BTBTBit Digital

For example, certain global privacy laws regulate the use of automated decision making and may require that the existence of automated decision making be disclosed to the data subject with a meaningful explanation of the logic used in such decision making in certain circumstances, and that safeguards must be implemented to safeguard individual rights, including the right to obtain human intervention and to contest any decision. Other global privacy laws allow individuals the right to opt out of certain automated processing of personal data and create other requirements that impact automated decision-making. At the federal level, the President scope and extent of regulation of AI is uncertain, but the United States recently issued an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which charges multiple agencies, including The National Institute of Standards and Technology, with producing guidelines in connection with Technology issued the development and NIST-AI-600-1, AI Risk Management Framework: Generative Artificial Intelligence Profile which will likely remain a standard that regulators may consider for determining whether companies have adequate assessed the risk of use of AI. In the European Union, there was political agreement on the EU AI Act, which establishes a comprehensive, risk-based governance framework for AI in the EU market. The EU AI Act entered in force on August 1, 2024, and the majority of the substantive requirements will apply two years later (beginning 2026). The EU AI Act will apply to companies that develop, use and/or provide AI in the European Union and includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose AI and foundation models, and proposes fines for breach of up to 7% of worldwide annual turnover (revenue). Additionally, in September of 2022, the European Commission proposed two Directives seeking to establish a harmonized civil liability regime for AI in the European Union, in order to facilitate civil claims in respect of harm caused by AI and to include AI-enabled products within the scope of the European Union’s existing strict liability regime. Once fully applicable, the EU AI Act will have a material impact on the way AI is regulated in the European Union, and together with developing guidance and/or decisions in this area, may affect our use of AI and our ability to provide, improve, or commercialize our cloud services, and could require additional compliance measures and changes to our operations and processes.

Net cash provided by used in operating activities was $8.5 $288.9 million for the year ended December 31, 2022, 2025, derived mainly from (i) a net loss of $105.3 $84.9 million for the year ended December 31, 2022, 2025 adjusted for depreciation expenses and amortization expense of $36.8 million, loss from disposal of property, plant and equipment of $0.9 million, loss on digital assets of $29.2 million, share based compensation expenses of $24.6 million, changes in fair value of investment securities $11.4 million, changes in fair value of derivative liability of $15.7 million, current expected credit losses of $0.2 million, acquisition expense of $1.7 million, digital assets mined of $32.3 $27.3 million from our mining services, depreciation expenses of miners of $27.8 million, gain from exchange of digital assets earned from staking of $6.5 $7.0 million, impairment of digital intangible asset of $6.0 million, gains on digital intangible assets of $24.7 $4.3 million, impairment gain from sale of property and equipment investment security of $50.0 million, and share-based compensation expenses of $2.3 million, $924 and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in digital assets and stable coins of $25.1 million as $283.1 million, a decrease in digital intangible assets of $19.1 million, an increase in other current assets of $5.5 million, a decrease in other non-current assets of $19.0 million, an increase in right-of-use assets of $4.9 million, an increase in deferred revenue of $48.8 million, a decrease in lease liability of $4.4 million, a decrease in accounts receivable of $18.8 million, an increase in net proceeds from sales investment in lease of digital assets and stable coins, and $3.3 million, an increase in accounts payable of $3.2 $6.7 million, and an increase in other payable and accrued liabilities of $18.1 million.

On June 3, 2024, the Company filed suit in Delaware the Superior Court of the State of Delaware, Complex Commercial Litigation Division, against Blockfusion, Blockfusion USA, Inc. (“Blockfusion”) (“Blockfusion”), alleging claims for breach of contract, conversion, contract and related claims in connection with, among other things, certain deposits and advances paid to Blockfusion, the return causes of which is owed to Bit Digital. Bit Digital is seeking action arising out of a terminated mining services relationship. The Company initially sought in excess of $4.3 million. million, including: (i) the return of a $3.75 million investment made under the parties’ Mining Services Agreement; (ii) approximately $576,000 in payments made in reliance on invoices the Company later determined to be fraudulent; and (iii) unpaid late development fees accruing at $9,375 per week. On October 22, 2024, Blockfusion denied the Company’s claims and brought filed counterclaims for reciprocal breach of contract and related relief. The Company denied Blockfusion’s counterclaims. Blockfusion is seeking at least $158,000 in damages. A bench trial has been scheduled for June 29, 2026. The litigation is at an early stage and a reasonably possible range of loss or recovery cannot be estimated.

For sales-type finance leases where the Company is the lessor, lessee, the Company recognizes a net investment right-of-use asset and a corresponding lease liability at lease commencement, measured in lease, which comprises a manner consistent with operating leases. Subsequently, fixed lease payments are recognized as amortization of the present value of the future lease payments right-of-use asset and any unguaranteed residual value. Interest income 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 at a constant periodic discount rate on or, if the remaining balance lease transfers ownership of the lease net investment using underlying asset to the rate implicit in Company, the lease and is included in “Revenue – other”. Sales-type leases result in the recognition of gain or loss at the commencement life of the lease, which will be recorded in “Other income, net.” leased asset.