RIOTRiot Platforms

On page 7, you disclose that, “Our Bitcoin is held in cold storage wallets by a well-known U.S.-based third-party digital asset-focused custodian. We also sell our Bitcoin using our custodian’s U.S. brokerage services.” Please revise future filings to describe in greater detail your custody procedures and related arrangements, including the following: • The identity of your third-party custodian; • The material

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terms of any (i) custody agreement and (ii) agreement in connection with your use of your custodian’s U.S. brokerage services to sell your Bitcoin. Additionally, file the same as exhibits in future filings. See Item 601(b)(10) of Regulation S-K; • The geographic location where crypto assets are held in cold wallets; • Whether any persons (e.g., auditors, etc.) are responsible for verifying the existence of the crypto assets held by your third-party custodian; and • Whether any insurance providers have inspection rights associated with the crypto assets held in storage.

Bullet #1: The Identity of Our Third-Party Custodian.

The Staff has requested that we disclose the identity of our third-party custodian in future filings. As disclosed on page 21 of the Form 10-K, as we continue to increase in size, we face escalated security threats from hackers, cyber-attackers and other malicious actors. We respectfully contend that publicly disclosing the identity of our custodian(s) raises significant data security concerns and increases the risk that our service provider(s) experience a security breach by which unauthorized parties may acquire access to our Bitcoin.

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We continually evaluate custodian options, as well as the appropriate size, number, and security of our custodians and potential future custodians, and we are free to enter into any number of custodian relationships with respect to our Bitcoin in the ordinary course of our business.

For the reasons stated above, we respectfully contend that we should not be required to disclose the identity of our third-party custodian (or custodians) in future filings made with the SEC. The name of our custodian and the amount of Bitcoin custodied with such custodian, as of June 30, 2024, is set forth on Appendix “A” hereto.

Bullet #2: Material Terms of Our Custody Agreement, Agreement With Our Custodian’s U.S. Brokerage Service to Sell Our Bitcoin and Request to File These Agreements as Exhibits in Future Filings.

The Staff has also requested that we disclose the material terms of our custody agreement and agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin and to file these agreements as exhibits in future filings. We respectfully contend that neither agreement is a “material contract” under Item 601(b)(10) of Regulation S-K, for the reasons set forth herein. Under Item 601(b)(10), a “material contract” includes a “contract not made in the ordinary course of business that is material to the registrant and is to be performed in whole or in part at or after the filing of the registration statement or report.” Both agreements are made in the ordinary course of business pursuant to Item 601(b)(10)(ii), which provides, in pertinent part:

“if the contract is such as ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries, it will be deemed to have been made in the ordinary course of business and need not be filed unless it falls within one or more of the following categories, in which case it shall be filed except where immaterial in amount or significance:

* * *

(B) Any contract upon which the registrant’s business is substantially dependent, as in the case of continuing contracts to sell the major part of registrant’s products or services or to purchase the major part of registrant’s requirements of goods, services or raw materials or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which registrant’s business depends to a material extent[.]”

The Agreements Are Not Made Outside the Ordinary Course of Business.

As disclosed in the Form 10-K, we are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin blockchain. Such custody agreements and agreements to use custodian brokerage services to sell Bitcoin are customary in the Bitcoin mining industry and ordinarily accompany the kind of business we conduct.

The Company’s Business Is Not Substantially Dependent on Either Agreement.

Further, neither agreement falls into any of the enumerated categories in Item 601(b)(10)(ii)(A-D) requiring registrants to file an agreement if it is material in amount or significance. As Bitcoin is a decentralized cryptocurrency, it is not required that Bitcoin be held by a custodian, and we may choose to self-custody. Therefore, our business is not substantially dependent on our custody agreement or agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin because our business is not dependent on the services our custodian offers us under the agreements. We have made the business decision to utilize third-party custodian and brokerage services with respect to our Bitcoin, and, in the future, we may decide to discontinue this practice, or to use other, or additional, service providers. Further, our current Bitcoin custodian and brokerage services relationships are non-exclusive, and we may freely change our Bitcoin custodian and brokerage relationships (including by entering into additional, parallel relationships, or by terminating our existing relationships) at any time. Finally, the market for third-party cold storage custodians and brokerages is well-developed, and neither agreement restricts our ability to engage an alternative provider, similar to our ability to change our depository financial institution relationships for our cash assets. We, therefore, respectfully submit to the Staff that our current third-party Bitcoin custodian and brokerage services agreements are not “material contracts” within the meaning of Item 601(b)(10) of Regulation S-K.

Also, because they are not material contracts, we should not be required to disclose the material terms of our custody agreement and agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin, or be required to file these agreements as exhibits in future filings.

Bullets #3-#4: Enhanced Disclosures in Future Filings of Our Custody Procedures and Related Arrangements.

We are not aware of our custodian experiencing excessive redemptions or withdrawals, or having suspended redemptions or withdrawals, of any customer assets (Bitcoin, crypto, or otherwise). Further, we have not experienced any loss of, or access to, our Bitcoin custodied with our custodian, we have never been unable to account for such Bitcoin assets, and we are not aware of our custodian having ever been unable to account for our Bitcoin assets or the crypto assets of its other customers. Finally, we continually monitor our Bitcoin assets held by third-party custodians, and we have unlimited audit rights with respect to such custodial accounts. Specifically, our accounting and internal audit teams perform a monthly reconciliation of our Bitcoin assets held by our custodian(s) and the records of our mining pool. The Chief Accounting Officer verifies these reconciliations quarterly, and our auditors verify the location and quantity of our Bitcoin assets annually, as part of the year-end audit process of our financial statements and internal controls over financial reporting.

Notwithstanding our contention that such contracts are not “material contracts” within the meaning of Item 601(b)(10) of Regulation S-K, in response to this comment, we will enhance our disclosures in future filings, commencing with our Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “2024 Q2 Form 10-Q”), to include information detailing our custody procedures and related arrangements and disclosure that our cold storage wallets in which our Bitcoin is held are located in the United States. We intend to provide enhanced disclosures of our custody procedures and related arrangements in future Form 10-K filings under Item 1. Business. An example of such enhanced disclosures for illustration purposes using the “Industry Trends” section of Item 1. Business in the Form 10-K is attached hereto as Appendix “B” (inserts marked with underline; deletions marked with strikethrough).

Bullets #5: Insurance Provider Inspection Rights.

Our insurance providers do not have inspection rights associated with our Bitcoin assets held in storage.

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Based on your disclosure on page F-44, there appears to be a concentration of risk related to your Bitcoin Mining revenue generated from your participation in a mining pool. In future filings, please include a risk factor highlighting the risks related to this revenue concentration.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding the risks related to revenue concentration due to our participation in a single mining pool in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor disclosure in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:

Our revenue generation is subject to risks applicable to our mining pool, including risks outside of our control.

We participate in a “Full-Pay-Per-Share” mining pool, which calculates Bitcoin payouts

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primarily based on the hash rate provided by us to the mining pool as a percentage of total network hash rate, along with other inputs. We currently derive a significant portion of our revenue from our mining pool participation, which accounted for XX% and XX% of our revenue for the six months ended June 30, 2024, and June 30, 2023, respectively. We own all of our miners and accompanying infrastructure, and the only connection between our assets and our mining pool is that the total hash rate capacity of our miners is currently allocated to our mining pool, which we are free to change at any time, in our discretion. Further, the mining pool in which we participate, like most mining pools, is decentralized and has protections in place to prevent malicious actors or technical errors from affecting the pool’s ability to operate; however, these protections are not foolproof, and we may lose access to the mining pool, perhaps permanently. Because of the monitoring systems we have in place, we would become aware within minutes if our mining pool were to suffer downtime or cease to exist altogether, and we would expect to be able to resume mining without a mining pool within minutes, or redirect our hash rate to another mining pool, within an hour of the downtime event. However, self-mining has, historically, been less successful in earning Bitcoin rewards than participating in a mining pool, and our Bitcoin Mining revenue would become more volatile and may decline–perhaps materially–as a result of the loss or unavailability of our mining pool. If such unanticipated circumstances associated with our mining pool arise, and we are unable to quickly switch to another pool, self-mine without a pool or otherwise diversify our sources of Bitcoin mining revenue, our business, results of operations, and financial condition may suffer as a result.

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Please add disclosure in future filings that addresses the risks related to bitcoin and the bitcoin network, including, for example, wash-trading, the existence of bitcoin "whales" and the concentration in bitcoin ownership, front-running and manipulation.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding risks related to the market for Bitcoin in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor disclosure in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:

Our success depends on external factors affecting the Bitcoin industry.

The Bitcoin industry has historically been subject to various risks relating to Bitcoin, as an asset, which have affected-at times adversely-the market price of Bitcoin.

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The ownership of Bitcoin has, historically, been concentrated in a relatively small number of persons or entities that, collectively, hold a significant number of Bitcoin (referred to as “whales” in the Bitcoin industry). While the ownership of Bitcoin has diversified significantly in recent years, whales continue to exist whose market activity (e.g., sales of large numbers of Bitcoin) could have an adverse effect on the demand for, and market price of, Bitcoin, which could have an adverse effect on our business and results of operation. Further, while larger, increasingly regulated exchanges with greater transparency and oversight have begun to proliferate, the Bitcoin economy remains nascent and largely opaque. The venues for Bitcoin transactions may experience greater operational problems and be exposed to a greater risk of facilitating fraudulent or illicit transactions (such as “wash trading”), than traditional financial markets and securities exchanges. Further, venues for Bitcoin transactions do not typically make complete information regarding their ownership structure, management teams, corporate practices, and regulatory compliance available to the public, who are, therefore, unable to verify the impartiality of such venues in respect of the Bitcoin transactions they facilitate. As a result of such lack of regulation and transparency, as well as the risk posed by Bitcoin whales, the public may lose confidence in Bitcoin transactions, which could adversely affect the market price of Bitcoin, perhaps materially, which would have an adverse impact on our business and results of operations.

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Please add disclosure in future filings that addresses the risks associated with the limited supply of bitcoins that can be mined, the maximum number of bitcoins that may be released into circulation, and the number of bitcoins currently in circulation.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding risks associated with the supply of Bitcoin in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:

There is a finite supply of Bitcoin and the number of new Bitcoin rewarded per block algorithmically decreases over time, which poses a risk to our business.

We earn revenue from Bitcoin Mining principally by earning Bitcoin rewards for solving blocks on the Bitcoin

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blockchain; however, the supply of new Bitcoin introduced to the market via Bitcoin mining is finite, with the last new Bitcoin expected to be mined in the year 2140 (approximately 116 years from now) according to experts. Accordingly, once the final new Bitcoin is introduced into the market, we will no longer earn revenue from Bitcoin Mining by earning Bitcoin rewards for solving a block. Instead, our Bitcoin Mining revenue will be dependent on the fees we earn from the transactions recorded on the blocks we solve. Historically, such transaction fees have been low; however, we have observed that, as the number of new Bitcoin introduced into the market is reduced in each halving, and as Bitcoin ownership and transactions in Bitcoin continue to proliferate, the fees charged for recorded transactions on the Bitcoin blockchain have increased. We cannot, however, predict whether such transaction fees will increase sufficiently to replace the value of earning new Bitcoin once the last Bitcoin in mined in the year 2140, and, therefore, we cannot guarantee that we will be able to earn sufficient revenue from Bitcoin Mining for our Bitcoin Mining business to continue as a going concern. Should any of these events come to pass, our business and results of operation may suffer, and the price of our securities may be affected, perhaps materially.

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We note your disclosure on page 12 that you currently rely on trade secrets, trademarks, service marks, trade names, copyrights, and other intellectual property rights, and on licenses to use intellectual property rights owned and controlled by others. Please add disclosure in future filings that addresses the associated intellectual property risks.

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Incorrect or fraudulent Bitcoin transactions may be irreversible..., page 22

We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding risks related to our reliance on third party intellectual property in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:

We rely on intellectual property rights, including third-party intellectual property rights, which exposes us to potential liability.

Our business relies on open-source technology and third-party intellectual property in certain respects.

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As a result, we may become the subject of third-party intellectual property right infringement claims relating to our use of such third-party intellectual property. For example, as further identified under Legal Proceedings, Green Revolution Cooling, Inc. has alleged that the immersion cooling systems we use, which were purchased from Midas Immersion Cooling, LLC, infringe on certain of its patent claims. While we reasonably rely on the representations and warranties of third-party vendors, such as Midas Immersion Cooling, LLC, it is not possible for us to avoid all potential claims of infringement of third-party intellectual property rights. If such claims are successful, we may be required to pay royalties or be ordered to cease using any technologies found to be infringing on such third-party rights altogether. Additionally, any such legal action would cause the diversion of time, energy, and resources away from our operations and toward defending against such actions, and such risks may dissuade us from pursuing further technological innovation in support of our strategic objectives.

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We note your disclosure that, "[w]e may be unable to secure insurance policies for our Bitcoin assets at rates or on terms acceptable to us, if at all, and we may choose to selfinsure." Under an appropriately captioned heading, please disclose in future filings the types of insurance coverage you carry, if any, including any insurance that you or your third-party custodian carries covering crypto assets held on your

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behalf. Also revise future filings to disclose the amount of coverage, term, termination provisions, renewal options and limitations on coverage. To the extent you or your custodian do not carry insurance covering crypto assets, please revise future filings to so clarify and expand your risk factor disclosure as appropriate.

We respectfully acknowledge the Staff’s comment and advise that we will enhance our disclosures regarding insurance coverage for our Bitcoin in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:

Our lack of insurance protection over our Bitcoin exposes us to enhanced risk of loss with respect to our Bitcoin.

We rely on the protections afforded to us by our third-party custodian of our Bitcoin, which utilizes market-leading, industrial-grade protections for custodied

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client assets, to protect against risk of loss of our Bitcoin. As such, we require our custodian to maintain insurance policies against cyber-attacks and other unauthorized intrusion events which may target our Bitcoin, and we have certain indemnification protections from our custodian in such events. Such protections are imperfect, however, and our custodian’s defenses may be breached, and our custodied Bitcoin may be lost, as a result. Further, the magnitude of such loss may exceed the amount of insurance coverage for our Bitcoin and the ability of our custodian, or its insurers, to indemnify us in full. Besides any third-party custodian insurance policies, we do not separately carry insurance policies covering our Bitcoin assets, and we may not be able to secure such insurance coverage in the future at rates or on terms acceptable to us, if at all, and we may choose to self-insure. If our digital assets are lost, stolen or destroyed, the responsible party may not have the financial resources sufficient to satisfy our claim. To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business, results of operations and financial condition.

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We note that your policy prohibits any transactions with SDN individuals, and you “take all commercially reasonable steps to avoid such transactions.” Under an appropriately captioned heading, please expand your disclosure in future filings to briefly discuss the procedures you conduct to determine, among other things, whether the counterparty in any transaction is a person named on OFAC’s SDN list.

We respectfully acknowledge the Staff’s comment and advise that we will enhance our disclosures of our procedures regarding compliance with regulations applicable to sales of our Bitcoin, including applicable FINCEN, KYC/AML, and Treasury/OFAC regulations, including with respect to transactions with persons named on OFAC’s SDN list. We intend to provide such enhanced disclosures in future Form 10-K filings under Item 1. Business. An example of such enhanced disclosures for illustration purposes using the “Regulatory” section of Item 1.

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Business in the Form 10-K is attached hereto as Appendix “C” (inserts marked with underline; deletions marked with strikethrough).

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Please enhance your disclosure in future filings to provide a comprehensive breakeven analysis for your bitcoin mining operations that compares the cost to earn/mine one bitcoin with the market value of one bitcoin. Identify and explain all relevant inputs. Quantitative tabular disclosure may be helpful. As part of your breakeven analysis, please be sure to reflect mining equipment costs.

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Additionally, clarify whether you finance the purchase of mining equipment and if so, reflect financing costs in your breakeven analysis.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance future filings, commencing with the 2024 Q2 Form 10-Q, to include a comprehensive breakeven analysis, identifying all relevant inputs to compare the cost to mine one Bitcoin with the market value of one Bitcoin within our Management’s Discussion and Analysis.

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An example, for illustrative purposes only in response to the Staff’s comment, of the enhanced disclosure in the Management Discussion and Analysis is as follows:

The following table presents the Company’s cost to mine one Bitcoin:

QX 2024

QX 2023

Cost of power for self-mining operations ($in thousands) (1)

$

Other direct cost of revenue for self-mining operations ($in thousands) (2)

Cost of revenue for self-mining operations

Less power curtailment credits ($in thousands)

Cost of revenue for self-mining operations, net of power curtailment credits ($in thousands)

Quantity of Bitcoin mined

Cost to mine one Bitcoin (3) (4)

Production value of one Bitcoin mined (5)

Cost to mine one Bitcoin as a % of production value of one Bitcoin mined

%

(1) Excludes $XX million and $XX, for the XX months ended XX XX, 2024 and XX XX, 2023, respectively, in power costs incurred to provide power to our legacy data center hosting customer since these costs are not directly related to our self-mining operations. When including the $XX million and $XX million, for the XX months ended XX XX, 2024 and XX XX, 2023, respectively, our total Bitcoin Mining cost of revenue as stated in the Company’s Consolidated Statements of Operations was $XX million and $XX million, for the XX months ended XX XX, 2024 and XX XX, 2023, respectively.

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

(3) Costs to finance the purchase of miners were zero in all periods presented as the miners were paid for with cash from the Company’s cash balance. The seller did not provide any financing nor did the Company borrow from a third-party to purchase the miners.

(4) The Cost to mine one Bitcoin is computed by dividing the Self-mining operations cost of revenue, net of power curtailment credits by the Quantity of Bitcoin mined. Consistent with “Cost of revenue” in the Company’s Consolidated Statements of Operations, “Cost to mine one Bitcoin” excludes depreciation expense. Including depreciation expense related to our miners, the Cost to mine one Bitcoin would increase by $XX and $XX per Bitcoin for the XX months ended XX XX, 2024 and XX XX, 2023, respectively. Therefore, our total Cost to mine including miner-related depreciation expense was $XX and $XX, respectively.

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

We have not historically financed the purchases of our mining equipment, nor do we have any current plans to do so in the future.

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Please enhance your discussion in future filings to provide comparative underlying key operating metrics for periods presented. For example, on page 33 you disclose that as of December 31, 2023, your Bitcoin Mining business segment operated 112,944 miners with a hash rate capacity of 12.4 EH/s, but you do not disclose 2022 metrics to support the changes in period-over-period operating results.

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Considering also providing key operating metrics in a table format. Refer to Item 303(b)(2)(ii) and Instructions to paragraph (b) of Regulation S-K.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance our Management’s Discussion and Analysis in future filings, commencing with the 2024 Q2 Form 10-Q, as outlined in Item 303(b)(2)(ii) of Regulation S-K to include comparative underlying key operating metrics for all periods presented.

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An example for illustrative purposes of the enhanced disclosure in our Management’s

Discussion and Analysis using the key operating metrics set forth in the Form 10-K and the corresponding key operating metrics set forth in the Form 10-K for the fiscal year ended December 31, 2022, is as follows:

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You disclose that during the years ended December 31, 2023 and 2022, you earned $71.2 million and $27.3 million, respectively, in power credits, which were recognized as offsets to your operating expenses, but equated to approximately 2,497 Bitcoin and 968 Bitcoin, respectively, as computed using the average daily Bitcoin prices for the applicable period.

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Please tell us the relevance of disclosing the number of Bitcoin equivalent to your power credits. In this regard, you did not mine these additional Bitcoin and it is evident that you did not purchase and hold the number of Bitcoin that you disclose. In your response tell us how you calculated the average Bitcoin price as it is unclear whether it is the average of closing prices on your principal market or some other average. Refer to SEC Release No. 33-10751.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance future filings, commencing with the 2024 Q2 Form 10-Q, to no longer report in our filings the above-referenced disclosure equating our power credits earned to Bitcoin values. Read in the reply ↗

We note that you present Non-GAAP financial measures for your Bitcoin Mining and Data Center Hosting segments for revenue, cost of revenue, revenue in excess of cost of revenue, net of power curtailment credits, power curtailment credits allocated and related derived margins, but you do not present the most directly comparable GAAP measures with equal or greater prominence.

