assets of $10.7 million, and a decrease in other non-current assets
of $1.5 million.

*Investing
Activities*

Net
cash used in investing activities was $142.7 million for the three months ended March 31, 2026, primarily attributable to purchases of
and deposits made for property, plant, and equipment of $169.2 million, and partially offset by proceeds from disposal of property, plant
and equipment of $26.5 million.

Net
cash used in investing activities was $65.0 million for the three months ended March 31, 2025, primarily attributable to purchases of
and deposits made for property, plant, and equipment of $65.0 million.

*Financing
Activities*

Net
cash provided by financing activities was $105.1 million for the three months ended March 31, 2025, attributable to net proceeds of $4.1
million from at-the-market offering, net proceeds of $222.1 million from convertible debt, partially offset by the purchase of zero-strike
call option of $120.0 million, payment of dividends of $0.8 million and repayment of finance lease liabilities of $0.3 million.

Net
cash provided by financing activities was $9.4 million for the three months ended March 31, 2025, attributable to net proceeds of $10.2
million from the at-the-market offering and the payment of dividends of $0.8 million.

**Off-Balance
Sheet Arrangements**

During
the periods presented, we did not have any off-balance sheet arrangements.

74

**Critical
Accounting Policies and Estimates**

Our
discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial
statements. These financial statements are prepared in accordance with U.S. GAAP, which requires the Company to make estimates and assumptions
that affect the reported amounts of our assets, liabilities, revenues, and expenses, to disclose contingent assets and liabilities on
the dates of the unaudited condensed consolidated financial statements, and to disclose the reported amounts of revenues and expenses
incurred during the financial reporting periods. The most significant estimates and assumptions include, but are not limited to, the
valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill,
valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization
of deferred tax assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances.
We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could
differ from those estimates as a result of changes in our estimates. Some of our accounting policies require higher degrees of judgment
than others in their application. We believe critical accounting policies as disclosed in this release reflect the more significant judgments
and estimates used in preparation of our unaudited condensed consolidated financial statements. For a summary of significant accounting
policies, refer to Note 2. *Summary of Significant Accounting Policies* in our Notes to Unaudited Condensed Consolidated Financial
Statements included elsewhere herein.

**Item
3. Quantitative and Qualitative Disclosures about Market Risk.**

The Company is exposed to market risks in the
ordinary course of business, primarily related to digital asset prices, interest rates, foreign currency exchange rates, energy prices
and utility risk.

*Risks
Regarding the Price of Ethereum (“ETH”)*

The Company’s business is focused on active participation in
Ethereum (“ETH”) infrastructure and staking strategies to maximize the amount of ETH we earn and hold. As of March 31, 2026,
we held approximately 140,196 ETH, recognized at its fair value of $294.9 million.

The
market price of ETH is highly volatile, and we cannot accurately predict future price movements. Fluctuations in the market value of
ETH directly affect revenue generated from our staking operations and the fair value of our ETH holdings. In addition, any decline in
the fair value of the ETH we hold would be reflected in our financial statements as a charge against net income, which could have a material
adverse effect on our results of operations and the market price of our securities.

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

| Line item | For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 |
| --- | --- | --- |
|  | 10% Decrease in Price of ETH | 10% Decrease in Price of ETH |
| Increase/ (Decrease) in Net Income | $$(29,491,853) | $$(4,455,647) |

The
increased sensitivity to price changes in 2026, compared with 2025, was primarily due to the increase in our ETH holdings as of March 31, 2026,
relative to March 31, 2025.

75

*Interest
Rate Risk*

The
Company is exposed to interest rate risk primarily through its variable-rate debt obligations used to finance infrastructure development
and capital expenditures. Changes in benchmark interest rates may increase future interest expense and adversely affect cash flows. In
addition, fluctuations in interest rates may affect the Company’s ability to obtain financing on favorable terms and increase the
cost of future borrowings. The Company monitors its interest rate exposure and may utilize financing arrangements or other risk management
strategies intended to mitigate the impact of interest rate fluctuations; however, such activities may not fully offset the effects of
changes in interest rates.