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For each Non-GAAP financial measure you present, please revise future filings to present the most directly comparable GAAP measure with equal or greater prominence as required by Item 10(e)(1)(i)(A) of Regulation S-K and the guidance in Questions 104.03 and 104.04 of the Division of Corporation Finance’s Compliance & Disclosure Interpretations on Non-GAAP Financial Measures. Also, provide the reconciliations required by Item 10(e)(1)(i)(B) of Regulation S-K. Please provide us with your proposed disclosures.

We respectfully acknowledge the Staff’s comment and respond that for each Non-GAAP financial measure presented on the bottom of page 39 and on page 40 of the Form 10-K, we presented the most directly comparable GAAP measure from the Company’s Consolidated Statements of Operations. However, for the following reasons, we have determined not to present in future filings the Non-GAAP financial measures and related reconciliations that were presented on the bottom of page 39 and on page 40 of the Form 10-K (and we did not present such Non-GAAP financial measures and related reconciliations in our

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Form 10-Q for the quarter ended March 31, 2024 (the “2024 Q1 Form 10-Q”)). As reported in the 2024 Q1 Form 10-Q: (a) prior to 2024, the Company had a Data Center Hosting reportable segment, and, as of March 31, 2024, the Company had terminated all contracts with its Data Center Hosting customers; (b) for the three months ended March 31, 2024, the Data Center Hosting agreements, by themselves, were no longer material

(based on revenue or profit) and therefore, commencing with the three months ended March 31, 2024, we will no longer report Data Center Hosting as a separate reportable business segment; and (c) we have no current plan to offer data center hosting services to new customers.

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You disclose that you believe netting the power curtailment credits against your costs can be an important financial measure because it allows management, investors, and your board of directors to evaluate and compare your operating results, including your operating efficiencies, from period-to-period and relative to actual proportional power consumption during the periods presented.

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You also disclose that offering power back to the grid at market-driven spot prices, thereby reducing your operating costs, is integral to your overall strategy. Considering the allocation percentages of the consolidated power curtailments to Bitcoin Mining and Data Center Hosting have fluctuated for the periods presented, please address the following in future filings: • Tell us the amounts of power consumption for the periods presented, including how you determined and measured the proportional power consumption for each segment. • Tell us what caused actual power consumption to fluctuate between periods and how the measures are useful to investors if the actual power consumption amounts are not disclosed, considering the change in allocation percentages in the periods presented. • Tell us your consideration for disclosing the reasons for significant changes in power consumption and the related credit allocation between segments.

We respectfully acknowledge the Staff’s comment and respond to the Staff’s questions as follows. However, for the same reasons referenced above in our response to the Staff’s Comment 11, we have determined not to present in future filings the Non-GAAP financial measures and related reconciliations that were presented on the bottom of page 39 and on page 40 of the Form 10-K, and accordingly, we will not include in future filings (and did not include the 2024 Q1 Form 10-Q) statements required by Item 10(e)(i)(C) and (D) of Regulation S-K corresponding to such Non-GAAP financial measures.

We

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respectfully refer the Staff to Note 9. Power Purchase Agreement, where we disclose the details of our power purchase agreement (“PPA”). Specifically, we note that our PPA specifically provides for the delivery of power to our Rockdale Facility. We have entered into various contracts under the PPA to acquire a total of 345 megawatts (“MW”) of long-term, fixed-price power, in multiple blocks, as follows: 130 MW contracted in May 2020, at fixed prices through April 30, 2030; 65 MW contracted in March 2022, at fixed prices through April 30, 2030; and 150 MW contracted in November 2022, at fixed prices through October 31, 2027.

Our Rockdale Facility is equipped with numerous power meters, which allow us to track the amount of power consumed by hosted customers and by our self-mining operations.

During 2021, the Rockdale Facility was entirely used to host third-party customers and our self-mining fleet of miners were deployed at a third-party hosting facility (the “Coinmint Facility”). As disclosed in the Company’s Form 10-Q for the quarterly period ended June 30, 2022, the Company elected not to renew its co-location mining services agreement with Coinmint, effective as of July 8, 2022. In connection with the termination of this agreement, our miners were transferred from the Coinmint Facility to our Rockdale Facility. Additionally, the first building in the Company’s 400 MW expansion of the Rockdale Facility was placed into service during the second quarter of 2022, followed by three additional buildings being placed into service at various times through the second quarter of 2023. All four new buildings are entirely used for our self-mining operations, whose results are included in the Bitcoin Mining reportable segment. As a result of the ongoing expansion, the proportion of power consumed by our Bitcoin Mining segment increased from 0% in 2021, 43.9% in 2022, and 65.5% in 2023.

Although our power consumption increased from 2021 through 2023 due to our expansion of the Rockdale facility our consumption declined in the summer months of those years relative to other months. The state of Texas often experiences extreme heat in summer months, causing demand for electricity to spike. We execute our power strategy by curtailing power usage for relatively short periods of time, but sometimes by more than 95% of its total available supply during periods of peak demand, forgoing revenue from our Bitcoin mining operations to instead provide energy resources to the Electric Reliability Council of Texas (“ERCOT”). We believe our curtailment of operations meaningfully contributes to reducing overall power demand in ERCOT, helping to ensure that its consumers do not experience interruptions in service.

As disclosed in Note 17. Commitments and Contingencies, we terminated one of our legacy hosting customer’s colocation services agreements as of June 29, 2023, which resulted in only one remaining hosted customer. As a result of the significant expansion of the Rockdale Facility and the reduction in power consumption from hosted customers, the proportion of power consumed by the Bitcoin Mining segment at the Rockdale Facility increased significantly.

We believe that disclosing the proportion of power consumed by the Bitcoin Mining reportable segment is useful to investors, especially considering the significant change in proportion of consumption over time. The change in the proportion of consumption was a direct result of the significant increase in our self-mining operations using more power than by our hosted customers, and not due to a change in allocation methodology in any period.

The PPA is a key differentiator for us and allows us to employ our power strategy, which significantly reduces our overall cost of operations. In addition to the quantity of Bitcoin produced, the Company believes a key performance indicator used by investors is direct cost of operations. Although the credits received as a result of our energy curtailment are recognized outside of cost of revenue in the statements of operations, we believe they significantly reduce our overall cost to mine Bitcoin.

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Your disclosure of net cash provided by/used in operating, investing and financing activities appears to repeat information already provided in the statement of cash flows. Please represent to us that, in future filings, you will enhance your disclosure to provide a quantitative and qualitative analysis of the drivers of the change in cash flows between periods and impact to future trends to provide a sufficient

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basis to understand changes in cash between periods. Refer to Item 303(b)(1) of Regulation S-K and Sections 1.B. and IV.B. of SEC Release Nos. 33-8350 and 33-10890 for guidance.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance in future filings, commencing with the 2024 Q2 Form 10-Q, our disclosures within our Management’s

Discussion and Analysis of net cash provided by/used in operating, investing, and financing activities as outlined in Item 303(b)(1) of Regulation S-K and SEC Release Nos.

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33-8350 and 33-10890 to provide a quantitative and qualitative analysis of the drivers of the change in cash flows between periods and impact to future trends to provide a sufficient basis to understand changes in cash between periods in future filings. An example, for illustrative purposes only in response to the Staff’s comment, of our Management’s Discussion and Analysis of net cash provided by/used in operating, investing and financing activities is as follows:

Operating Activities

For the six months ended June 30, 2024 and 2023, net cash provided by operating activities was $XX million and $XX million, respectively. The increase was primarily attributable to $XX million in higher proceeds from the sale of Bitcoin due to selling nearly twice the quantity of Bitcoin during 2023, combined with higher Bitcoin prices during 2023, partially offset by increased power costs of $XX, and $XX in selling, general, and administrative costs excluding stock-based compensation, both of which were primarily driven by the increased mining capacity, and headcount, at the Rockdale Facility combined with other general operating costs such as insurance and information technology projects to support our growth.

Investing Activities

For the six months ended June 30, 2024 and 2023, net cash used in investing activities was $XX million and $XX million, respectively, which was attributable to purchases and deposits paid for miners and purchases of property and equipment for our ongoing expansions, as we continue towards our anticipated 28 EH/s of total self-mining hash rate capacity by the end of 2024. We completed our expansion of the Rockdale Facility during the year ended December 31, 2023, and continued to develop our Corsicana Facility, which is expected to commence self-mining operations by the end of the first quarter of 2024. We anticipate incurring additional costs related to the first phase of the Corsicana Facility of approximately $XX million during the first half of 2024. During the six months ended June 30, 2024, we paid $XX million in deposits and payments for the purchase of miners, and anticipate additional payments of $XX million and $XX million to be made in 2024 and 2025, respectively.

Financing Activities

For the six months ended June 30, 2024 and 2023, net cash provided by financing activities was $XX million and $XX million, respectively, consisting primarily of proceeds from our ATM Offerings of $XX million and $XX million, respectively. We have less than $XX million in long-term debt and have primarily financed our strategic growth through proceeds from our ATM Offerings and issuances of our common stock. It is reasonably likely that we will continue to finance our ongoing growth with proceeds from current and future ATM Offerings.

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We note your disclosure of critical accounting estimates. Please represent to us that, in future filings, you will enhance your disclosure to provide qualitative and quantitative information necessary to understand the estimation uncertainty and the impact your critical accounting estimates have had or are reasonably likely to have on your financial condition and results of operations.

Rest of the question

Your disclosure should explain why each critical accounting estimate is subject to uncertainty and, to the extent the information is material and reasonably available, discuss how much each estimate and/or assumption has changed over a relevant period and the sensitivity of reported amounts to the underlying methods, assumptions and estimates used, to the extent applicable. The disclosures should supplement, not duplicate, the description of accounting policies or other disclosures in the notes to the financial statements. Please also consider the underlying estimates related to your power purchase agreement and related power curtailment credits. Refer to Item 303(b)(3) of Regulation S-K and SEC Release No. 3310890 for additional guidance.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance in future filings, commencing with the 2024 Q2 Form 10-Q, our disclosures within our Management’s Discussion and Analysis to provide qualitative and quantitative information necessary to understand the estimation uncertainty and the impact our critical accounting estimates have had or are reasonably likely to have a material impact on our financial condition and results of operations as stated in Item 303(b)(3) of Regulation S-K and SEC Release No. 33-10890.

Rest of the answer

An example, for illustrative purposes only in response to the Staff’s comment, of such enhanced disclosure in our Management’s Discussion and Analysis is as follows:

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

Long-Lived Assets

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

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

Stock-Based Compensation

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

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We note your election to provide disclosure under the sensitivity analysis option of Item 305(a)(1)(ii) of Regulation S-K. Please address the following: • Tell us how your hypothetical 10% increase or decrease in future power prices at December 31, 2023, would have a positively correlated impact of increase or decrease in net income.

Rest of the question

In your response:o Tell us how you derived the approximately 10% impact; o Tell us whether you believe the 10% impact is reasonably possible in the nearterm as stipulated in Instruction 3A to Item 305(a) of Regulation S-X and explain why; and o Tell us whether you believe a 10% decline in power prices is reasonable possible and explain why. • Tell us whether you believe the 10% increase or decrease in the price of Bitcoin is reasonably possible in the near-term considering 2023 price volatility, specifically explaining your consideration for providing a higher rate of change.

In response to the Staff’s comment regarding our future power price sensitivity analysis, as of December 31, 2023, a 10% increase in future power prices would have increased the value of our derivative asset and reduced our net loss by $43.2 million. A 10% decrease in future power prices would have decreased the value of our derivative asset and increased our net loss by $43.2 million.

Although many factors can significantly impact the spot price of power on a near-term basis, we believe a 10% increase or decrease in the entire 2027 and 2030 future power curves (the dates of maturity of our

Rest of the answer

various fixed-price power purchase agreements) is much less likely in the near-term although reasonably possible as defined in Instruction 3A to Item 305(a) of Regulation S-X. During 2023, the average quarterly change in fair value of our derivative asset was approximately $1.7 million and the largest change on an absolute value basis was $13.1 million. These changes are much smaller than the estimated $43.2 million impact a 10% change in future power prices would have been. Therefore, we conservatively derived the approximately 10% impact from the instructions for Item 305(a)(1)(ii) of Regulation S-K, which states that registrants should use changes that are not less than 10 percent of end of period market rates or prices.

In response to the Staff’s comment regarding our Bitcoin price sensitivity analysis, we believe the 10% is an amount that can provide users of our financial statements a reasonable sensitivity analysis for use in near-term analysis. While the Bitcoin price has historically experienced periods of significant volatility, as the market for Bitcoin has continued to mature, that volatility has also decreased. Because of the significant investment inflows into Bitcoin through the newly-approved spot ETFs for example, we believe it is reasonably likely that the volatility will continue to decline as the market cap of Bitcoin increases. However, we cannot predict future prices or volatility. Therefore, although it is reasonably possible the near-term volatility could be greater than 10%, we do not want to mislead investors by providing a potentially extreme possible increase in our net income.

Additionally, because we disclose the quantity of Bitcoin produced during the year and the corresponding revenue recognized during the year, a user of our financial statements has the information to estimate any increase or decrease they deem likely or even unlikely.

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You disclose that after the adoption of ASU 2013-08 you record Bitcoin at fair value. From your June 29, 2018 response to comment 14 of our June 15, 2018 letter, it appears that you consider CoinMarketCap your principal market. As CoinMarketCap is not a market where Bitcoin is bought and sold, please tell us whether you still consider it to be your principal market.

Rest of the question

If so, tell us how CoinMarketCap qualifies as your principal market, or in the absence of a principal market, your most advantageous market. If not, tell us the identity of your principal or most advantageous market. In your response, please include the following: • As you regularly sell Bitcoin, tell us what market or markets you actively sell in. • Tell us how you considered that market or those markets in your determination of your principal or most advantageous market. Refer to ASC 820-10-35-5A.

In response to the Staff’s comment, subsequent to our 2018 correspondence with the Staff, we have since determined that Coinbase is our principal market for purposes of determining the fair value of our Bitcoin as it is the market with the greatest volume and level of activity and is a market that we have access to.

Rest of the answer

The impact of the difference between the Bitcoin price as per CoinMarketCap and Coinbase was immaterial in all prior periods.

Commencing with the 2024 Q2 Form 10-Q, we intend to expand the above-referenced disclosure as follows:

Bitcoin is recorded at fair value, as determined using the period-end closing price of Bitcoin on the Company’s principal market, Coinbase, and changes in fair value are recognized in Change in fair value of Bitcoin, in Operating income (loss) on the Consolidated Statements of Operations, as of, and for the six months ended June 30, 2024.

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Please address the following as it relates to your mining pool participation under the Full- Pay-Per-Share (FPPS) payout methodology: • Confirm for us that you participated in only one mining pool for each period presented in your filing as implied by your concentrations disclosures on page F-44 and represent to us that you will enhance your disclosure in future periods to clarify.

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• You identify the provision of “computing power” as your single performance obligation. Tell us how that terminology accurately portrays the promise under your contracts given that you run the pool operator’s software on your equipment to construct block header candidates and perform hash calculations. In your response, clarify for us whether as a participant in a mining pool it would be more accurate to characterize your performance obligation as the provision of hash calculation services to the pool operator and represent to us, if true, that you will revise your disclosure in future filings, including a statement that you decide when to provide services under the contract(s). • You disclose that contracts are terminable at any time by you, at no cost to you, or by the pool operator, under certain conditions specified in the contract. However, in your April 3, 2019 response to our February 14, 2019 letter you indicated that contracts can be terminated by pool operators at any time for any reason. Please reconcile the apparent discrepancy for us. To the extent the pool operator is only able to terminate the contracts for specific reasons, tell us the conditions that allow the pool operator to terminate. Otherwise, represent to us that you will enhance future filings to clarify, if true, that the contracts with your pool operators provide both parties the unilateral enforceable right to terminate the contract at any time without penalty. • Tell us how you considered the guidance in Questions 7 and 8 to the FASB Revenue Recognition Implementation Q&A's and the impact on your determination of both contract inception and contract duration for accounting purposes. Specifically, tell us whether you believe the termination rights in your contracts result in contracts that are continually renewed for accounting purposes and therefore have a duration of less than 24 hours and if so, revise your revenue recognition policy in future filings to state that fact. • To the extent you have determined that the pool operator's ability to terminate at any time without penalty under each mining pool arrangement results in a contract that is continually renewed, clarify for us whether the rate of payment remains the same upon renewal and whether your customer’s option to renew represents a material right that represents a separate performance obligation as contemplated in ASC 60610-55-42. Please revise your revenue recognition policy disclosure in future filings accordingly. • Enhance future filings to disclose, if true, that revenue is recognized the same day that control of the contracted service transfers to the mining pool operators, which is the same day as contract inception. • You disclose that your mining rewards are determined based on an FPPS payout formula. Please enhance your disclosures in future filings to include a more fulsome description of this formula. Your disclosure should clarify, if true, that your rewards are comprised of block rewards and transaction fees. Your revised disclosure should also describe the variables that comprise the FPPS formula. For example, if true, disclose that network block subsidies are based on the total amount of block subsidies that are expected to be generated on the bitcoin network as a whole during the 24hour period beginning at midnight UTC daily (i.e., the measurement period), while network transaction fees are based on the total amount of transaction fees and block rewards that are actually generated on the blockchain network as a whole during the measurement period. Your disclosure should also make clear whether the amounts are calculated based on expected or actual amounts. • You state that you value noncash consideration at contract inception. Given that Bitcoin trades 24/7, please tell us and disclose the specific point in time on the date of contract inception that you fair value Bitcoin each day (e.g., 23:59:59 or 0:00:00). If 0:00:00, please specify if that is the start of the day of the contract (i.e., 0:00:00 to 23:59:59) or the start of the next day.

First bullet:

As disclosed in Note 2. Significant Accounting Policies and Recent Accounting Pronouncements, we only utilized a fractional share mining pool during the year ended December 31, 2021 and throughout 2022, until mid-December 2022, when we stopped participating in the fractional share pool and began participating in an FPPS pool.

Rest of the answer

We continue to utilize the FPPS pool.

We will enhance our concentration disclosures in future periods to clarify that we only participate in the FPPS pool.

Second bullet:

We agree with the Staff’s comment that as a participant in a mining pool, it would be accurate to describe our performance obligation as the provision of hash calculation services (i.e. hash rate) to the pool operator and that we decide when to provide services under the contract. We will revise future filings accordingly.

Third bullet:

As noted above, we entered into a contract with an FPPS pool in December 2022 and therefore, the 2019 fractional share pool contract is no longer relevant. We will enhance future filings to clarify that the contract provides both parties the unilateral enforceable right to terminate the contract at any time without penalty.

Fourth bullet:

We believe the duration of each contract is less than 24 hours, which corresponds with the period of service and remuneration terms of the agreement. The contract is continually renewed, but when considering Questions 7 and 8 to the FASB Revenue Recognition Implementation Q&A’s, since the terminating party is not required to pay a termination fee or penalty and the pricing formula remains the same upon each contract renewal and represents a standalone price, the contract does not provide an additional material right that would require a separate performance obligation by us, as also contemplated in ASC 606-10-55-42. We will revise our revenue recognition policy in future filings accordingly.

Fifth bullet:

We believe the contract provides both parties the unilateral enforceable right to terminate the contract at any time without penalty and that the contact is continually renewed, However, the rate of payment (i.e. the FPPS payout formula) remains the same upon each contract renewal. Therefore, we do not believe our right to renew represents a material right that represents a separate performance obligation by us, as contemplated in ASC 606-10-55-42. We will revise our revenue recognition policy disclosure in future filings accordingly.

Sixth bullet:

We will enhance future filings to disclose that revenue is recognized on the same day that control of the contracted service transfers to the mining pool operators, which is the same day as contract inception.

Seventh bullet:

We will enhance future filings to enhance our description of the FPPS payout formula entered into, including clarification that rewards are comprised of block rewards and transaction fees, the variables that comprise the FPPS formula, and that amounts are calculated based on actual amounts mined. An illustrative example of the enhanced description is as follows:

We are entitled to consideration even if a block is not successfully placed by the mining pool operator. Bitcoin network block subsidies are based on the total amount of block subsidies that are expected to be generated on the Bitcoin network as a whole during the 24-hour period beginning at midnight UTC daily (i.e., the measurement period), while network transaction fees are based on the total amount of transaction fees and block rewards that are actually generated on the blockchain network as a whole during the measurement period.

We are entitled to a fractional share of the Bitcoin award and transaction fees from the mining pool operator as determined based on the hash rate provided by the Company to the mining pool as a percentage of the total expected Bitcoin network hash rate based on the current network difficulty. We are entitled to our relative share of consideration at the end of each contract period, even if a block is not successfully placed by the mining pool.

Eighth bullet:

Daily earnings are calculated at the start of the day of the contract, which is determined at 0:00:00 UTC.

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Please address the following: • Tell us and enhance future filings to clarify the agreements included in the measurement of the power purchase agreement accounted for as a derivative asset. For example, indicate whether the Facilities Agreement, Demand Response Services Programs and Four Coincident Peak program are included and whether they are also scheduled to end as of April 30, 2030 and, if not, when.

Rest of the question

• Tell us and enhance future filings to clarify the inputs of the derivative fair value, including how your annual power activity and earned power credits impact the change in the derivative asset fair value and changes in key assumptions and inputs for the periods presented. For example, you disclose that you earned credits under the PPA of approximately $71.2 million in 2023 compared to $27.3 million in 2022 which you recognized in addition to the change in fair value of the derivative asset of $6.7 million. Refer to ASC 815-10-50-1A(d) and ASC 820-10-50-2(bbb)(2). • As fair value is a market-based measurement and not an entity-specific measurement as stipulated in ASC 820-10-05-1B, tell us how your "qualitative judgment[s] related to company-specific risk factors," as disclosed in the fifth paragraph on page F-28, are market-based inputs to your fair value determination.

The only agreement included in the measurement of the power purchase agreement (“PPA”) is the PPA. The Facilities Agreement, Demand Response Services Program, and Four Coincident Peak Program are not included in the calculation of fair value of the derivative asset.

The Demand Response Services Program is available to us as part of the PPA. The Four Coincident Peak Program is available to all ERCOT customers. The Facilities Agreement provided for the construction of certain facilities to receive and deliver electricity at our Rockdale Facility.

Rest of the answer

This construction has been completed and will be disclosed as such in future filings.

Our power activity and earned power credits are not included in the valuation of our derivative asset. The derivative asset’s value is determined by a third-party valuation specialist using the income approach. The fixed-price of each contract comprising the total 345 MW under contract is compared to its respective future power curve depending on their maturity and is then discounted back to present value. Inputs into the weighted-average cost of capital estimate include a risk-free rate of return, which is determined from United States Treasury Bond yields, estimated cost of debt, which includes a Moody’s rating, and an equity risk premium based upon market data provided by a global cost of capital service provider. We will enhance our disclosure of the inputs used in the valuation in future filings.

The “qualitative judgment[s] related to company-specific risk factors” were intended to indicate the utilization of our own credit risk in determining the fair value, as required by ASC 820. In response to the Staff’s comment, we will update future disclosures to clarify that the Company’s credit risk is an input to our fair value determination.

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Please address the following: • Tell us how your disclosures provide a measure of profit or loss for each of your segments. Refer to ASC 280-10-50-22, 50-30(b) and 50-31, and the illustrative examples in FASB ASC 280-10-55-49 and 55-50 for further guidance. • Tell us why you have separately included revenue and cost or revenue eliminations in total segment revenues and total segment cost of revenues.

Rest of the question

Refer to ASC 280-10-5027. • Tell us why you do not allocate power curtailment credits in your measures of segment cost of revenue for Bitcoin Mining and Data Center Hosting when you include them in your non-GAAP measures on page 40. Refer to ASC 280-10-50-27 and 50-28.

We respectfully acknowledge the Staff’s comment and confirm that we will enhance future filings, commencing with the 2024 Q2 Form 10-Q, by providing a measure of profit or loss for each of our segments. As reported in the 2024 Q1 Form 10-Q: (a) prior to 2024, the Company had a Data Center Hosting reportable segment, and, as of March 31, 2024, the Company had terminated all contracts with its Data Center Hosting customers; (b) for the three months ended March 31, 2024, the Data Center Hosting segment, by itself, was no longer material (based on revenue or profit) and therefore, commencing with

Rest of the answer

the three months ended March 31, 2024, we will no longer report Data Center Hosting as a separate reportable business segment;

and (c) we have no current plan to offer data center hosting services to new customers Therefore, beginning in 2024, the Company’s reportable segments are Bitcoin Mining and Engineering.

Specifically for measures of profit or loss, our CODM uses segment gross margin (defined as segment revenue less cost of revenue) to allocate resources and assess segment performance. An example of such future enhanced disclosure in our Segment Information footnote is as follows:

…The Company believes the key profit or loss metric for the Bitcoin Mining and Engineering segments is gross margin, which we define as Revenue less Cost of Revenue…

We separately included revenue and cost of revenue eliminations in total segment and consolidated revenues and total segment and consolidated cost of revenues to provide stand-alone information by segment and the eliminations represented the elimination of intersegment revenue and intersegment cost of revenue in total so that in accordance with ASC 280-10-50-32, the total of the reportable segment information reconciled to our consolidated revenue and cost of revenue. We acknowledge the Staff’s comment and, commencing with the 2024 Q2 Form 10-Q, will also present our segment information in accordance with ASC 280-10-50-27 and ASC 280-10-55-48 to not include eliminations in total segment revenue, but rather as a reconciling item. An example, for illustrative purposes only in response to the Staff’s comment, of the enhanced disclosure is as follows:

The following tables present a reconciliation of the Company’s reportable segment revenues and measures of profit or loss to the Company’s consolidated totals:

For the six months ended June 30, 2024

Bitcoin Mining

Engineering

Total

Revenue from external customers

XXX

Intersegment revenue

Reconciliation of revenue

Other revenue (1)

Elimination of intersegment revenue

(XX)

Total consolidated revenue

Less:

Cost of revenue

Segment gross profit

Acquisition-related costs

Selling, general, and administrative

Depreciation and amortization

Change in fair value of Bitcoin

Change in fair value of derivative asset

Power curtailment credits

Change in fair value of contingent consideration

Realized gain on sale of Bitcoin

(Loss) gain on sale/exchange of equipment

Casualty-related (charges) recoveries, net

Impairment of Bitcoin

Impairment of goodwill

Impairment of miners

Interest income (expense)

Realized loss on sale of marketable equity securities

Realized gain on sale/exchange of long-term investment

Unrealized loss on marketable equity securities

Other income (expense)

Current income tax benefit (expense)

Deferred income tax benefit (expense)

Net income (loss) before taxes

(1) Other revenue consists of license fees from our legacy animal bioscience business and was not significant in any period.

We did not allocate power curtailment credits in our segment cost of revenue because power curtailment credits are related to our derivative contract activity (our PPA) and are not included, or netted against, cost of revenue in our consolidated statements of operations. Because the credits received were a direct result of our PPA, we were not obligated to distribute those credits to any Data Center Hosting customer, and therefore also did not allocate them between segments.

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It is apparent from your disclosure added on page 29 in response to prior comment 8 that your cost of revenue for Bitcoin Mining does not include depreciation. Please represent to us that in future filings you will revise your statements of operations to provide the parenthetical disclosure called for in SAB 11B.

Rest of the question

To the extent depreciation and amortization are not included in any of your costs of revenues lines (i.e., Bitcoin Mining, Engineering and Other), ensure your disclosure covers all relevant captions. Notes to the financial statements, page 6

We respectfully acknowledge the Staff’s comment and confirm that we will revise our disclosure, commencing with the 2024 Q3 Form 10-Q, to provide parenthetical disclosure as called for in

SAB 11B, and we intend to include such disclosure in future filings. Read in the reply ↗

Please revise future Form 10-Q filings to provide activity in notes to the financial statements for the current quarter in addition to the year-to-date information you currently present in the financial statements. Note 2. Significant Accounting Policies and Recent Accounting Pronouncements Revenue recognition, page 7 We note your response to prior comment 17 and your revised disclosures.

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Please address the following: • You disclose that your mining pool participation agreements are freely terminable, at any time by you or by the pool operator, without penalty to either party and separately that for accounting purposes, each agreement has a duration of less than 24 hours and is therefore continually renewed. Confirm for us that your agreements are continually renewed as a result of either party being able to terminate the agreement at any time without penalty and therefore result in a duration that is less than 24 hours. If this is true, revise your policy disclosure in future filings to properly state the causal relationship (i.e., contracts are less than 24 hours in duration as a result of them being continuously renewed and not vice versa) and link the continuously renewal determination to the termination rights in your agreements. • In the first paragraph on page 8 you disclose that you measure the noncash Bitcoin consideration received at agreement inception and indicate that this measurement is based on the quoted price in your Principal Market at the beginning of the "contract period" at the single Bitcoin level. As contracts continuously renew and therefore there are multiple contracts incepted (and multiple contract periods) during each "measurement period" identified in the antepenultimate paragraph on page 7, tell us whether you mean you value Bitcoin consideration from the pool operator at the beginning of the measurement period. If so, revise your disclosure in future filings to indicate the specific time you measure Bitcoin and state that this specific time is on the date of contract inception. In this regard, see ASC 606-10-32-21 which clarifies that the measurement of noncash consideration is made on the date that the criteria in ASC 606-10-25-1 are met. If not, tell us the time you use to value Bitcoin consideration and clarify whether this time is on the date of contract inception for all the contracts during the measurement period. In the penultimate paragraph on page 7 and the first paragraph on page 8 you refer to "contract period" when it appears you may be referring to the measurement period as 4. there appear to be multiple contract periods throughout the day based on continuous renewal. Confirm for us whether this is true. If so, revise your disclosure in future filings to clarify. If not, tell us the contract periods to which you are referring. Note. 9 Power Purchase Agreement, page 14 5. We note your response to prior comment 18 and your revised disclosures on pages 14 and 15. Please enhance future filings by revising disclosure to: • Clarify, if true, that power usage is not a variable input in fair value determination of the Power Purchase Agreement (PPA) derivative fair value as under the terms of the PPA, the price and quantity of power are fixed, despite the existence of multiple blocks with separate power amounts and terms. If not true, tell us why not. • Clarify, if true, that the discounted cash flow estimation considers the PPA fixedprice of each block for a total of 345 MW as well as the disclosed quoted commodity exchange spot and forward prices as adjusted for basis spreads for load zone-to-hub differentials through the term of the PPA. If not true, tell us why not. • Enhance your rollforward of the change in fair value of the derivative asset to disaggregate the change in fair value between gains and losses and/or settlements for the periods presented. Refer to ASC 820-10-50-2(c) and (d). In this regard, as you either purchase power or elect to sell it back in exchange for credits against future power cost, it would appear that settlements occur each period. In your response, tell us how settlements are calculated for purposes of the requested disclosure. • Provide additional quantitative input disclosure as we note that the only quantitative input you provide (i.e., the discount rate used to calculate the fair value of the derivative asset) did not change from the 23.6% rate at December 31, 2023 and it otherwise is not clear from your financial statement disclosures what caused the changes in value in 2024. In your response tell us your consideration of disclosing estimates and or ranges of quoted commodity exchange spot and forward prices, adjusted for basis spreads for load zone-to-hub differentials through the term of the PPA, that presumably you would utilize in validating the derivative fair value determined by your third-party valuation specialist. Refer to ASC 820-10-35-54 and ASC 820-10-50-2(bbb)(2). Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, We note your response to prior comment 12. Considering the material impact of your power strategy on operating results, period over period changes, and to inform investors of factors driving power curtailment credits, please address the following: • Enhance your disclosures in future filings to describe your power strategy, including factors considered in determining when you will power down operations and return power back to the utility market, under the terms of the PPA 345MW Long-term 24/7 Fixed Price Power Contract, as well as the interaction with the ERCOT Ancillary Services and ERCOT Four Coincident Peak Program consistent with that reflected in your Corporate Presentation FY 2023 Update provided as exhibit 99.2 to your Form 8-K dated February 22, 2024. Disclose in future filings by period, consistent with your disclosures on pages 17 and • 6. 18 of your Corporate Presentation FY 2023 Update, power credits received from manual curtailment from powering down operations and returns of power back to the utility when market prices are higher than Bitcoin mining revenues, demand response credits received from ERCOT Ancillary Services as well as the graph of daily ERCOT South Hub average historical settlement prices, Bitcoin mining revenue and average cost of power. • Enhance your disclosures in future filings to quantify the impact of significant changes to inputs in the fair value of your PPA derivative asset that resulted in increases of over 100% in the change in fair value of derivative asset in your statements of operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. In this regard, your disclosures on pages 32 and 34 that the changes in fair value were due to changes in future power prices over the applicable period provide no insight into the magnitude of those changes or the judgments involved in assessing those changes. To provide investors with a meaningful metric(s) in evaluating results, including relative to your related market risk disclosure based on a 10% change in the price of power as disclosed on page 38, at a minimum, disclose the rate of future price increases inherent in your derivative asset fair value estimates at both the beginning and end of each period presented and relate those amounts to futures market activity, explaining any significant differences. Bitcoin Mining, page 29 7. We note your response to prior comment 8 and your disclosure of the cost to mine one Bitcoin for the six months ended June 30, 2024 and 2023. Please address the following: • Represent to us that you will revise your disclosure in future Form 10-Q filings to also provide information for the current three-month period and comparative prior year period in addition to the year to date periods. • As depreciation of miners is a continuing expense that is incurred and miners need to be replaced when they become obsolete, represent to us that in future filings you will include miner depreciation in quantitative tabular form along with fulsome narrative disclosures and not just disclosed in footnote (3), otherwise tell us why its inclusion is not warranted when disclosing your cost to mine one Bitcoin. • Tell us how you calculated the $45.6 million and $34.5 million amounts disclosed in footnote (3) to the table for the total cost to mine Bitcoin including miner depreciation for the six months ended June 30, 2024 and 2023, respectively. In this regard, for the 2024 period, for example, it appears that miner depreciation alone was $48.8 million (2,208 Bitcoin mined times $22,109 increase in per-Bitcoin cost to mine associated with depreciation), and when added to the $52.8 million cost of revenue for selfmining operations, net of power curtailment credits (that excludes miner depreciation) total costs including depreciation would be $101.6 million. • Represent to us that you will add footnote disclosure to your table in future filings that provides the estimated expected service lives of your miners and known information about miner replacements. • Represent to us that in future filings you will clarify whether, and if so, how, mining equipment acquisition costs factor into your breakeven analysis. 8. We note your response to prior comment 9. Considering continued developments, your evolving operations and recurring acquisitions, to provide your investors with a clear understanding of the underlying drivers of changes in your operating results, please represent to us that you will provide the key metrics below in a table format, both for the period presented and year-to-date for the current and prior year. Refer to Item 303(b)(2)(ii) and Instructions to paragraph (b) of Regulation S-K. • Total Hash Rate capacity vs deployed; • Total Power Capacity by site and in total; • Total miners vs deployed; • Cost to mine one Bitcoin as % of production value of one Bitcoin mined, including and excluding depreciation; • Production value of one Bitcoin mined; and • Cost of power per c/kWh consistent with your disclosures in your quarterly earnings updates. Please also conform references to metrics between your presentations. For example, we note you refer to cost to mine one Bitcoin in your Form 10-Q versus direct cost to mine in your quarterly earnings updates. Results of Operations Comparative Results, page 31 9. Please enhance future filings to provide prior year comparative information for Cost of revenue for Bitcoin mining as disclosed on pages 32 and 33. Refer to Item 303 and Instructions to paragraph 303(b) of Regulation S-K. Critical Accounting Estimates, page 37 10. We note your response to prior comment 14 and your revised disclosures on page 37 and reissue in part. Please revise future filings to also discuss the underlying estimates related to your power purchase agreement/derivative asset and related power curtailment credits given their significance to your operating results. To the extent you do not believe critical accounting estimates are inherent in these measures, please explain why in your response. Refer to Item 303(b)(3) of Regulation S-K and SEC Release No. 33-10890 for additional guidance. Item. 3. Quantitative and Qualitative Disclosures About Market Risk, page 38 11. We note your response to prior comment 15 and your revised disclosures. Please revise your risk regarding the price of power disclosures in future filings to clarify, if true, that the 10% increase/decrease in future power prices is from those prices used in deriving the fair value of your PPA derivative asset and not that future prices are expected to increase/decrease 10% from current price levels. Item 1. Business Industry Trends, page 6 We note your response to prior comment 1 and the revised disclosures in your June 30, 12. 2024 Form 10-Q and partially reissue. Please further revise future filings to address the following: • Disclose the identity your third-party custodian. • Disclose the material terms of your (i) custody agreement and (ii) agreement in connection with your use of your custodian’s U.S. brokerage services to sell your Bitcoin. File the custody agreement as an exhibit pursuant to Item 601(b)(10) of Regulation S-K. • Disclose that you may choose to self-custody Bitcoin, as your response to bullet 2 indicates, and discuss the material risks attendant to self-custodying crypto assets. • Disclose that your insurance providers do not have inspection rights associated with your Bitcoin assets held in storage, as your response to bullet 5 indicates. Item 1A. Risk Factors Risks Related to the Price of Bitcoin, page 18 13. We note your response to prior comment 3 and the added risk factor on page 39 of your June 30, 2024 Form 10-Q titled, "Our success depends on external factors affecting the Bitcoin industry." Please further revise future filings to also discuss the risks of frontrunning, as previously requested. 14. We note your response to prior comment 4 and the added risk factor on page 40 of your June 30, 2024 Form 10-Q titled, "There is a finite supply of Bitcoin and the number of new Bitcoin rewarded per block...." In future filings, please expand this risk factor to provide quantitative disclosure addressing the maximum number of Bitcoins that may be released into circulation and the number of Bitcoins currently in circulation. Risks Related to our Operations Incorrect or fraudulent Bitcoin transactions may be irreversible..., page 22 15. We note your response to prior comment 6 and revised risk factor disclosure on page 41 of your June 30, 2024 Form 10-Q that, among others, you require your custodian to maintain insurance policies against cyber-attacks and other unauthorized intrusion events which may target your Bitcoin, and you have "certain" indemnification protections from your custodian in such events. Please further revise future filings to disclose the amount of coverage, term, termination provisions, renewal options and limitations on coverage provided by your custodian, as previously requested. Additionally, please describe the "certain" indemnification protections you have from your custodian, as your revised disclosure references. Form 8-K Dated July 31, 2024 Exhibits In the Second Quarter 2024 Financial Results section of your press release provided as Exhibit 99.1 we note your disclosure of “Bitcoin Mining revenue in excess of Bitcoin Mining cost of revenue” and “Engineering revenue in excess of Engineering cost of revenue” and associated percentages of the revenue amounts (e.g., 37% of Bitcoin Mining revenue for the second quarter of 2024) for both the current year and prior year quarters. We note that the amounts of revenue in excess of cost (i.e., essentially gross profit) and 16. the related percentages (i.e., essentially gross margin) are effectively non-GAAP measures as the costs of revenues you present do not include depreciation of mining equipment and therefore are not fully costed. Please represent to us that in future earnings releases furnished under Item 2.02 of Form 8-K you will provide: • The most directly comparable GAAP measures (i.e., fully-costed gross profits for the former and gross margins for the latter) with equal or greater prominence; • A reconciliation from the most directly comparable GAAP measure to your non- GAAP measures; • A statement disclosing the reasons why you believe the non-GAAP measures are useful information to investors; and • To the extent material, a statement disclosing the additional purposes, if any, for your use of these non-GAAP measures. See Instruction 2 for Item 2.02 of Form 8-K and Item 10(e)(1)(i) of Regulation S-X. Also see footnote 27 to the Non-GAAP Financial Measures Adopting Release No. 33-8176. 17. On slide 3 of your Q2 2024 Update presentation provided as Exhibit 99.2 we note your disclosure of Bitcoin Mining gross margin in footnote 2 characterized as a GAAP measure that is actually a non-GAAP measures because it excludes depreciation of your mining equipment and therefore is not fully-costed. Please represent to us that in future presentations you will: • rename the current measure to indicate that it is non-GAAP; • provide the most directly comparable GAAP gross margin that includes depreciation of your mining equipment; and • reconcile your non-GAAP measure to the GAAP gross margin that includes depreciation of your mining equipment. See Items 100(a)(1) and 100(a)(2) of Regulation G. 18. In section 2 on slide 3 of your Q2 2024 Update presentation provided as Exhibit 99.2 you disclose Bitcoin Mining gross margin of 62% for the second quarter of 2024 that you characterize as a non-GAAP measure in footnote 3 because it nets power curtailment credits. Please represent to us that in future presentations you will:

We respectfully acknowledge the Staff’s comment and confirm that we will revise our disclosure, commencing with the 2024 Q3 Form 10-Q, to provide current quarter activity in notes to the financial statements in addition to year-to-date information where applicable, and we intend to include such disclosure in future filings. For example, we will add disclosure of activity for the current three-month period in addition to the previously reported year-to-date disclosures in Note 5.