*Foreign
Currency Risk*

The
Company operates internationally and is exposed to foreign currency exchange rate risk arising from transactions denominated in currencies
other than the U.S. dollar, including certain operating expenses, vendor payments and capital expenditures. Fluctuations in foreign currency
exchange rates may adversely affect the Company’s results of operations, financial condition and cash flows. To manage a portion
of this exposure, the Company may enter into derivative instruments, including foreign currency forward contracts, to reduce the impact
of exchange rate fluctuations on certain foreign currency-denominated transactions. The Company’s hedging activities may not fully
offset the adverse financial effects of unfavorable movements in foreign currency exchange rates.

*Energy
Price and Utility Risk*

The Company’s cloud business and data center
business are energy intensive and, in certain instances, subject to fluctuations in electricity prices and utility availability. Increases
in energy costs, changes in energy market conditions or constraints on available electrical capacity could increase operating costs, adversely
affect operating margins and impact the timing or ability to deploy additional infrastructure capacity.

**Item
4. Controls and Procedures.**

***Evaluation
of Disclosure Controls and Procedures***

Our
management, with the participation of our Principal Executive Officer and our 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 the
end of the period covered by this Quarterly Report 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 Principal Executive Officer and Principal Financial Officer, to allow timely decisions
regarding required disclosures.

Based
on this evaluation, our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, concluded
that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this
report.

Management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
their objectives and management necessarily applies its judgment in conducting a cost-benefit analysis of possible controls and procedures.

***Changes
in Internal Control over Financial Reporting***

There
have been no changes in the Company’s internal control over financial reporting during the quarter-ended March 31, 2026 that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

76

**PART
II - OTHER INFORMATION**

**Item
1. Legal Proceedings.**

Except
as set forth herein, there have been no changes since the filing of the Company’s Form 10-K for the year ended December 31, 2025.

*Bit
Digital USA, Inc v. Blockfusion USA, Inc. – Superior Court of Delaware*

On
June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion, Inc. (“Blockfusion”) alleging claims
for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to
Blockfusion, the return of which is owed to the Company. The Company was seeking in excess of $4.3 million. On October 22, 2024, Blockfusion
denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Following limited discovery, the
Company sought leave to file a Second Amended Complaint asserting additional tort and equitable claims, including fraud-based claims,
and adding Blockfusion’s Chief Executive Officer as an individual defendant. On September 19, 2025, Blockfusion moved to dismiss
the Second Amended Complaint. The Company filed its opposition to the motion on October 17, 2025, and the Court held a hearing on the
motion on January 6, 2026. Following the hearing, the Court granted the motion to dismiss. The Court dismissed the claims against the
individual defendant without prejudice on the ground that it lacked personal jurisdiction, and did not reach the merits of certain substantive
issues raised in the motion. The Company’s contract-based claims and related claims for contractual recovery against Blockfusion
were not dismissed and remain pending.

On
March 18, 2026, the Company moved to dismiss some of the Blockfusion’s counterclaims. That motion remains pending and is currently
set for hearing on June 12, 2026.

The
litigation is ongoing and remains in an active pretrial phase. The Company seeks recovery of its original investment, allegedly improper
invoice payments, unpaid contractual amounts, and other damages, and may seek equitable or other relief as the proceedings continue.
The aggregate damages sought exceed $5.0 million.

*Bit
Digital USA, Inc. v. Alex Martini-Lo Manto, et. al. – New York Supreme Court, New York County, Commercial Division*

On
March 4, 2026, the Company filed suit against Alex Martini-Lo Manto, CEO of Blockfusion; and two Blockfusion-related entities alleging
that the defendants had designed a Special Purpose Acquisition Company (“SPAC”) merger to avoid paying the Company for its
prejudgment liabilities. The suit alleges claims under New York Uniform Voidable Transactions Act, as well as fraud claims against defendant
Alex Martini-Lo Manto and other related claims.

Upon
filing, the Company also moved for a preliminary injunction enjoining the SPAC transaction. On April 15, 2026, the Court denied that
motion. The Company has appealed that ruling.

On
April 29, 2026, Defendants moved to dismiss the Company’s claims. That motion remains pending.

The litigation is ongoing and remains in an active pretrial phase.