Rest of the answer

Bitcoin, where we will add disclosure of revenue recognized from Bitcoin mined and the change in fair value of Bitcoin, and in Note 9. Power Supply Agreements, where we will add disclosure for the change in fair value of derivative assets.

Read in the reply ↗

We reviewed your response to prior comment 15 and revised disclosures in response thereto. Please revise future filings to address the following points: • We note your disclosure in the fifth paragraph on page 35 of your September 30, 2024 Form 10-Q regarding the NYDIG Custodial Agreement. Please expand your future disclosure regarding this agreement to disclose the term and termination provisions thereof.

Rest of the question

Additionally, noting your disclosure that this agreement contains certain mutual indemnification provisions, please revise future filings to explain your related indemnification obligations thereunder, including the material terms of your obligation to indemnify NYDIG in this regard. • Refer to your revised disclosure on page 50 of your September 30, 2024 Form 10- Q in the risk factor headed, “Our limited rights of legal recourse and our lack of insurance protection over our Bitcoin....” We note you have removed your disclosure that “we require our custodian to maintain insurance policies against cyber-attacks and other unauthorized intrusion events which may target our Bitcoin, ... Such protections are imperfect, however, ... and our custodied Bitcoin may be lost, as a result,” appearing on page 41 of your June 30, 2024 Form 10-Q. Please revise future filings to reinstate this disclosure or advise otherwise. Also please describe in future filings your custodian's insurance coverage in greater detail, including how the total value of insurance coverage that would compensate you in the event of Bitcoin losses compares to the total value of Bitcoin held by your custodian, as opposed to stating that the “magnitude of such loss may exceed (emphasis added) the amount of insurance coverage for our Bitcoin,” as previously disclosed in your June 30, 2024 Form 10-Q.

We respectfully acknowledge the Staff’s comment and respond as follows:

Bullet #1: We confirm that we will expand our future disclosures regarding the NYDIG Custodial Agreement, and the new Coinbase Prime Broker Agreement, to disclose the term and termination provisions, and mutual indemnification provisions, as applicable. An example of such enhanced disclosures for illustration purposes using the “Bitcoin Mining” section of Item 7.

Rest of the answer

Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 3Q24 Form 10-Q is attached hereto as Appendix “B” (inserts marked with underline; deletion marked with strikethrough).

Bullet #2: We respectfully acknowledge the Staff’s comment and advise the Staff that since we filed our Form 10-Q for the period ended June 30, 2024, we entered into an arrangement with a new custodian, Coinbase, resulting in us currently having relationships with two well-known U.S. based third-party custodians, NYDIG and Coinbase. NYDIG is not required to maintain insurance coverage under the NYDIG Custodial Agreement. Coinbase is required under the Coinbase Prime Broker Agreement to maintain insurance coverage, but it has discretion to determine the types and amounts, subject to being commercially reasonable for the custodial services provided thereunder.

Accordingly, we respectfully advise the Staff that, for the following reasons, it is appropriate not to reinstate in future filings the “we require our custodian to maintain insurance policies against cyber-attacks and other unauthorized intrusion events which may target our Bitcoin, ... Such protections are imperfect, however, … and our custodied Bitcoin may be lost, as a result,” disclosure from our Form 10-Q for the period ended June 30, 2024:

● We have no contractual right to control whether a custodian maintains any insurance coverage, in the case of NYDIG, or the type or amount of insurance coverage, in the case of Coinbase; and

● If it maintains insurance coverage, the custodian is not required to notify us of the type, amount or other terms thereof, which may change without notice to us.

However, we advise the Staff that in future filings we will revise the disclosures on page 50 of our 3Q24 Form 10-Q in the risk factor headed, “Our limited rights of legal recourse and our lack of insurance protection over our Bitcoin….,” substantially as follows, in response to the Staff’s comment, to clarify the risk of lack of insurance protection over our Bitcoin, as it relates to our custodians (inserts marked with underline; deletions marked with strikethrough):

“Our limited rights of legal recourse and our lack of insurance protection over our Bitcoin expose us and our stockholders to the risk of loss of our Bitcoin for which there may be no adequate remedy.

While we rely on a well-known U.S.-based third partythird-party digital asset-focused custodiancustodians to safeguard our Bitcoin, our Bitcoin is not insured by us, including not being subject to Federal Deposit Insurance Corporation or Securities Investor Protection Corporation protection. Accordingly, if our Bitcoin is lost, stolen or destroyed under circumstances rendering a party liable to us, our loss could be significant and the responsible party may not have the financial resources sufficient to satisfy our claim. For example, as to a particular event of loss, the only source of recovery for us might be limited, to the extent identifiable, to responsible third parties, such as a custodian, or in other instances, a thief, terrorist or others, any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim. We believe our custodians, NYDIG and Coinbase, maintain limited insurance policies covering the pool of digital assets each custodies against certain events of loss, such as theft. NYDIG and Coinbase custody the digital assets of hundreds of parties, worth billions of U.S. dollars, and any insurance coverage held by any of these custodians is likely significantly less than the total value of the custodied digital assets of their customers. Any insurance proceeds received by a custodian in response to a loss would likely be shared by the custodian with us and other affected parties, rendering any amount we would receive significantly less than the value of our lost custodied assets. Furthermore, any insurance held by the custodians may be terminated without notice to us. Any loss of insurance coverage would impede our ability to be compensated for our losses. Therefore, a loss may be suffered with respect to our Bitcoin for which there may be no recourse is availableor adequate remedy, which could have a material adverse effect on our results of operations and financial condition and, consequently, an investment in our securities.”

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We note your response to prior comment 7 and the revised disclosures at pages 37 – 38 of your September 30, 2024 Form 10-Q. Please expand your disclosure in future filings to disclose the gross purchase price of your mining equipment and clarify whether, and if so, how, such equipment acquisition costs factor into your breakeven analysis.

We respectfully acknowledge the Staff’s comment and confirm that we will expand our disclosures regarding the purchase price of our mining equipment and how such costs impact our breakeven analysis beginning with the 2024 Form 10-K. Specifically, we will add disclosure to our breakeven analysis that we capitalize the acquisition cost of our miners and depreciate them over a three-year period, during which time, they are expected to generate revenue. Additionally, we will disclose the cash expenditures on miners for each period presented.

Rest of the answer

Our expanded disclosure will be to footnotes 2 and 4 of our cost to mine one bitcoin table (as previously disclosed on page 37 of our 3Q24 Form 10-Q) substantially in the form as follows:

(2) During the years ended December 31, 2024, 2023 and 2022, we paid in cash approximately $XX million, $XX million, and $XX million, respectively, in total deposits and payments for the purchase of miners. Costs to finance the purchase of miners were zero as the miners were paid for with cash from the Company’s cash balance. The seller did not provide any financing, nor did the Company borrow from a third-party to purchase the miners. The Company does not have any current plans to finance miners we may purchase in the future.

...

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

Depreciation expense incurred is disclosed for each respective period in the table above. The following table presents the future depreciation expense of all our Bitcoin miners:

Read in the reply ↗

We acknowledge your revised disclosures and response to prior comment 3. Please expand your description of the SynapseFi agreement to disclose that this agreement will provide you with the ability to identify and track the location of RiotX users, as you have explained in your response.

No reply letter found.

Your amended filing includes only select disclosures under Items 1, 1A, 2, and 6. This is inconsistent with Exchange Act Rule 12b-15, which provides that amendments must set forth the complete text of each item as amended. Accordingly, please amend your filing to provide the complete text of each item as amended.

No reply letter found.

We note your response to prior comment two of our letter dated June 15, 2018 and your disclosure on page 9 addressing the correction of an error related to your accounting for digital currencies. You assert that the correction of this error did not have a material impact on your previously reported interim financial statements.

Rest of the question

Please confirm whether this is the case because all previously reported changes in fair value are now reflected as impairment losses. Please also tell us how you have complied with the disclosure requirements set forth in ASC 350-30-50-3 related to these impairment losses. Item 2. Management's Discussion and Analysis. . .

Materiality Analysis

The Company assessed the materiality of its change in its accounting policy from the "fair value" method to the "intangible assets" method, during the period ended September 30, 2018 and concluded that the change did not have a material impact on its previously reported financial position or results of operations.

This conclusion was based upon the historical prices of digital currencies as of each reporting period's quarter end. The US dollar spot price of digital assets declined in each subsequent quarterly period as compared to the prior quarter.

Rest of the answer

Therefore, the fair value method as previously used only recorded write-downs of digital currencies and no write-ups were recorded. This fact pattern resulted in no difference in the reported financial results for the prior period(s) included in the September 30, 2018 filing. Following is a chart of the digital asset costs and impairment values used in the digital assets' analysis at each period end:

Digital Currencies

Values

Date

Description

BTC

LTC

Comments

31-Dec-17 Period End Values

$

14,156.40

232.10

Q4 - 2017 was initial mining operations

31-Mar-18 Period End Values

6,973.53

116.61

Change

(7,182.87

)

(115.49

30-Jun-18 Period End Values

6,404.00

81.37

(569.53

(35.24

30-Sep-18 Period End Values

6,625.56

61.14

Pro Forma: @ Fair Value

30-Sep-18 Period End Values (As Recorded)

Recorded computed @ lower of historical cost

-

(20.23

The Company has revised its disclosures in its Form 10-Q Amendment #1, filed January 11, 2019 to comply with the disclosure requirements set forth in ASC 350-30-50-3 related to these impairment losses. For the convenience of the Staff, the entire amended disclosure as included on Form 10-Q/A filed on January 11, 2019, is reproduced below:

"Part I: Financial Information

Item 1: Condensed Interim Consolidated Financial Statements

Note 2: Basis of presentation, summary of significant accounting policies and recent accounting pronouncements

Digital Currencies Translations and Remeasurements

Digital currencies are included in current assets in the Company's consolidated balance sheets as intangible assets with indefinite useful lives. Digital currencies are recorded at cost less impairment.

An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The Company assesses impairment of its digital currencies quarterly if the fair value of digital assets is less than its cost basis. The Company recognizes impairment losses on digital assets caused by decreases in fair value using the average US dollar spot price of the related digital currency as of each impairment date. Impairment losses related to digital assets totaled $163,837 and $3,374,976 for the three and nine-month periods ended September 30, 2018, respectively. Impairment charges are included in as a separate line item in costs and expenses, in the accompanying statements of operations.

Realized gain or loss on the sale of digital currencies is included in other income or expenses in the condensed interim consolidated statements of operations. Realized gains on the sale of digital currencies totaled $219,247 and $451,341 for the three and nine month periods ended September 30, 2018, respectively.

The Company originally adopted an accounting policy regarding digital currencies transactions and remeasurement that stated:

"Digital currencies are recorded at their fair value on the date they are received as revenues, and are revalued to their current market value at each reporting date. Fair value is determined by taking the spot rate from the most liquid exchanges."

Based on reviews of the available accounting guidance, the Company has concluded that its originally adopted accounting policy was in error and the digital currencies should have been recorded at cost less impairment. The change in this accounting policy did not have a material impact of the Company's previously reported condensed interim consolidated financial statements."

ASC 350-30-50-3 Reporting Analysis

Following the change in accounting practices for the Company's digital currency assets, the Company has amended its compliance and reporting practices per ASC 350-30-50-3 to comport with the requirements for reporting of impairment losses. ASC 350-30-50-3 requires that, for each impairment loss recognized related to an intangible asset, all of the following information shall be disclosed in the notes to financial statements that include the period in which the impairment loss is recognized:

a.

a description of the impaired intangible asset and the facts and circumstances leading to the impairment;

b.

the amount of the impairment loss and the method for determining fair value Impairment;

c.

The caption in the income statement or the statement of activities in which the impairment loss is aggregated; and d.

If applicable, the segment in which the impaired intangible asset is reported under Topic 280.

Accordingly, the Company has determined, after consulting with its outside public accountants and legal counsel, that the Company's previous disclosures regarding its accounting for digital currencies actually reflected the impairment losses it would have shown under the revised accounting policy and therefore that no revised disclosure is required to comply with ASC 350-30-50-3.

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Please revise your fifth paragraph in this section of your Form 10-Q for the quarter ended September 30, 2018 to expand your disclosure regarding your current mining operations, including for example, the number of miners that were operating at your facility on September 30, 2018, and any expected changes.

The Company acknowledges the Staff's comment and has revised its disclosure to: (i) explicitly state that it operates 8,000 digital currency miners, which includes 7,500 model S9 and 500 model L3+ miners, at its Oklahoma City, Oklahoma facility; (ii) state that the changes in the lease of the facility will not affect the number of miners deployed there; and (iii) state that the variable electricity charges under the amended lease agreement will enable the Company to operate its miners in a manner more responsive to various market and environmental forces affecting the relative profitability

Rest of the answer

of its mining operation. For the Staff's convenience, the full text of the disclosure is included below:

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

Management's plans and basis of presentation:

Digital Currency Mining Operations

Overview of Digital Currency Mining Operations

The primary focus of the Company is our digital currency mining operations. Digital currencies are digital or virtual currencies used as a medium of exchange outside of the traditional state-backed fiat currencies. Digital or "crypto" currencies rely on complex cryptographically recorded data entries known as "blocks" on decentralized digital ledger system known as a blockchain. Blocks are added to the blockchain chronologically and, once added, are unchangeable. Thus, digital currencies are seen as a secure means of storing and recording information regarding a transaction or set of transactions. To incentivize the creation of blocks for the blockchain, digital currency tokens are awarded on a per block basis for block creation, a process which is known in the industry as digital currency mining.

The Company's digital currency mining operations focus primarily on bitcoin mining. Bitcoin mining entails solving complex mathematical problems using custom designed and programmed application-specific integrated circuit computers (referred to as "miners"). Bitcoin miners provide transaction verification services to a given blockchain by solving complex algorithms to encode additional blocks into the blockchain; which blocks serve as immutable records of transactions once added to the blockchain. When a miner is successful in adding a block to the blockchain, it is rewarded with a fixed number of bitcoin. Blocks are added to the blockchain on a first-to-finish basis, meaning that the first miner to solve an algorithm and verify a given transaction is the only miner to receive a bitcoin reward. This first-to-finish environment has created a computing power arms race whereby miners are encouraged through competition to allocate ever-increasing computing power (known as "hash rate") to solving algorithms in the hopes of finishing first. The resulting energy costs are substantial, and, in light of the recent decline in the market price of bitcoin and other "benchmark" digital currencies such as bitcoin cash, litecoin, and ethereum, the profitability of digital currency mining operations has been reduced while competition to solve each block continues to increase. The Company's digital currency mining operations operate at a maximum hash rate of 95 petahash per second.

In response to these factors, the Company has entered into digital currency mining pools, whereby multiple miners allocate their collective computing powers to solving a given algorithm, thereby increasing the hash rate devoted to a given algorithm while spreading the cost of providing that increased hash rate across the digital currency mining pool. By pooling their efforts, miners in a pool are more likely to receive a reward from the verification a given transaction than miners acting individually. Pool miners are awarded a fractional reward based on the hash rate each miner contributed to the pool in a successfully solved algorithm by the pool operator, regardless of whether the individual miner actually solved the applicable algorithm and added a block to the blockchain. Miners participating in digital currency mining pools accept the proportional share of a bitcoin reward rather than seeking to obtain whole bitcoin rewards individually for two reasons: first, by pooling their efforts, miners participating in a digital currency mining pool are able to devote a greater collective hash rate to solving a given algorithm than would be economically feasible for any individual miner to do so themselves, thereby increasing the likelihood they will receive more bitcoin from their digital currency mining activities on average than they would operating outside of a pool; and second, they enjoy the benefit of their fellow digital currency mining pool participants' contributed hash rates, without incurring the significant cost of producing a greater hash rate individually. The Company participates in pools on an at-will basis, and is under no obligation to remain in a given pool and may terminate its engagement with a given pool at any time. Presently, management believes participating in digital currency mining pools is the most efficient means of digital currency mining digital currencies, but is under no obligation, nor does it provide any assurance that it will continue to do so in the future.

Oklahoma City Mining Facility

Beginning in February of 2018, we relocated our digital currency mining operations to our Oklahoma City, Oklahoma facility (our "Mining Facility"), which is leased by our subsidiary, Kairos Global Technology, Inc. ("Kairos"). As of September 30, 2018, we have moved all of our 8,000 digital currency miners, which includes 7,500 model S9 and 500 model L3+ miners, to our Mining Facility. These miners have been installed and operational since being deployed in June of 2018. Kairos leased the Mining Facility from 7725 Reno #1, L.L.C. ("7725 Reno") by a lease agreement dated February 27, 2018, as amended on March 26, 2018 (the "Lease"). Effective as of November 29, 2018, Kairos amended the Lease with 7725 Reno by: (i) extending the initial term of the Lease through August 15, 2019; (ii) effective as of December 1, 2018, changing the monthly rent for the Lease as follows: (a) $235,000 for December of 2018, (b) $230,000 for January of 2019, and (c) $190,000 per month thereafter for the duration of the Lease, including any renewals; (iii) reducing the monthly electricity usage charges due under the Lease; (iv) providing that Kairos will reimburse 7725 Reno for up to $14,000 of the costs of installing electricity metering devices in the facility; and (v) Kairos will have the option to renew the Lease for up to two (2) three (3) month periods after the expiration of the initial term of the Lease. Under the initial terms of the Lease, the Company was required to pay for 12 megawatts of power per month, regardless of the actual power consumption by its miners. Before upgrades were made to the software of our miners which made our digital currency mining activities much more energy efficient, this fixed cost arrangement was beneficial to the Company, as the Company had access to the allotted 12 megawatts of power each month during a time of peak demand for electric power. When the original Lease was entered into, computing power, and therefore electricity, was in high demand among competitors in the bitcoin mining industry, and securing access to 12 megawatts of electric power per month at a fixed price important given those market conditions. Subsequent changes to the software of our miners and facility improvements have made our miners far more energy-efficient and therefore, this fixed cost arrangement had become cost-inefficient, as the Company used less than the allotted 12 megawatts of power per month. Accordingly, for these reasons and other economic factors, the Company renegotiated the Lease.

The changes to the Lease do not impact the number of miners deployed at the facility. The Company's monthly electricity usage costs are now variable, rather than fixed under the Lease, and are assessed at a lower rate per kilowatt/hour for the electricity used. The reduction in the base rent was the product of negotiations between the Company and 7725 Reno and reflects changes to the economics of the Lease, rather than any change in the leased space or the number of deployed miners. These changes to the Lease will allow the Company to be more responsive to changes in the profitability of its digital currency mining operations.

The Company can, under the amended Lease, decide to reduce or temporarily switch off any number of its miners in its Mining Facility and therefore reduce its variable electricity costs from its digital currency mining operation. Whereas under the original Lease, the Company would still have incurred the same electricity cost, regardless of actual electricity use. These changes allow the Company to monitor its monthly costs by optimizing its digital currency mining performance by operating its miners at less than full capacity during times of peak electricity rates.

Operation of the miners requires substantial electrical power, which power usage increases as the hash rate produced increases. Furthermore, miners generate a substantial amount of heat when operating, which heat must be dissipated to avoid damaging the miners' circuitry. Heat dissipation also requires significant electrical power. As the hash rate produced is increased, the heat generated by operation of the miners is increased. Therefore, as the hash rate produced from operation of the miners is increased, the electricity used in heat dissipation is also increased. Accordingly, the electricity cost incurred in operation of the miners increases exponentially as the hash rate produced is increased, as the electrical power required to operate the miners and to dissipate the heat they produce both increase as a function of the hash rate produced. This increased electricity usage comes at substantial cost to the Company, and, accordingly, when the conversion spot price of bitcoin declines, the profitability of operating the mine at peak capacity declines. Under the original Lease, the Company incurred the same electricity cost regardless of electricity used, so it was negatively incentivized to reduce or halt its digital currency mining activities in response to dips in the conversion spot price of bitcoin, effectively causing the Company to produce bitcoin at disadvantageous conversion spot prices. Under the amended Lease, however, the Company can reduce or even halt the operation of its miners temporarily in response to changing market conditions and obtain a corresponding reduction of its electricity costs for its Mining Facility. Furthermore, the Company expends electricity in dissipating environmental heat affecting its miners. As the environmental heat increases, so does the amount of electricity required to dissipate that heat. In times of extreme heat, the cost of dissipating environmental heat can be substantial. Accordingly, running the Company's miners at peak capacity during times of high heat is more expensive for the Company. Because the amended Lease does not have a fixed power cost built in, the Company can reduce, increase, or even shut off the electric power devoted to the miners when environmental factors or market forces change the relative advantages of digital currency mining at a given time, without incurring the high fixed power cost required under the original Lease. This variability in the Company's power costs resulting from the operation of its digital currency mining facility makes the Company's digital currency mining activities more responsive to variables affecting the cost of digital currency mining, therefore bringing more of the Company's variable expenses under the Lease within management's control."

Read in the reply ↗

We note your response to prior comment 4 and your disclosures in your Form 10-Q for the quarter ended September 30, 2018 on page 27 that you have not entered into any formal vendor agreements with respect to your planned exchange.

Rest of the question

Please revise your disclosures to discuss the termination of your licensing and services agreement with Coinsquare, and to explain how the SynapseFi agreement will help you launch your platform. We also note that subsequent to your filing of the Form 10-Q, you announced the entrance into an agreement with Shift Markets, Ltd. that provides you with Shift's crypto exchange platform. Please tell us why this information was furnished pursuant to Item 7.01 on a Form 8-K rather than as a material agreement under Item 1.01, and why the agreement will not be filed as a material agreement.

Entry into Formal Vendor Agreements

The Company acknowledges the Staff's comment and has revised its disclosures accordingly. The Company notes that its disclosure reported the termination of its agreement with goNumerical, Ltd. (d/b/a "Coinsquare"), and its entry into the SynapseFi Agreement, and that the statement that it had not entered into any formal vendor agreements with respect to its planned exchange was erroneously included in the disclosure.

Rest of the answer

Accordingly, the Company has revised its disclosure to: (i) discuss its agreement with SynapseFi to provide RiotX with Banking Services; (ii) discuss the effect of the termination of the Coinsquare agreement on the development of RiotX and management's plans to replace it; and (iii) discuss its plans to enter into additional vendor agreements to complete the development of RiotX. For the Staff's convenience, the text of the amended disclosure is included below:

"Agreements with Third Party Vendors

As the Company continues to explore and develop its planned U.S.-based digital currency exchange, it will continue to develop relationships with third party vendors to support the RiotX exchange. As of September 30, 2018, the Company has entered into relationships with two third parties to provide RiotX with these core services.

(i) Banking Services

As previously reported on the Company's Periodic Report on Form 8-K filed on October 29, 2018, the Company's subsidiary, Logical Brokerage, has entered into a material definitive agreement with Synapse Financial Technologies, Inc. ("SynapseFi"), and its partner, Evolve Bank and Trust, to provide RiotX with banking services and transactional support (the "SynapseFi Agreement"). SynapseFi's proprietary software technologies will provide the RiotX exchange with secure banking services to enable RiotX users to efficiently and securely create accounts to hold, transfer, and deliver exchanged currencies, allowing RiotX users to make deposits and take withdrawals of fiat currencies into and from their RiotX user accounts. SynapseFi is an industry leader in the provision of Application Program Interfaces ("API") to the financial services industry. SynapseFi's APIs provide a secure and stable means of communication between users and financial institutions, while providing security and compliance assurances to financial institutions. Under the terms of the SynapseFi Agreement, SynapseFi will engage Evolve Bancorp, Inc., through its subsidiary, Evolve Bank & Trust (collectively, "Evolve"), or any successor financial institution designated by SynapseFi, to provide Logical with all bank services directly. SynapseFi API will allow Logical to effectively communicate user requests to Evolve, while assisting Evolve with managed risks and compliance concerns associated with the exchange of digital currencies. Pursuant to the terms of the SynapseFi Agreement, Logical has also agreed to submit to periodic security, compliance and risk reviews and audits performed by SynapseFi on behalf of Evolve as a means of ensuring continued compliance and reliability for Evolve, SynapseFi, the Company, and its end users. The SynapseFi agreement is a significant milestone in the development of the planned RiotX exchange.

(ii) Trading Engine

On August 31st, 2018, the Company signed a Software Licensing and Subscription Services Agreement (the "Coinsquare Agreement") with goNumerical, Ltd. (d/b/a "Coinsquare") to provide the Company with a comprehensive digital currency exchange platform inclusive of a Trading Engine and Digital Wallet Services. Under the Coinsquare Agreement, Coinsquare would have been responsible for the day to day management, hosting, customer support and other operational services provided to RiotX users, and would have been responsible for integration of banking services software into RiotX once a software as service agreement was reached with a third party vendor. In total, the Coinsquare Agreement had an initial cost for the first year in excess of $1,500,000, an equity grant of 9.9% of the equity interest in RiotX Holdings, and an issuance of 450,000 shares of the Company's common stock to Coinsquare. The Coinsquare Agreement was terminated by mutual agreement of the Company and Coinsquare on September 17, 2018, as reported by the Company on Form 8-K on September 18, 2018, prior to the issuance of the Company's common stock, and all shares of RiotX Holdings were returned by Coinsquare pursuant to the termination. As of the date of the original filing of the Quarterly Report, November 19, 2018, the Company had not reached an agreement with a third party vendor or vendors to replace those services which would have been provided by Coinsquare pursuant to the Coinsquare Agreement, including a Trading Engine.

(iii) Digital Wallet Services

The Company plans to integrate SynapseFi's banking services technologies and a to-be-determined Digital Wallet Services provider's technology into a licensed Trading Engine in order to complete the development of the RiotX exchange. Digital Wallet Services will provide RiotX exchange users with secured means of storing digital currencies for exchange on RiotX. Digital Wallet Services are a core component of the Company's planned RiotX exchange, and will be integrated into RiotX as soon as a service vendor is selected and an agreement is formalized. Once the Company has consummated an agreement with an appropriate Digital Wallet Services provider, The Company will be in a position to start bringing its RiotX digital currency exchange online in those jurisdictions where it has obtained regulatory approval."

Consequence of the Termination of the Coinsquare Agreement, the Impact of the SynapseFi Agreement, and the Materiality of the Shift Markets Agreement.

The termination of the licensing and services agreement with goNumerical, Ltd. (d/b/a "Coinsquare") (the "Coinsquare Agreement") was a substantial material agreement for the Company and it represented a significant partnership in the development of the Company's planned U.S.-based digital currency exchange, RiotX. As discussed in the revised disclosures above, the Coinsquare Agreement would have provided the Company with a comprehensive digital currency exchange platform inclusive of a Trading Engine and Digital Wallet Services, and would have been responsible for integrating the banking services software into RiotX, as well as for managing the day to day management, hosting, customer support and other operational services provided by RiotX to its end users. Furthermore, the contract price for the Coinsquare Agreement was $1,500,000 plus equity outlays consisting of 9.9% of the equity in RiotX Holdings, Inc., the Company's subsidiary, and 450,000 shares of the Company's common stock. The Coinsquare Agreement therefore represented a definitive material agreement which the Company reported accordingly. The termination of the Coinsquare Agreement, which the Company disclosed on Form 8-K filed on September 18, 2018, caused the Company to seek replacement service providers for those aspects of RiotX that would have been provided by Coinsquare, including a Trading Engine.

The Company reported the SynapseFi Agreement on form 8-K filed on October 29, 2018 under item 1.01, entry into material definitive agreements because SynapseFi is a unique service provider whose software as service agreement provides RiotX with secure and efficient banking services software. The SynpaseFi Agreement will enable RiotX users to gain access to accredited banking institutions, and it will provide the Company with assurances through its Application Program Interfaces ("API") of the identity and location of RiotX users. The API provided by SynapseFi is nearly as important to the Company as the banking services it will provide, as the API enable the Company to better track and identify its users in order to prevent fraud and improper use of its RiotX exchange. As the Company has previously disclosed, regulatory compliance has been and continues to be a top priority for its development of RiotX, including complying with territorial restrictions on the exchange of digital currencies. SynapseFi's API will enable to Company to know where its end users are when they access RiotX, thereby enabling the Company to prevent, for example, a user from Montana, a state where the exchange of digital currencies is permitted, from traveling to neighboring Wyoming, where the exchange of digital currencies is not permitted, and using RiotX there. The SynapseFi Agreement is therefore not just material to the development of RiotX, but is also material to the Company.

The Company acknowledges the Staff's concern regarding the materiality of the Shift Markets Agreement, but disagrees with the Staff's conclusion that it is a material definitive agreement requiring reporting under item 1.01 on Form 8-K. The Company disclosed its agreement with Shift Markets under item 7.01, Regulation FD Disclosure, on its current report on Form 8-K filed on November 28, 2018 as the agreement is a milestone in the development of its RiotX exchange, and the knowledge of the existence of the agreement itself would tend to affect the trading price of shares of its common stock. Therefore, under Regulation FD, the Company was required to disclose the existence of the agreement to the market, but not the terms of said agreement, as they are immaterial to the Company and therefore would not tend to impact an investor's decision whether to invest in its stock. Various service providers were examined by the Company when seeking to replace the trading engine services to be provided under the terminated Coinsquare Agreement, and ultimately Shift Markets was chosen. Nothing about their trading engine software, nor the services they will provide to RiotX are particularly important to the Company, and Shift Markets is easily replaceable with alternative service providers. Furthermore, as disclosed in the Company's Amendment No. 2 to its Registration Statement on Form S-3/A filed on January 3, 2019, the Shift Markets Agreement amounts to less than 10% of the total contract price of the Coinsquare Agreement and represents less than 5% of the operating budget the Company has allocated to the RiotX exchange. The Shift Markets Agreement is therefore not material to the Company, whereas the Coinsquare and SynapseFi Agreements are material to the Company due to their scope, size, and uniqueness.

Both the Coinsquare and SynpaseFi Agreements offered the Company a unique and substantial service at a price which represented a significant outlay by the Company in terms of its total operation costs and its development budget for RiotX. The Shift Markets agreement, on the other hand, offers the Company with a relatively non-unique service, a Trading Engine, at a price representing less than five percent (5%) of the Company's total operating budget for RiotX, and at a total contract price of less than ten percent (10%) of the Coinsquare Agreement. Therefore, the agreement between Shift Markets and the Company itself is not material. However, the fact the Company has secured a Trading Engine for RiotX through the agreement is material, in that it represents a significant milestone in the development of RiotX. Whereas the Coinsquare and SynapseFi Agreements were material definitive agreements reportable under item 1.01 on Form 8-K, the Shift Markets agreement is not so-reportable, but, due to the progress in the development of RiotX indicated by securing a trading engine for the exchange, the Shift Markets agreement is reportable under Regulation FD, and therefore the Company so-reported it on Form 8-K under item 7.01.

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We note your disclosure on page 30 that you will require additional capital in order to meet your ordinary business obligations for the next twelve months. Please revise to also disclose how long you expect your business will be able to continue its current and planned operations if you are unable to secure additional capital.

The Company acknowledges the Staff's comment regarding its liquidity disclosures and has made additional clarifying disclosures accordingly. The Company notes that, due to the fluctuations in the market price for cryptocurrencies, and in particular that of bitcoin, the Company's largest digital currency asset, the Company cannot predict a date on which it would cease to continue as a going concern with any reasonable degree of accuracy.

Rest of the answer

As detailed in the Company's revised disclosure below, the Company can make significant drawbacks in its variable costs in order to survive for a three month period following a sustained decline in the conversion spot price of bitcoin below $3,000.00. The Company does not, at present, anticipate instituting these cost-savings measures, but it may have to do so in the future given the fluctuations in the conversion spot price of bitcoin. Further, even if the conversion spot price of bitcoin reverses its 2018 trend, the Company will still need to raise additional capital to fund its strategic plans, including the development of its U.S.-based digital currency exchange.

If the Company were to provide a more definite estimation of its liquidity and going concern evaluation, any error in such estimation would potentially open the Company up to shareholder derivative suit. By providing an estimate, even with strong cautionary statements regarding such forward looking statements, the Company would be unreasonably exposed to litigation which, regardless of its ultimate outcome, would require the Company to advance significant capital to defend the claim, shifting that capital away from its business operations and strategic plans. Furthermore, making such an estimate may place the Company in the difficult situation of arguing that the estimate it gave was a reasonable good faith estimate when it knew or should have known that such estimate was unreasonable.

Because of this significant risk and the lack of market precedent for disclosing such a going concern estimate, the Company chose instead to disclose a minimum operating window following a triggering event during which the Company expects it could continue as a going concern. By providing a minimum period for which the Company can continue as a going concern if it engages in certain cost-saving measures following a sustained dip in the conversion spot price of bitcoin, the Company believes it has balanced the competing goals of providing sufficient disclosure to the market for investors to make informed decisions regarding its stock, and protecting itself from potential harmful litigation. Accordingly, the Company has revised its disclosure regarding its liquidity in its Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the period ended September 30, 2018 as follows:

"Results of Operations

Liquidity and Capital Resources

The Company has experienced recurring losses and negative cash flows from operations. We expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur costs and expenses associated with recent and potential future acquisitions and development of the RiotX exchange platform, as well as public company, legal and administrative-related expenses being incurred. We are closely monitoring our cash balances, cash needs and expense levels.

As of September 30, 2018, the Company had approximate balances of cash and cash equivalents of $1,607,000, a working capital deficit of $1,178,000, total stockholders' equity of $16,532,000 and an accumulated deficit of $185,796,000. To date, the Company has in large part relied on debt and equity financing to fund its operations. As of September 30, 2018, the Company has been closely monitoring its cash and cash equivalents and has reduced its operating expenses, as needed, in order to continue to execute the Company's strategy. Management believes that the Company will require additional capital to meet its obligations arising from normal business operations for the next twelve months. Without additional capital, the Company's ability to continue to operate as a going concern will be limited. If unable to obtain adequate capital, the Company could be forced to reduce or cease its operations. The Company is currently pursuing capital transactions in the form of debt and equity; however, management cannot provide any assurance that we will be successful in its plans.

Cash flow from our operations relies substantially on our ability to continue to mine digital currencies and the conversion spot price at which our digital currencies are exchangeable for U.S. Dollars. We expect to generate ongoing revenues from the production of digital currencies, primarily bitcoins, in our Oklahoma City digital currency mining facility. Our ability to liquidate bitcoins at future values above the cost of production of bitcoins will affect our ability to generate positive cash flow from operations. However, our primary variable expense associated with our digital currency mining operation is the electricity expense of operating our Oklahoma City facility. Accordingly, the revenue from our digital currency mining operation is a function of the conversion spot price of bitcoin to U.S. Dollars over our electricity and other variable costs associated with operating our digital currency mining facility.

As of September 30, 2018, the trading spot price of bitcoin, our primary digital currency asset, has significantly declined from its highest conversion spot price in 2018. Management has determined that a conversion spot price for bitcoin of $3,000 per bitcoin is the lowest acceptable "floor price" at which continued peak operation of the mine comports with the Company's shortand long-term strategies. At a conversion spot price at or below $3,000 per bitcoin, the ratio of revenue generated to operating costs from our digital currency mining operation is not supportable based on current internal projections. Should the spot price of bitcoin fall below $3,000 per bitcoin, management may reduce or completely deactivate its digital currency miners as a cost-saving measure. Management could substantially reduce or cease the Company's digital currency mining activities until such a time as bitcoin begins to trade at a more advantageous conversion spot price against the U.S. Dollar, at which point the Company could immediately re-initiate its miners and resume bitcoin production from its digital currency mining facility.

If the spot price of bitcoin were to consistently trade at or below $3,000 per bitcoin and management were to successfully reduce or eliminate its variable operating expenses associated with its digital currency mining operation, sell certain of its salable assets at prices below fair market value, reduce payroll and delay the launch of its RiotX exchange, management believes that the Company can continue as a going concern for at least three months. This estimate is based on current internal projections of the Company's expenses, and does not account for unforeseen or unforeseeable costs such as additional legal or regulatory expenses which the Company cannot reasonably predict. If such isolated or continuing unpredictable costs occur, the Company's predictions could change materially.

The Company does not, at present, anticipate initiating these cost mitigation efforts, but is prepared to do so should access to capital markets not materialize in the short-term. Cutting its core digital currency mining operations, reducing its payroll, and delaying the development and launch of its RiotX exchange platform may have a material negative impact on the trading price of our common stock, and our shareholders may lose part or all of their investment. Management believes, however, that continued decline in the conversion price of bitcoin to U.S. Dollars may reduce cash flow to the extent that the Company is forced to engage in these cost-saving measures in order to continue as a going concern.

Additionally, even if the present trend of the decline in the conversion price of bitcoin to U.S. Dollars reverses and the Company is able to convert its digital currency assets to U.S. Dollars at a more advantageous price, the Company will need to raise additional capital to continue its operations and pursue its strategies, including the development of RiotX, and the need to respond to competitive pressures or unanticipated working capital requirements. The Company may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely affect our existing operations. If the Company raises additional equity financing, the Company's shareholders may experience significant dilution of their ownership interests, and the value per share of the Company's common stock could decline. Furthermore, if the Company engages in additional debt financing, the holders of debt would have priority over the holders of common stock, and the Company may be required to accept terms that restrict its ability to incur additional indebtedness and take other actions that would otherwise possibly not be in the interests of the Company's shareholders, forcing it to maintain specified liquidity or other ratios."

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We note your disclosure regarding the March 26, 2018 acquisition of 92.5% of Logical Brokerage that you are investigating launching a digital currency exchange and futures operation. We also note your recent 8-K disclosure regarding your recent agreement with Shift Markets.

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Please ensure that your current plans with respect to the recent agreement and plans to launch a digital currency exchange and futures operation are clear, including the business risks and challenges of launching these operations, what aspects of launching these operations will be provided by Shift Markets pursuant to the agreement, and your anticipated timeline and estimated costs.

The Company acknowledges the Staff's comment and has revised its disclosures regarding the development of its planned U.S.-based digital currency exchange, RiotX, accordingly. The Company has revised its disclosures to: (i) provide an overview of the RiotX exchange; (ii) provide a discussion of its agreements with third party vendors to provide services to RiotX as discussed in the Company's response to the Staff's comment no.

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3 above; (iii) provide an estimated project timeline for the development and launch of RiotX, including an initial launch by the end of the first quarter of 2019, and a subsequent rollout across 48 of the 50 states; (iv) provide a breakdown of the development and operational costs budgeted for RiotX by the Company; (v) provide a discussion of the regulatory framework of RiotX and the challenges regulatory compliance has posed to the development or RiotX; and (v) a discussion of the business risks associated with developing and operating the RiotX exchange. For the Staff's convenience, the full text of the amended disclosure (less the portion regarding the vendor agreements excerpted in the Company's response to the Staff's question no. 3 above) is included below:

"Development of a U.S.-Based Digital Currency Exchange

Overview of the RiotX Exchange

In addition to those business developments previously reported by the Company in its annual report on Form 10-K, quarterly reports on Form 10-Q, and periodic reports on Form 8-K, the Company has continued its exploration of the development of a U.S.-based digital currency exchange. The Company has been investigating and pursuing the regulatory pathway for the launch of a digital currency exchange in the United States since the beginning of 2018. The Company's planned digital currency exchange under the name "RiotX" is being developed by and is contemplated to be operated through the Company's subsidiary, RiotX Holdings, Inc. ("RiotX Holdings") The Company believes that, by providing a stable and secure platform for the exchange of digital currencies, it will attract significant trading volume, thereby providing the Company with consistent revenue per trade, independent of the price of any one digital currency. The Company intends to launch RiotX for the exchange of bitcoin, bitcoin cash, litecoin, and ethereum (the "Exchanged Currencies") and for exchange of the Exchanged Currencies for U.S. Dollars by the end of the first quarter of 2019. The Company has selected the Exchanged Currencies for exchange on RiotX based on internal and external reviews, and will only include those currencies for which it has obtained regulatory approval.