*Bit
Digital USA, Inc. v. Alex Martini-Lo Manto, et. al. – New York Supreme Court, Appellate Division, First Department*

On
April 22, 2026, the Company appealed the Commercial Division’s denial of the preliminary injunction. The Company also filed a request
for interim appellate injunctive relief. That request and the appeal remain pending.

77

**Item
1A. Risk Factors**

Except
as set forth below, there have been no material changes from risk factors as previously disclosed in the Company’s Annual Report
on Form 10-K for the year-ended December 31, 2025 (“Annual Report”) in response to Item 1A to PART 1 of Form 10-K. You should
refer to the other information set forth in this report, including the information set forth in “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”, as well as in our consolidated financial statements and the related
notes. Our business prospects, financial condition or results of operations could be adversely affected by any of these risks.

Please
note in considering the “Risk Factors” in Item 1A of our Annual Report that (A) notwithstanding the fact that Bit Digital,
Inc. has not conducted operations in the PRC since September 30, 2021, we have previously disclosed under Risk Factors in our Annual
Report. “We may be subject to fines and penalties for any noncompliance with or any liabilities in our former business in China
in a certain period from now on.” Although the statute of limitations for non-compliance by our former business in the PRC is generally
two years and the Company has been out of the PRC, for more than two years, the Authority may still find its prior bitcoin mining operations
involved a threat to financial security. In such event, the two-year period would be extended to five years.

Please
note the following in considering the risk factor in our Annual Report titled “Uncertainty in the global economy and instability
within international relations, including changes in governmental policies relating to technology, and any potential downturn in the
semiconductor and electronics industries, may negatively impact our business”: In addition, the recent armed conflict between the
U.S. and its allies and Iran has caused a de facto closure of the Strait of Hormuz and further disruption of trade routes in the Red
Sea, which has had a significant impact in the Middle East region and on global oil markets. We cannot predict the severity or length
of the current conditions impacting international shipping in this region and the continuing disruption of the trade routes in the region
of the Red Sea and Strait of Hormuz. Based on the complex relationship between countries involved in our supply chain, disruptions in
shipping and the impact on energy prices could have a material and adverse impact on our financial condition, results of operations,
and future performance.

**Item
2. Unregistered Sales of Equity Securities and Use of Proceeds**

None.
Previously reported on Form 8-K.

**Item
3. Defaults Upon Senior Securities.**

None.

**Item
4. Mine Safety Disclosures.**

Not
applicable.

**Item
5. Other Information.**

During
the three months ended March 31, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading
arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

On
May 13, 2026, the Board of Directors of the Company adopted an amended and restated policy on insider trading (the “Amended and
Restated Insider Trading Policy”). The Amended and Restated Insider Trading Policy was revised to broaden the scope of its
applicability to all employees, rather than just directors, officers and other “Covered Persons” of the Company and its subsidiaries.

The foregoing
description of the Amended and Restated Insider Trading Policy is not intended to be complete and is qualified in its entirety by reference
to the Amended and Restated Insider Trading Policy attached as Exhibit 19.1 hereto.

78

**Item
6. Exhibits.**

(a)
Exhibits.

| Exhibit No. | Document Description |
| --- | --- |
| 19.1 | Insider Trading Policy*** |
| 31.1 | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*** |
| 31.2 | Certification of PFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*** |
| 32.1 | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*** |
| 32.2 | Certification of PFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*** |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).** |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.** |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.** |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.** |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document.** |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.** |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).** |

\* This exhibit shall not  be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities  of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities  Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any  filings.

\*\* XBRL (Extensible Business  Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections  11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act  of 1934, as amended, and otherwise is not subject to liability under these sections.

\*\*\* Filed with this Report

79

**SIGNATURES**

In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

**Bit Digital,  Inc.**

Date: May 15, 2026 By: */s/  Sam Tabar*

Sam Tabar

Chief Executive Officer

(Principal Executive Officer)

Date: May 15, 2026 By: */s/  Erke Huang*

Erke Huang

(Chief Financial Officer)

(Principal Accounting Officer)

Date: May 15, 2026 By: */s/  Bryan Ng*

Bryan Ng

(Principal Financial Officer)

80