The Company views its RiotX exchange as being comprised of three core services: (i) Banking Services; (ii) a Trading Engine; and (iii) Digital Wallet Services. The Company intends to provide each of these services by engaging experienced third-party vendors in the industry, which will be reviewed on a case-by-case basis by the Company's management, along with external advisors and legal counsel; ultimately subject to review by the Company's board of directors. The Company plans to only contract with companies that have established track records as industry leaders, which comply with federal, state and local laws, and, if required, are in compliance with U.S. securities law to provide such services. The Company assesses each vendor using a risk management process that evaluates key risk factors related to their performance and their potential impact on the Company, including, without limitation, its capital structure, financial condition and liquidity. The Company has engaged external advisors and legal counsel to review contracts and conduct due diligence related to financial stability and performance and cybersecurity procedures of each vendor. Additionally the Company assesses each vendor as they relate to its regulatory compliance framework needs such as reporting, fraud monitoring, know your customer, anti-money laundering, and data privacy standards to ensure compliance with applicable rules, regulations, and industry best practices. […]

Project Timeline for RiotX

The Company anticipates launching its RiotX digital currency exchange late in the first quarter of 2019, which is subject to change based on several factors. Once the exchange software is online, the Company plans to offer services in a limited number of states in order to fully validate the performance of the system and debug any potential issues with RiotX. Throughout this time, the Company plans to increase staff levels to support additional users and refine its procedures for compliance, security and general support of RiotX. As the Company obtains the necessary regulatory approval in a given jurisdiction, the Company intends to bring RiotX online in that jurisdiction, with the ultimate goal of bringing RiotX online in all 50 states except Hawaii and Wyoming by the end of 2019. The regulatory hurdles faced by the Company, and its progress in this regard, is discussed in greater detail under the section titled "Regulatory Framework of RiotX"¸ below. Management believes this timeline is achievable, but, in light of difficulties in obtaining regulatory approval, reaching software as service agreements with third party vendors, and capital restrictions affecting the Company, this timeline may be delayed.

Reaching software service agreements with third party vendors for the RiotX exchange has presented a delay for the Company's development of the RiotX exchange. Termination of the Coinsquare Agreement requires the Company to replace Coinsquare with another provider (or providers) that would fulfill various technology components (such as the Trade Matching Engine and Digital Wallet Service for RiotX) as well as customer support and management services, all of which were to be handled by Coinsquare staff under the original Coinsquare Agreement. In addition to allocating its own personnel and resources to handling the customer service and troubleshooting aspects of the RiotX exchange which would have been handled by Coinsquare under the Coinsquare Agreement, the Company must integrate the services provided by third party vendors into the RiotX exchange to provide the Company with the necessary services for the development and operation of its planned exchange.

The timeline to launch the RiotX exchange will depend on several factors including, but not limited to: performance of the Company and its ability to finance its deployment; the federal and state regulatory landscape; the ability of the Company to secure proper licensing in each state in which it intends to operate; the Company's technology implementation schedule; and the Company's ability to raise capital to continue funding the development of the RiotX exchange. Any delay in these factors, as well as additional unforeseen or unforeseeable factors, may result in the delay of the launch of the RiotX exchange platform.

Cost of Development and Operation of RiotX

The Company estimates the initial development costs of launching the RiotX exchange inclusive of software development, license applications, legal fees, and general overhead should not exceed $250,000 prior to the anticipated launch by the end of the first quarter of 2019. This estimate is based on current projections, and is subject to change as factors, such as protracted legal costs, affect the cost of development of the RiotX exchange. Once operational, the RiotX exchange budget for the 2019, inclusive of the contract costs of the SynapseFi agreement, as well as the to-be-determined Digital Wallet Services provider and Trading Engine Service provider, employee, utility, regulatory, and legal costs, is not anticipated to exceed $2,000,000 per year. Factors such as rapid growth, changes in the regulatory landscape, and changes in our business plan could have a material adverse effect on these estimates, and, as such, these costs are subject to change over time. You should not assume that the estimates disclosed under this subheading of this prospectus are accurate on any date subsequent to the date set forth on the front of this prospectus. You should also not assume that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered, or securities are sold, on a later date.

Regulatory Framework of RiotX

As of the date of this prospectus, RiotX is licensed and/or approved in five states and has pending licenses in another 17 states, with review in another two states. The Company plans to be operational in 24 states by the launch date of RiotX by the end of the first quarter of 2019. However, management continues to work towards the long-term goal of obtaining regulatory approval of the RiotX exchange in all 50 U.S. states, with the exception of Hawaii and Wyoming, by the end of 2019; which timeline is subject to delays caused by regulatory review, market forces, and other factors outside of the Company's control.

In furtherance of its plan for regulatory compliance, the Company's purchase of 92.5% of Logical Brokerage Corp. ("Logical Brokerage"), which is an introducing broker registered with the Commodities Futures Trading Commission and the National Futures Administration, was completed in March of 2018. The Company subsequently obtained a Money Services Business License from FinCEN in May of 2018. The Company then obtained a Money Transmitter License from the State of Florida for RiotX in June of 2018. In October Logical Brokerage and RiotX were approved for application in a consortium of 17 states for fast track approval for Money Transmitter Licenses. We expect to receive these licenses in the first quarter of 2019. In December of 2018, RiotX obtained a Sellers-Issuers of Payment Instruments and Money Transmitter License from the State of Georgia and is actively pursuing additional state Money Transmitter Licenses. Additionally, RiotX, through Logical Brokerage, is a licensed futures introducing broker registered with the Commodity Futures Trading Commission and is a member of the National Futures Association. RiotX is licensed with FinCEN as a Money Service Business. These additional licenses may permit the Company to explore additional exchange developments in the future.

Throughout 2019, the Company plans to pursue additional money transmitter licenses in the United States for RiotX, as well as a New York State Bitlicense, which will license the RiotX exchange to engage in cryptocurrency business in New York. The New York State Bitlicense is seen as a benchmark license in the cryptocurrency business, and has traditionally been difficult to obtain. In the Third and Fourth Quarter of 2018, however, New York State regulators have increased the number of New York State Bitlicenses issued, and have done so at a greater frequency than in previous quarters. While management does not believe this bears any indication on its own application, management believes this movement indicates increasing action by New York State regulators to grant state licenses. The Company may not, however, ever succeed in obtaining a New York State Bitlicense for RiotX, and RiotX may therefore never obtain regulatory approval to conduct cryptocurrency business in New York. This lack of regulatory approval in one of the largest and most economically important states in the United States could have a detrimental effect on the planned RiotX exchange, which may have a material negative impact on our business operations.

Business Risks Associated with RiotX

The Company has devoted significant resources to the development of the planned RiotX exchange and the Company may lose most or all of its investment if RiotX fails. If the Company faces significant delays in the deployment of RiotX, or if the development costs of RiotX become unbearable, the Company may have to reduce or even halt its efforts to develop and deploy RiotX. If the Company is unsuccessful in the deployment of RiotX, it may lose most or all of the capital it has invested into its planned exchange. Additionally, if RiotX is not adopted by users, it may never gain traction in the market and become viable long-term. These risks to the deployment and adoption of RiotX pose significant risks to the capital the Company has invested in RiotX and the Company may be unable to sustain the shortand long-term costs associated with the development and operation of RiotX.

In addition to the disclosures made in its Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the period ended September 30, 2018, the Company has made corresponding updates to its Registration Statement on Form S-3, as amended December 12, 2018 and January 3, 2019, to include a thorough discussion of the Shift Markets Agreement and its impact on the development of the RiotX exchange. Please see the Company's letter in response to the Staff's comment letter dated December 18, 2018 regarding Amendment No. 1 to the Company's Registration Statement on Form S-3 filed December 12, 2018 regarding the materiality of the Shift Markets Agreement.

Read in the reply ↗

Please note, we are currently reviewing your amended Form S-3 and may have additional comments. Any additional comments will be provided under separate cover.

The Company notes the Staff's comment regarding their comments to the Company's Form S-3 and directs the Staff's attention to the Amendment No. 2 to the Company's Registration Statement on Form S-3/A filed on January 3, 2019, and the associated correspondence from the Company to the Staff transmitted on January 11, 2019 regarding the same. Read in the reply ↗

We are continuing to evaluate your response to prior comment 13 of our letter dated June 15, 2018. We may have additional comments.

The Company notes the Staff is still reviewing its response to the Staff's prior comment 13 of its letter dated June 15, 2018 and that additional comments may be outstanding regarding the same. Read in the reply ↗

We note that you have a pending request for confidential treatment and that there are outstanding comments on your Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2017, your Form 10-Q for the quarter ended March 31, 2018, and your Current Report on Form 8-K filed October 4, 2017.

Rest of the question

Please be advised that we will not be in a position to declare your registration statement effective until (1) we resolve any issues concerning the confidential treatment request, and (2) all comments on your Exchange Act filings are resolved.

No numbered answer found in the reply. Read the reply ↗

Please revise to expand your disclosure regarding the number of miners that are currently operating at your facility, and whether there are any expected changes that will correspond with the decreases in the amount of rent.

No reply letter found.

Please revise to discuss the termination of your licensing and services agreement with Coinsquare, and to explain how the SynapseFi agreement will help you launch your platform. It appears that the master services agreement with Shift Markets may be a material agreement.

Rest of the question

Please disclose the material terms of the agreement, including what aspects of the platform operations will be provided by Shift Markets pursuant to the agreement.

No reply letter found.

Please ensure that your current plans with respect to the SynapseFi and Shift Markets agreements and plans to launch a digital currency exchange and futures operation are clear and updated, including the business risks and challenges of launching these operations, the regulatory approvals that will be needed, and your anticipated timeline and estimated costs.

Rest of the question

For example, we note your statement on page 6 in the Annual Report on Form 10- K/A that was filed on June 29, 2018 that you intend to investigate licensing and suitability to serve customers in all states except Wyoming and Hawaii, but that you recently stated in your December 6, 2018 press release that you now plan to be operational in 24 states in the short term.

No reply letter found.

We note your disclosure that you will require additional capital in order to meet your ordinary business obligations for the next twelve months. Please revise to also disclose how long you expect your business will be able to continue its current and planned operations if you are unable to secure additional capital.

No reply letter found.

We note your statement that your common stock may be perceived as a way of maintaining investment exposure to the blockchain and digital currency markets without exposing the investor to the risk of a particular digital currency.

Rest of the question

The statement appears to contradict your statements that the primary focus of the company is digital currency mining operations and that your mining operations are focused primarily on bitcoin mining. Please revise your disclosure accordingly.

No reply letter found.

You state that RiotX is being developed "to be resistant" to various hacking attacks. Please tell us what this statement means and expand your business disclosure regarding your proposed platform launch to explain the steps you have taken to achieve this goal. Please also include balancing disclosure to explain the security risks that remain.

No reply letter found.

We note your statement in the last sentence of the third paragraph on page 7 that investors should not assume any incorporated information is correct on any date after the date of the applicable document. Please revise this disclosure to reflect your obligation to describe any and all material changes in your affairs that have occurred since the end of the latest fiscal year and which have not been described in a

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report on Form 10-Q or Form 8-K. Refer to Item 11 of the Form S-3.

No reply letter found.

We note that your bylaws include a forum selection provision. Please disclose the existence of this provision in a risk factor and that such a provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for such disputes and may discourage lawsuits with respect to such claims.

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Please also specifically disclose whether the provision applies to actions arising under the Exchange Act and the Securities Act.

No numbered answer found in the reply. Read the reply ↗

We note that you filed this registration statement more than 45 days after the end of your fiscal year. As you do not appear to meet the age of financial statement requirements of Rule 8-08(b) of Regulation S-X, you will need to include your audited financial statements or file and incorporate by reference your Form 10-K for fiscal year ended December 31, 2018 before we will accelerate the effective date of your

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registration statement. Please also note that if the Form 10-K does not include Part III information, we will not be in a position to accelerate the effective date of your registration statement until you have filed the definitive proxy statement. Please refer to Compliance and Disclosure Interpretations, Securities Act Forms Question 123.01 and Regulation S-K Question 117.05 for guidance.

We filed our Annual Report on Form 10-K for the year ended December 31, 2018 (the “Annual Report”) with the Commission on April 2, 2019. The Annual Report includes our audited financial statements and the reports of our auditors for the year ended December 31, 2018. For the Staff’s reference, we direct your attention to Part II, Items 5 through 9B of our Annual Report.

We have also included the Form 10-K, Part III information in the Amendment No. 1 to our Annual Report on Form 10-K (the “Amendment”), filed with the Commission on April 23, 2019.

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For the Staff’s reference, we direct your attention to Part III of the Amendment beginning on page 22 thereof.

Comment Letter Dated April 17, 2019

Risk Factors, page 10

1. We note your disclosures in your recently filed Annual Report on Form 10-K for the year ended December 31, 2018 and your proposed revised disclosure for the registration statement regarding your exclusive forum provision, and note that the provision in your bylaws provide that a state or federal court located within the State of New York shall be the sole and exclusive forum. Please revise your disclosures to correspond to the jurisdiction referenced in your governing documents.

Response

In response to the Staff’s comment, the Company has included the following risk factor disclosure in its Amendment No. 1 to its Registration Statement on Form S-3 (File No. 333-230290), filed with the Commission on April 23, 2019 under the section entitled “Risk Factors” on page 10 thereof:

Risk Factors, page 10.

“Our Bylaws contain a forum selection clause which requires our stockholders to bring claims against us in the State of New York as the sole and exclusive forum for the resolution of their claims; our stockholders may be prejudiced by this forum selection clause.

The Company’s choice of the state and federal courts located within the State of New York as the sole and exclusive forum for the resolution of claims brought by our stockholders under the forum selection clause contained in our Bylaws may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for such disputes and may discourage lawsuits with respect to such claims. The Company believes, however, that the choice of New York is beneficial to our stockholders and the Company, as the state and federal courts of New York have considerable experience and familiarity with stockholder derivative and other similar claims brought against corporations, which leads to greater consistency in the application of applicable law. The Company’s forum selection clause applies to civil claims and it is our intention that this forum selection clause apply to claims brought under the Securities Act and the Exchange Act to the fullest extent permitted by law.”

We have also included this risk factor disclosure in the Amendment No. 1 to our Annual Report on Form 10-K under Part I, Item 1A. Risk Factors. on page 21 thereof.

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We note that there are outstanding comments on your Form 10-K for the fiscal year ended December 31, 2017, your Form 10-Q/A for the quarter ended September 30, 2018, and your Current Report on Form 8-K filed October 4, 2017. Please be advised that we will not be in a position to declare your registration statement effective until all comments on your Exchange Act filings are resolved.

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We note your disclosures in your recently filed Annual Report on Form 10-K for the year ended December 31, 2018 and your proposed revised disclosure for the registration statement regarding your exclusive forum provision, and note that the provision in your bylaws provide that a state or federal court located within the State of New York shall be the sole and exclusive forum.

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Please revise your disclosures to correspond to the jurisdiction referenced in your governing documents.

No reply letter found.

Please provide us an analysis as to whether you meet the definition of an “investment company” under Section 3(a) of the Investment Company Act of 1940 following your investment in Coinsquare Ltd./goNumerical Ltd. and, if so, whether you are excepted from this definition or are otherwise exempt from registering with the Commission as an investment company.

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In your response, please provide us with sufficient detail to assess your analysis. As part of your analysis, please be sure to address Section 3(a)(1)(A) in light of your October 2017 “Investor Presentation”, furnished as Exhibit 99.1 to your October 5, 2017 Form 8-K, which announces your "Corporate Shift in Focus."

The Company does not meet the definition of "investment company" under Section 3(a) of the Investment

Section 3(a) of the Investment Company Act of 1940 defines an "investment company" as an issuer which-

"(A) is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities;

(B) is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or

(C) is engaged or proposes to engage

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in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer's total assets (exclusive of Government securities and cash items) on an unconsolidated basis."

Pursuant to the broad definition above, a company that holds substantial minority interests in other companies that it does not control, or an operating company that temporarily holds investment securities that constitute a large percentage of its assets may be deemed, inadvertently, to be an "investment company". However, the Company believes that its purchase of interests in other third party companies, should not be deemed to result in it being deemed an "investment company" because the Company's investment in a single passive investment (goNumerical/Coinsquare) is not intended to represent the Company being largely engaged in investments that are passive in nature and the Company owns and operates businesses that are not passive in nature such as its historical laboratory and veterinary businesses, and more recently the acquisition of a 52% interest in Tess Inc, which is actively engaged in developing blockchain solutions for telecommunications, whose operations are expected to be included on a consolidated basis within the financial statements of the Company. Additionally, the recently acquired 100% of Kairos Global Technology, Inc. and, consequently, certain computer equipment and other assets used for the mining of cryptocurrency, specifically servers consisting of 700 AntMiner S9s and 500 AntMiner L3s,whose operations are also expected to be reported on a consolidated basis. Accordingly, the Company is not largely engaged in holding substantial minority interests. Further, the Company intends to exercise some level of control over these entities. In addition, as discussed in more detail below, the Company intends to maintain and continue to grow its non-blockchain related business operations. As such, it does not engage, and does not seek to engage, in the activities listed under Section 3(a) quoted above.

To further clarify the Company's current strategy, and as stated in its October 2017 presentation, the Company "intends to gain exposure to the blockchain ecosystem through targeted investments in the sector, with a primary focus on the Bitcoin and Ethereum blockchains." The Company's strategy is to pursue opportunistic investments and controlling positions in these new and emerging technologies, with the end view of enabling the Company to operate blockchain technology. The October 2017 presentation was intended to provide information relating to blockchain technology and was not intended to imply that the Company intended or proposed to be "engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities."

We also deem it important to note that, as stated in the Company's Press Release dated October 17, 2017, despite the Company's entry into the blockchain space, the Company still intends to maintain its existing business operations and its royalty license stemming from its Exclusive License Agreement with Ceva Santé Animale S.A., which provides an exclusive worldwide royalty-bearing license, until December 31, 2028, to develop, seek regulatory approval for and offer to sell, market, distribute, import and export luteinizing hormone and/or follicle-stimulating hormone products for cattle, equine and swine for the assistance and facilitation of reproduction. This was also stressed in the Form 8-K filed by the Company on October 5, 2017 (in which the October 2017 Presentation was included as an exhibit).

Lastly, as noted above, and as reported in the Company's Current Report on Form 8-K dated October 23, 2017, on October 20, 2017 the Company acquired approximately 52% of Tess Inc., a private Ontario company ("TESS") which is developing blockchain solutions for telecommunications companies. Under the terms of its agreement with TESS, the Company invested $320,000 and issued 75,000 shares of its restricted common stock, in exchange for 2,708,333 shares of TESS' common stock. As a result, TESS became a majority-owned subsidiary of the Company. Further, the Company has also been granted the right to select a member of TESS's Board of Directors. Additionally, as reported in the Company's Current Report on Form 8-K dated November 3, 2017, on November 3, 2017, the Company acquired 100% of Kairos Global Technology, Inc. ("Kairos), and, consequently, computer equipment and other assets used for the mining of cryptocurrency, specifically servers consisting of 700 AntMiner S9s and 500 AntMiner L3s. The Company believes that its acquisitions of, 100% of Kairos's and 52% of TESS' common stock, respectively, along with the Company's investment in goNumerical Ltd./Coinsquare Ltd., further illustrates that the Company's intention is to become an active participant in the blockchain ecosystem. The Company further believes that this, coupled with the continuation of its business related to its Exclusive License Agreement discussed above, places the Company outside the definition of an "investment company" under Section 3(a) of the Investment Company Act of 1940.

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We note your statement that you entered into a "series of agreements", including an Amended and Restated Unanimous Shareholder Agreement in connection with the goNumerical transaction. Please identify for us each of the agreements and provide us a brief description of the material terms and conditions contained in each referenced agreement.

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Also, explain to us why each of these agreements has not been filed as an exhibit to date.

The Company entered into a subscription agreement whereby it purchased an approximate 10.9% ownership in goNumerical Ltd. In connection with the foregoing transaction, the Company also received warrants to purchase shares of Coinsquare's common stock, which would result in an additional 3.8% net ownership interest, if exercised in full. The subscription agreement was filed with the Commission on November 13, 2017 as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017.

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The Amended and Restated Unanimous Shareholder Agreement, however, is an agreement that governs shareholders of goNumerical Ltd. Accordingly, the Company did not file such agreement because it believes the agreement to be immaterial to its minority interest in goNumerical Ltd.

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Please provide us your analysis supporting your determination that financial statements of goNumerical Ltd./Coinsquare Ltd. are not required or tell us when you will provide them. Cite in your response all authority on which you rely, and show us your calculations supporting your analysis.

On October 4, 2017, the Company purchased a minority interest in goNumerical Ltd. ("Coinsquare") which operates a digital crypto-currency exchange platform operating in Canada. The Company has determined that the financial statements of goNumerical Ltd./Coinsquare Ltd. are not required pursuant to the equity method of accounting, which applies to investments in common stock or in-substance common stock, as is the case here, where the investor does not control an investee nor does it have the ability to exercise significant influence over the investee's operating and financial policies.

In

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determining whether an investor has the ability to exercise significant influence over operating and financial policies of the investee is based on facts and circumstances but is presumed to exist for investment of 20% or more of the voting stock of the investee. In the current case, the Company only holds approximately 10% of the voting stock of Coinsquare. Under ASC 323-10-15-8, an investment of less than 20% of the investee's voting stock shall lead to a presumption that an investor does not have the ability to exercise significant influence.

Other ways that ASC states that significant influence over operating and financial policies of an investee may be indicated also include: representation on the board of directors; participation in policy-making processes; material intra-entity transactions; interchange of managerial personnel and technological dependency. None of the foregoing factors are present with respect to the Company's minority investment in Coinsquare. The Company holds no board of director seat, does not participate in policy-making policies, has not engaged in any other transaction with Coinsquare other than its initial investment, does not engage in any managerial role and it does not depend on Coinsquare's technology for the operation of its business.

As the Company neither controls Coinsquare nor does it have the ability to exercise significant influence over its operating and financial policies, financial statements of Coinsquare are not required pursuant to ASC 323.

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We note your response to prior comment 1. Please provide further information needed to conduct an analysis under section 3(a)(1)(C) of the Investment Company Act of 1940 (the “Company Act”) with respect to the Company.

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In particular, please identify and explain (including a detailed calculation on an unconsolidated basis) what assets held by the Company are "investment securities" for the purposes of Section 3 of the Company Act, as well as identifying the percentage of the value of the Company’s total assets that are "investment securities."

As of September 30, 2017 (the most recent 10-Q filed) the unconsolidated assets of the Company, removing cash items and comparing that total to the goNumerical/Coinsquare acquisition, results in a percentage of 34.49% (less than the 40%). Read in the reply ↗

We continue to evaluate your response to prior comment 2. Please explain the purpose of the Amended and Restated Unanimous Shareholder Agreement and describe the material terms and conditions contained in the agreement. Also, explain to us the reason for the amendment and restatement.

The Amended and Restated Unanimous Shareholder Agreement (the "Agreement") is a confidential agreement governing the rights and responsibilities among the owners of goNumerical that had been in effect prior to the Company's investment. The Agreement was amended to admit the Company as an owner of goNumerical. Section 6(2) of the Agreement, included within the table of contents of "Access to Information/Confidentiality", requires confidentiality as follows:

Confidentiality/Non-Disclosure.

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Each Shareholder shall (a) hold all of the Company's proprietary information and information concerning its business and affairs in the strictest of confidence, and (b) not make any disclosure to third parties (other than its lawyers, financial advisors and accountants) or to the public of, or use or authorize anyone to use for any purposes other than for the private affairs of the Company, any information or data relating to the operations of the Company or of any other party, except with the approval of the BOD, but this provision shall not prohibit any disclosure to the extent required by governmental or regulatory authorities. Notwithstanding the foregoing, the BOD shall be entitled to make such disclosures as the BOD, in his sole discretion, deems appropriate in connection with a potential transaction or business opportunity involving the Company, provided that the recipient of any disclosed confidential information of the Company shall sign a confidentiality agreement approved by the BOD.

The Company considers the Agreement in connection with a minority held investment as immaterial and its contents confidential. The Company is contractually restricted from disclosure and for such reasons has not filed the Agreement as an exhibit to any filing or report. Supplementally, for the assistance of the Staff, the Agreement generally covers common restrictions on the rights of minority shareholders in a closely-held corporation. For illustration, the Company provides the Staff with the table of contents from the Agreement:

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We note your response to prior comment 1. Please provide a more-detailed calculation on an unconsolidated basis for which assets held by the Company are “investment securities” for the purposes of Section 3 of the Company Act.

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As part of such response, please explicitly list which of the securities recently acquired by the Company (e.g., goNumerical/Coinsquare, TESS, and Kairos) are (or are not) included as “investment securities” and why such securities have the applicable treatment for Company Act Section 3 purposes.

When calculated on an unconsolidated basis, none of the Company's assets constitute "investment securities" exceeding 40% of the value of issuers unconsolidated assets, as defined for purposes of Section 3 of the Company Act. Attached hereto as Exhibit A is a detail computation of the Company's investment securities as requested by the Staff.

Section 3 (a) of the Company Act defines "investment company" as an issuer which, among other things, is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire

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investment securities having a value exceeding 40 per centum of the value of such issuer's total assets (exclusive of Government securities and cash items) on an unconsolidated basis and defines "investment securities" as all securities except: (A) Government securities, (B) securities issued by employees' securities companies, and (C) securities issued by a majority-owned subsidiaries of the owner which (i) are not investment companies, and (ii) are not relying on the exception from the definition of investment company…".

As shown on Exhibit A, none of the Company's recent transactions involve investment securities of the Company having a value exceeding 40% of the value of the Company's total assets.

GoNumerical/Coinsquare

The Company owns an approximate 15% interest in goNumerical Ltd., (Coinsquare). GoNumerical investment would constitute an "investment security" under the Company Act.

Tess, Inc.("Tess")

The Company owns approximately 52% of the outstanding securities of Tess.

As a majority owned subsidiary, Tess is exempt under "C" above.

Kairos Global Technology, Inc. ("Kairos")

Kairos is the Company's wholly-owned subsidiary which owns computer equipment and other related assets used for the mining of cryptocurrency. As a wholly-owned subsidiary Kairos is exempt under "C" above.

See additional information under Response #3 below.

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We refer to your January 24, 2018 press release announcing your recent acquisition of Bitcoins at auction. Please explain the Company’s treatment of Bitcoins (and any other crypto assets acquired by the Company since September 30, 2017, as applicable) for the purposes of Section 3(a)(1)(C) of the Company Act.

Attached as Exhibit B is a schedule of the Company's "crypto assets" acquired and mined as of December 31, 2017 and February 12, 2018. See response below with #4 for a further discussion on accounting for the Company's crypto assets. The Company does advise the staff that based upon its preliminary estimates, even if it is ultimately determined that crypto assets are determined to be investment securities, based upon current amounts, they are not expected to cause the Company to exceed the 40% threshold.

The key in assessing whether the Company is an investment company under ASC 946, is

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found in ASC 946-10-15-6. By going through the analysis in ASC 946-10-55 the Company believes it has and will have another primary purpose, other than investing, reinvesting, owning, holding, or trading in securities exceeding 40 per centum of the value of its total assets (exclusive of Government securities and cash items). See response 4 below. In the event that the analysis fails to continue at any time to be accurate, due to fluctuating market pricing for crypto assets, or otherwise, after taking into account any regulatory statements regarding the classification of such crypto assets, the Company will, subject to any other applicable exemptions or interpretations by the SEC, register as an Investment Company if so required to do so.

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We note your response to prior comment 1. Notwithstanding your determination as to whether you are an Investment Company under the Investment Company Act of 1940, please provide us with your analysis under ASC 946-10-15-5 through 15-9 in determining whether you meet the definition of an investment company for accounting purposes.

Whether the Company is an investment company for accounting purposes turns on the provisions of ASC 946-10-55. Pursuant to the "Implementation Guidance" of such ASC "This Section provides additional guidance for the assessment in paragraphs 946-10-15-5 through 15-9 to determine whether an entity that is not regulated under the Investment Company Act of 1940 is an investment company under this Topic".

Given that we are not regulated under the Investment Company Act of 1940, we note that ASC 946-10-15-5 requires further assessment of paragraphs 15-6 and 15-7 of the same section, which

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specify:

15-6 An investment company has the following fundamental characteristics:

a)

It is an entity that does both of the following:

i.

Obtains funds from one or more investors and provides the investor(s) with investment management services

Note: Company does not provide investors with investment management services ii.

Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both.

Note: Company's business purposes are publicly disclosed and consist of both capital appreciation and investment income.

b)

The entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income.

Note: The Company's objective with all of its investments are for obtaining returns attributable to ownership interests from capital appreciation and or investment income.

15-7 An investment company also has the following typical characteristics:

It has more than one investment.

Note: Company has one investment asset in Coinsquare

It has more than one investor.

Note: Company has multiple investors.

c)

It has investors that are not related parties of the parent (if there is a parent) or the investment manager.

Note: Company's investors are not related parties of the parent.

d)

It has ownership interests in the form of equity or partnership interests.

Note: Company's ownership interests are in the form of equity.

e)

It manages substantially all of its investments on a fair value basis.

Note: Company's investments to date have not been managed or reported on a fair value basis. Future periodic reports are expected to account for the Company's digital assets on a mark-to-market basis, as further discussed below.

15-8 To be an investment company, an entity shall possess the fundamental characteristics in paragraph 15-6. Typically, an investment company also has all of the characteristics in the preceding paragraph [15-7]. However, the absence of one of more of those typical characteristics does not necessarily preclude an entity from being an investment company. If an entity does not possess one or more of the typical characteristics, it shall apply judgment and determine, considering all facts and circumstances, how its activities continue to be consistent (or are not consistent) with those of an investment company.

Note: Company's assessment of the above criteria concludes that it does not meet the conditions of an investment company.

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In your description of the accounting policy you propose to apply by analogy to digital assets you reference foreign currency, financial assets, and securities. In order to help us further evaluate your proposed accounting, please clarify for us to what the terms “digital assets” and “digital securities” relate and whether they meet the accounting definition of foreign currency, financial assets, or securities.

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Provide a more detailed analysis supporting the appropriateness of your proposed analogy to ASC 825 and provide further elaboration as to the other analogies you considered and rejected and the reasons why.

While there are initiatives underway by financial and accounting bodies to address and develop guidelines, there is currently no authoritative literature under accounting principles generally accepted in the United States, which specifically addresses the accounting for digital assets, including digital currencies. In the Company's most recently reported financial results as of September 30, 2017, no bitcoin assets were held. The Company is currently in the process of closing its books and records to undertake its audit for the year ended December 31, 2017.

Rest of the answer

As of December 31, 2017, the total amount of bitcoin assets held were not material to the Company's assets. As part of its year-end financial reporting process the final accounting and financial reporting policies in connection with the Company's activities in the fourth quarter, including accounting and reporting for its bitcoin assets, will be finalized and are currently preliminary.

Digital Assets

Bitcoins are a type of Digital Asset, and generally the most commonly known. There are however, many other Digital Assets, which similar to Bitcoin are founded on mathematical algorithms and cryptographic security, the exchange of which are tracked in public transaction ledgers (commonly known as "Blockchain"). We consider the earning or acquisition of any such coin or token to be a Digital Asset. Specifically, through our mining operations we have earned Bitcoin, Bitcoin Cash and LiteCoin, we do not own any other Digital Assets.

Consideration of Accounting Treatment

In evaluating current literature regarding accounting for crypto-currency, including papers by the large accounting and audit firms, suggest evaluation of crypto-currency using exiting guidance for financial assets, intangibles or inventory, receivable or operational assets. Inserted below is a summary of such considerations:

Financial asset

Under ASC 825 the definition of a financial asset is that it is cash, evidence of an ownership interest in an entity, or a contract that conveys to the entity a right to do either of the following:

Receive cash or another financial instrument from a second entity

Exchange other financial instruments on potentially favorable terms with the second entity.

The definition of a financial instrument adds to this:

Conveys to that second entity a contractual right either:

To receive cash or another financial instrument from the first entity

To exchange other financial instruments on potentially favorable terms with the first entity.

The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity.

Digital Assets do not hold a contractual right to cash; however, through various means of exchange they can provide a store of value that can be converted into cash by the holder, or used in place of cash to make other purchases from vendors accepting Digital Assets as payment.

Management has drawn an analogy of this to foreign currencies whereby the holder may exchange U.S Dollars into a foreign currency, but then can only use that currency to transact with other parties willing to accept that currency. The holder then also bears the risk of appreciation and depreciation of that currency prior to their conversion back into U.S. Dollars, which in the most dramatic case could be a complete crash of the related foreign currency and theoretically a total loss, not dissimilar from the risks faced with Digital Assets

Intangibles

By their nature Digital Assets are intangible, following ASC 350 to recognize an internally developed identifiable intangible asset would contemplate capitalizing the costs of developing the intangible asset. However, ASC 350-25-3 then notes that internally developed intangible assets that have indeterminate lives would be expensed. Accordingly, under this approach we would recognize the current expense as we have, which is the cost of running our mining operations, but would effectively move Digital Assets that we have earned through mining off balance sheet.

If this approach was taken, then in order to present relevant data to users of the financial statements we would propose that the fair value information, as it is considered readily available should form part of the disclosure in the financial statements. However, there is no guidance within ASC 350 that would contemplate this form of disclosure. We again would consider applying by analogy the fair value disclosures of ASC 820.

Despite the above, we are of the opinion that this could then create misleading financial data when Digital Assets were then used to transact, since it would result in either a new asset (be it cash or otherwise) or a reduction in liability and the corresponding credit amount would then have to be recorded as a gain in the statements of operations. The consequence of following this method is that changes in the fair value and the potential impact on gain or loss are left unrecognized until a triggering event.

Inventory, receivable or operational asset

We have also considered whether Digital Assets earned through our mining activity represent inventory that can then be sold to other market participants in the course of the Company's business. Given that Digital Assets can be stored and thus bought and sold as in the case of the Bitcoin we acquired at auction in January 2018. However, we believe that in generating the Digital Assets that we currently hold as of December 31, 2017, those were earned in our ordinary course of business, being mining of Digital Assets.

As we require funds to fund operations we would then be capable of converting the Digital Assets into fiat currency for use in operations, or using the Digital Assets themselves permitting that there are counterparties willing to accept those Digital Assets as payment. However, the Digital Asset does not represent a contractual right to receive cash, accordingly, we have determined that it would not in effect represent a receivable by nature.

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Please clarify whether you hold investments in digital assets other than bitcoin, for example as a result of your acquisitions of Tess, Inc. or Kairos Global Technology, Inc.

See response to 2 above. In addition to bitcoin, the company holds the following digital assets: litecoin and bitcoin cash. Apart from the 500 bitcoins the company holds from its winning bid in the U.S. Marshals Service auction, the remainder of the company's digital assets were generated from Kairos' mining operations. Tess does not hold any cryptocurrencies or touch any cryptocurrencies directly. Tess is developing its own closed loop blockchain technology platform as further described in response to comment #6. Read in the reply ↗

Please clarify the nature of Tess, Inc.’s business including what you mean when you state that Tess, Inc. is developing blockchain solutions for telecommunications companies.

Tess intends to develop blockchain technology and Tess Smart Contracts to create a paradigm shift in the process of settlements for Wholesale Telecom traffic between international carriers. Prepayments attached to immutable contractual obligations embedded in Tess Smart Contracts will guarantee daily payments upon fulfilment. It is anticipated that most carriers will not use their own capital to fund Tess Smart Contracts. Tess Smart Contract protocol is designed to facilitate lender participation in the Wholesale Telecom supply chain to securely fund prepaid settlements down the supply chain. Read in the reply ↗

Please clarify the nature of Kairos Global Technology, Inc.’s business and the extent to which its operations relate to the mining of cryptocurrency.

Kairos Global Technology, Inc's business is exclusively focused on cryptocurrency mining to verify transactions and generate newly issued cryptocurrency as payment. It is only mining cryptocurrencies that the company views as digital currencies, and nothing that has been associated with any "Initial Coin Offerings" or tokens. At present, Kairos has only mined bitcoin, bitcoin cash, and litecoin. Read in the reply ↗

We refer to your response to prior comment 2. Based on the response, it remains unclear why you believe the restrictions on your rights as a shareholder in Coinsquare are immaterial to an understanding of the investment.

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In particular, we note that your response indicates that the shareholder agreement governs the management and operation of the Coinsquare business and also contains provisions restricting, and in certain cases mandating, transfer of your ownership interest. We further note that the Coinsquare investment, when undertaken, represented your sole asset reflective of your announced “shift in direction” to a “strategic investor and operator in the blockchain.” Accordingly, we believe the agreement is a material agreement that is required to be filed pursuant to Regulation S-K, Item 601(b)(10). Please file the agreement or advise.

The agreement will be filed as an Exhibit to the registration statement as other information in order to assist in an understanding of this matter. In advance of that filing the Company will be submitting a confidential treatment request for certain information disclosed in the agreement. Read in the reply ↗

We note your response to prior comment 3. Your determination that you do not meet the definition of an investment company under ASC 946 appears to hinge on your assertion that you do not provide your investors with investment management services. Please explain your consideration as to whether your significant business activities fit within the broader context of investment management services.

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For example, ASC 946-10-55-16 illustrates that investment management services include providing access to investment opportunities unobtainable by individual investors. In this regard, your public disclosures have indicated that you are providing investors with investment exposure to the blockchain ecosystem through targeted investments in the sector, with a primary focus on the bitcoin and ethereum blockchains.

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You assert in your response to prior comment 3 that the company's business purposes are publicly disclosed and consist of both capital appreciation and investment income. Please address the following: • Describe for us the company’s design, business purpose(s), and how it holds itself out to investors.

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• Identify for us examples of your public disclosure referenced in your response that indicates that the company’s business purposes consist of both capital appreciation and investment income. • Clarify for us whether you have identified or intend to identify potential exit strategies for the company’s investments through which the company can realize capital appreciation. • Provide us with a description of the various business activities performed by the company and each of its consolidated subsidiaries and the nature of the returns generated by such activities (e.g., capital appreciation, investment income or operating income). For each entity, clarify whether it develops, produces or markets products and services (other than investment management services) for/to its customers. • Describe for us the activities of the company’s officers and directors (e.g. seeking investments for capital appreciation and/or investment income or for the purpose of providing goods and services to customers). • Provide us with an analysis of the additional guidance in ASC 946-10-55-4 through ASC 946-10-55-10.

s #1 and #2:

Riot Blockchain Inc. (the "Riot" or "the Company") is not an "investment company" within the meaning of Section 3 of the Investment Company Act of 1940, as amended (the "Act"). Section 3 of the Act provides two definitions of "investment company" that could potentially relate to Riot. Section 3(a)(1)(A), a subjective test, applies to those issuers that intend to be investment companies and that are, or hold themselves out as being, primarily engaged in the business of investing in securities.

Rest of the answer

This definition does not apply to Riot because Riot is not and does not hold itself out as primarily engaged in the business of investing in securities. Section 3(a)(1)(C), is an objective test and applies to any issuer that is engaged in the business of investing, reinvesting, owning, holding or trading securities, and owns or proposes to acquire "investment securities" having a value in excess of 40% of the issuer's total assets. Riot does not meet this portion of the definition as its assets are predominantly its computer servers used to mine digital assets, which in essence is providing transaction verification services. In the future, regulatory interpretations may consider the digital assets themselves that are mined to be "investment securities". This possibility is addressed below and in the Company's SEC filings and reports as a significant risk

Section 3(a)(1)(A) Analysis

The Company describes itself in its public filings and presentations engaging in activities in which it aims to be a leader in developing and operating blockchain technologies through appropriately targeted investments and acquisitions. The Company has made significant strides in ramping up its internally owned and operated cryptocurrency mining operations in particular, which starting in March 2018 are projected to yield in excess of 2 bitcoins per day generated from running approximately 3,000 ASIC cryptocurrency mining servers located in its leased facility in Oklahoma City, Oklahoma. The Company presently restricts the digital assets it mines to bitcoin, bitcoin cash, and litecoin and anticipates growing its number of deployed mining servers in Oklahoma City to approximately 8,000 ASIC cryptocurrency mining servers by May 2018.

In addition, the Company has made several investments in other owned or controlled ventures developing blockchain technologies and holds several minority investments that could be considered "investment securities". In response to the Staff's reference to the Company's publicly disclosed stated purpose, the Company believes that just as any publicly traded company can provide investment exposure for investors for assets in other industries (consider for example, the ownership of uranium, gold, silver, copper, airplanes, drugs or real estate), investors can find a means to gain investment exposure to the emerging blockchain ecosystem through an investment in the Company's common stock which is publicly traded on NASDAQ. Since the Company owns various assets engaged in blockchain technology and owns cryptocurrency directly, both as a result of its cryptocurrency mining and transaction verification services and acquired from a one-time successful bid at a United States Marshall's service auction, investors can obtain "exposure to the blockchain ecosystem through the Company's targeted investments" in these assets. The Company has modified its presentations to better coalesce with its development and currently uses the following introductory overview in its investor presentations:

"Riot Blockchain intends to gain exposure to the blockchain ecosystem through its mining operations, internally developed businesses, joint ventures, and targeted investments in the sector. Its primary focus is on Bitcoin and general blockchain technology."

In further responding to the Staff's concerns that the Company may be an investment company the Company has performed an analysis of its operations against the five-factor test and determined that it is not. To determine whether an issuer is engaged primarily in investing in securities, the SEC generally has analyzed the company using the five-factor test enunciated in Tonopah Mining Company of Nevada (26 S.E.C. 426 (1947)). The five factors are: (i) the company's historical development, (ii) its public representations of policy, (iii) the activities of its officers and directors, (iv) the nature of its present assets and (v) the sources of its present income. Looking at these factors, Riot clearly is not primarily engaged in investing in securities. As discussed above, its historical development and public representations of policy illustrate that Riot is primarily engaged in the business of acquiring, operating and supporting (through management and investments) blockchain related non-investment company businesses, and its management spends the vast majority of its time overseeing and executing this strategy (i.e., not engaging in short-term securities trading or investing activities). Currently Riot and its majority owned subsidiaries employ a total of 24 employees, three of whom are less than full time. Of the total employees, seven are executives and officers (all hands-on in day-to-day operations), six are in finance, accounting and administrative, (including the Company's public reporting functions), five are focused on sales and marketing functions, four are dedicated to technical services for platform, web and software development and two are in business development, one of whom is part-time.

Section 3(a)(1)(C) Analysis

The second definition of "investment company" potentially applicable to Riot, Section 3(a)(1)(C), is an objective test and applies to any issuer that is engaged in the business of investing, reinvesting, owning, holding or trading securities, and owns or proposes to acquire "investment securities" having a value in excess of 40% of the issuer's total assets (exclusive of government securities and cash items) on an unconsolidated basis. For purposes of that definition, the term "investment securities" exempts majority-owned subsidiaries of the issuer that are not themselves investment companies. Under that analysis, our assets are dominated by equipment and related assets, the purpose of which is to mainly support Riot's mining operations for digital currency. In exchange for that service, the Company is rewarded (or compensated) in digital assets. The activities entail running specialized computer servers which solve a set of prescribed complex mathematical calculations in order to add a block to the Blockchain and thereby confirm digital currency transactions. When we are successful in adding a block to the Blockchain we are rewarded in digital assets (i.e. Bitcoin) for our effort. As of December 31, 2017, less than 40% of Riot's total assets (exclusive of government securities and cash items) consisted of digital assets or cost method investments accounted for under ASC subtopic 325-20, Investments-Other: Cost Method Investments which is expected to continue to be the case as of March 31, 2018. This assumes that the Bitcoin itself would be included in the definition of investment securities, which is a question that is as of yet unresolved by the regulatory interpretations applicable to the Company's business.

Conclusion

The Company has reviewed various additional related source materials and acknowledges that the absence of one or more of the typical investment company characteristics (as recited in our letter to the Staff dated March 8, 2018) does not necessarily prevent an entity from being an investment company. If an entity does not possess one or more of the typical characteristics, the guidance we have reviewed allows for judgment and some flexibility in assessing whether the entity's business activities, considering all facts and circumstances, are consistent with those of an investment company. In particular we are influenced by the accounting definition of an investment company contained in Accounting Standards Update No. 2013-08, Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, available at www.fasb.org.

When reviewing these measures relative to REITs, using principles which we believe are also applicable to our analysis of the Company's status as an investment company, KPMG LLP summarized the SEC literature as follows1:

An entity would not be an investment company if the entity or its affiliates obtain or have the objective of obtaining returns or benefits from an investee or its affiliate through operating or strategic activities. An investment company may be involved in day-to-day management activities of its investees and provide financial support to its investees if those services are provided to maximize the overall value or capital appreciation of the investment, and they do not represent a separate substantial business activity or separate substantial source of income for the investment company entity (or its affiliates in relation to the investing activities of the entity).

1 https://assets.kpmg.com/content/dam/kpmg/pdf/2013/12/new-investment-company-accounting-literature.pdf

Finally, we note that even an issuer that otherwise falls within the definition of "investment company" in Section 3(a)(1)(C) nonetheless is exempted from that definition by Section 3(b)(1) of the Act if it is primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities. See e.g., SEC v. National Presto Ind., Inc., 486 F.3d 305, 312-315 (7th Cir. 2007). The determination of a company's primary business under Section 3(b)(1) is generally made by application of the same five-factor test discussed above. As discussed above, applying that test to Riot demonstrates that Riot is primarily engaged in Bitcoin and general blockchain technology as evidenced by its operating activities, its public representations about its business, the day-to-day activities of its officers and directors, the sources of its income (Transaction Verification Services) and the nature of its assets.

Notwithstanding the foregoing, circumstances may arise where during a particular measurement cycle the Company may realize that more than 40% of its assets constitute investment securities, as such term is understood at the time, including as may arise as a result of holding cryptocurrency mined by the Company. In such event the Company would take steps to reduce such holdings to 40% or less, which could include liquidating cryptocurrency holdings for fiat currency for example. The Company has prepared additional risk factor disclosures describing the possibility of becoming an inadvertent investment company under the Commission's interpretations and the actions that may be taken which will be included in future filings as well as the impact on having to register as an investment company if no exemption is then available.

Read in the reply ↗

In your response to prior comment 4 you indicate that you have not yet finalized your accounting and financial reporting policies for your digital assets but expect to do so as part of your year-end financial reporting process. We are therefore not in a position to evaluate the accounting and financial reporting considerations included in your response at this time.

Rest of the question

As a reminder, we do encourage companies and their auditors to consult with the Office of the Chief Accountant (OCA) on accounting and financial reporting matters, especially those involving unusual, complex, or innovative transactions for which no clear authoritative guidance exists. Instructions regarding pre-filing submissions to OCA can be found on our website at https://www.sec.gov/info/accountants/ocasubguidance.htm.

The Company has been advised that the fair value measurement model should be the accounting model used for the Company's digital assets and intends to proceed on that basis. This position is consistent with the following excerpt from PWC's Point of View Cryptocurrencies (March 2018):

While it is possible to fit cryptocurrency into the existing accounting model for intangible assets, this model does not best reflect the economics of these unique assets.

Unlike other intangible assets that are measured at cost (unless impaired), the fundamental nature of cryptocurrencies is different.

Rest of the answer

While these assets have no physical substance, many are traded on exchanges (unlike other intangibles), are designed to be accepted as payment for other goods and services (which is infrequent for intangibles), and subject to significant volatility.

We believe that a fair value measurement model, with both realized and unrealized changes reflected currently in the income statement, will best represent the economics associated with holding cryptocurrencies.

Read in the reply ↗

We acknowledge your response to prior comment 1. We note that Exhibit A, which is referenced in your response, values the Company’s investment in Coinsquare/goNumerical at $3,000,000 as of September 30, 2017. We note further that a shareholder letter dated February 16, 2018, filed with an 8-K on the same date, notes that the Company’s stake in Coinsquare is “now valued at CAD $50 million” which is “over 15x higher

Rest of the question

than the valuation at which Riot first invested.” Please provide a detailed calculation on an unconsolidated basis for a recent date (no earlier than February 28, 2018), for which assets held by the Company are included as “investment securities” for Company Act Section 3 purposes.

With respect to its other minority investments, the Company and its advisors believe that we should record our investments at cost in accordance with ASC subtopic 325-20, Investments-Other: Cost Method Investments, because the Company does not have significant influence or voting control over such minority investments and which do not have readily determinable fair value.

Rest of the answer

If the Company is deemed an investment company in the future, the Company will record its other minority investments at fair value.

As discussed in comment 1 & 2, we note that even an issuer that otherwise falls within the definition of an "investment company" in Section 3(a)(1)(C) nonetheless is exempted from that definition by Section 3(b)(1) of the Act if it is primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities. Therefore even if the value of the Company's stake in Coinsquare is "now valued at CAD $50 million and our "investment securities" have a value in excess of 40% of the issuer's total assets, we would not be required to quantify our fair value of investment securities as compared to total assets because Riot is primarily engaged in the business of acquiring, operating and supporting (through management and investments) blockchain related non-investment company businesses, and its management spends the vast majority of its time overseeing and executing this strategy (i.e., not engaging in short-term securities trading or investing activities).

Read in the reply ↗

We note your response to prior comment 8. Please file the agreement promptly.

This agreement was filed March 15, 2018, requesting confidential treatment for identified information. Read in the reply ↗

We note your response to prior comment 3. It appears from your response that you consider your digital assets (including bitcoin, bitcoin cash and litecoin) to be intangible assets but that you do not believe the existing accounting model for intangible assets best reflects the economics of these unique assets.

Rest of the question

We do not believe you have provided a sufficient basis to justify a departure from the required accounting treatment for intangible assets under ASC 350. Please advise.

Digital assets technically meet the definition of an intangible asset, as intangible assets are those that lack physical substance. This model results in holdings of digital assets being recorded at the cost of acquisition, subject to impairment. That is, the model will only capture declines in the value of the digital assets, not increases.

In the Company's opinion, while digital assets meet the strict definition of intangible assets, this model does not best reflect the nature and economics of digital assets, which have unique characteristics that differ from most intangible assets.

Rest of the answer

While digital assets have no physical substance, many are traded on exchanges (unlike other intangibles), are designed to be accepted as payment for other goods and services (which is very infrequent for intangibles), and their value is subject to significant volatility. The Company believes these differences are fundamental, and point to the appropriateness of a fair value model.

This position is reflected in and consistent with "PWC's Point of View Cryptocurrencies" (March 2018).

Read in the reply ↗

We note your response to prior comment 2. Your response focuses on whether you meet the definition of an investment company under Section 3 of the Investment Company Act of 1940 ("40 Act"). Notwithstanding your determination of your 40 Act status, please provide specific responses to each bullet of prior comment 2 and any additional information necessary to understand your conclusion that you are not an investment

Rest of the question

company for U.S. GAAP purposes under ASC 946.

Provided below are responses to each of the bullet points set forth in the comment letter of the Staff dated March 8, 2018 ("prior comment 2" referred to above). The Company notes that the bullet points set forth in that comment letter are consistent with the guidance in ASC 946-10-15-6 that sets forth the fundamental characteristics of an investment company under U.S. GAAP, and the Company has added the implementation guidance in ASC 946-10-55-4 through 55-10 that illustrates these concepts.

Rest of the answer

The Company has evaluated this accounting guidance in conjunction with its advisors who have addressed the bullet points set forth below and concludes that the Company does not have the fundamental characteristics of an investment company for U.S. GAAP purposes under ASC 946.

U.S. GAAP describes the following fundamental characteristics of an investment company:

946-10-15-6 An investment company has the following fundamental characteristics:

a. It is an entity that does both of the following:

1. Obtains funds from one or more investors and provides the investor(s) with investment management services

2. Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both.

b. The entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income.

946-10-55-4: An investment company should have no substantive activities other than its investing activities and should not have significant assets or liabilities other than those relating to its investing activities, subject to the exception in the following paragraph.

946-10-55-5: An investment company may provide investing-related services (for example, investment advisory or transfer agent services) to other entities, directly or indirectly through an investment in an entity that provides those services, as long as those services are not substantive. However, an investment company may provide substantive investing-related services, directly or indirectly through an investment in an entity that provides those services, if the substantive services are provided to the investment company only.

Responsive information below appears in the various Company public filings and reports, most recently as set forth in the Company's 2017 Annual Report filed with the SEC on April 17, 2018.

• Describe for us the company's design, business purpose(s), and how it holds itself out to investors.

The Company describes its business activities as follows in the Annual Report:

The Company, since late 2017, has directed its efforts towards blockchain and cryptocurrency businesses. Specifically, the Company has begun to enter businesses involving cryptocurrencies and intends, in the near, future, to consider entering and evolving businesses related to these types of cryptocurrencies. This strategy represents a departure from the Company's historical mission following several failed efforts to obtain regulatory approval for new drugs and the manufacture and distribution of specialized medical equipment. The Company experienced large accumulated losses from those efforts and determined to control expenses and seek to curtail ongoing losses expected from those efforts which were effectively ended after a new management team and board of directors joined the Company during 2017 and early 2018.

New Business Initiative in Blockchain and Cryptocurrency Mining.

The Company is building a cryptocurrency mining operation, operating specialized computers (also known as "miners") that generate cryptocurrency (primarily Bitcoin). As of December 31, 2017, the Company owned 1,200 miners acquired with the Kairos Global Technology, Inc., ("Kairos") acquisition in November 2017. During February 2018 in two separate transactions the Company acquired an additional 6,800 miners bringing the total miners owned to 8,000. During February 2018, Kairos entered into a lease agreement for approximately a 107,000-square foot facility in Oklahoma City, Oklahoma, which included data center improvements. Upon the execution of the facility lease the Company began consolidating all of its miners at the data center facility. As of March 31, 2018, approximately 3,500 of the miners were installed and operating.

The Company utilizes specialized servers manufactured by Bitmain. Many of these servers are in short supply and the cost of acquisition of servers especially in large quantities, when available, varies widely. The Company has acquired all of its servers from third parties, some of whom were shareholders in the Company as well, and certain of the acquisitions have included access to operating facilities, support and related equipment for which the Company has paid a premium over the listed retail cost from the manufacturers. The Company's current facility in Oklahoma was obtained as part of its overall transaction with Prive. It is expected that this shortage condition may continue and that in order to continue to grow the Company may need to continue to source mining equipment that may become available from third parties. We participate in mining pools wherein groups of miners associate to pool resources and earn cryptocurrency together allocated to each miner according to the "hashing" capacity they contribute to the pool. As it relates to Bitcoin, the hash rate is the speed at which a computer is completing an operation in the Bitcoin code, and hashing capacity would be a miner's total output. A higher hash rate increases the opportunity of solving the next block and receiving the mining reward. Mining pools were established to help limit the variance involved with competing to solve blocks. As more and more miners competed for the limited supply of blocks, individuals found that they were working for months without finding a block and receiving any reward for their mining efforts. To address this variance, miners started organizing into pools to share mining rewards more evenly on a pro rata basis based on total hashing capacity contributed to the mining pool.

In addition to mining, we are seeking to pursue our diversified blockchain and cryptocurrency focused strategy, in part through targeted investments in, and acquisitions of, businesses and assets within the blockchain ecosystem. As of December 31, 2017, we owned approximately 12.9% of goNumerical Ltd., (d/b/a "Coinsquare") which operates a leading Canadian exchange for purchasing and selling cryptocurrencies. We also subsequently invested $200,000 in a convertible note of Verady, LLC, which seeks to provide accounting, audit and verification services for blockchain based assets such as cryptocurrencies. We also own approximately 52% of Tess Inc., ("Tess") which is developing TessPay and other blockchain solutions for telecommunications companies. TessPay is a payments ecosystem for component and sub-component supply chain settlements (payments). Subsequent to December 31, 2017, we formed Digital Green Energy Corp., a wholly owned subsidiary, which is seeking to identify environmentally friendly projects with large energy capacity and a cost-effective rate for energy for cryptocurrency mining operations and data center projects.

Logical Brokerage Corp

On March 27, 2018 we acquired 92.5% of Logical Brokerage Corp. ("Logical Brokerage") for a $600,000 cash payment. Logical Brokerage is registered with the Commodity Futures Trading Commission ("CFTC") as an introducing broker and a member of the National Futures Association ("NFA"). The Company believes that Logical Brokerage will allow the Company to investigate the establishment of a futures brokerage operation and a U.S. digital currency exchange operating lawfully in several states, and a futures brokerage operation, although there can be no assurance the Company will be successful. Neither the CFTC nor the NFA regulate spot-market digital currency exchanges or activity, although the CFTC's jurisdiction is implicated when there is fraud or manipulation involving a virtual currency traded in interstate commerce.

As described above, the Company has substantive activities other than investing activities. Further, the Company does have significant assets or liabilities other than those relating to its investing activities. Such significant assets include data center locations performing mining activities and related infrastructure (electricity and cooling) for these properties and liabilities such as lease liabilities associated with such business. The Company does not provide investing-related services to other entities.

• Identify for us examples of your public disclosure referenced in your response that indicates that the company's business purposes consist of both capital appreciation and investment income.

1 Update includes the business activities described in the Annual Report continuing to be applicable to March 31, 2018, the end of the current fiscal quarter.

U.S. GAAP describes the following:

946-10-55-6: Evidence of the entity's business purpose and substantive activities may be included in the entity's offering memorandum, publications distributed by the entity, and other corporate or partnership documents that indicate the investment objectives of the entity. Evidence of the entity's business purpose and substantive activities also may include the manner in which the entity presents itself to other parties (such as potential investors or potential investees). For example, an entity that presents its business to its investors as having the objective of investing for realizable capital appreciation has characteristics that are consistent with the business purpose and substantive activities of an investment company. Alternatively, an entity that presents itself as an investor whose objective is jointly developing, producing, or marketing products with its investees has characteristics that are, the documents show that the Company's business purpose is inconsistent with the business purpose and substantive activities of an investment company.

See our response above, which quotes the descriptions of the Company's business purpose and substantive activities which appear in the Annual Report. In addition, in a Business Update press release issued April 17, 2018 the Company's business purpose is presented to investors and clearly identifies that the Company satisfies the business purposes that are inconsistent with the business purposes and substantive activities of an investment company. As stated therein the Company (via its leased datacenter facilities in which it consumes energy and computer services to generate cryptocurrency) had generated during March 2018 69 Bitcoins and 44 Bitcoin Cash from operations, owns interests in both goNumerical and Tess/Cresval which through jointly developing, producing or marketing, have significant value "step-ups" since the investments were made. The principal purpose of these investments is presented to investors as being the ability to enter into different channels related to the business purpose of investing in business opportunities covering a wide spectrum of the blockchain ecosystem. See Current Report on Form 8-K filed by the Company on April 19, 2018 with Business Update as Exhibit 99.1 thereto. Although these investments have capital appreciation, the documents show that the Company's business purpose is inconsistent with the business purpose and substantive activities of an investment company.

• Clarify for us whether you have identified or intend to identify potential exit strategies for the company's investments through which the company can realize capital appreciation.

U.S. GAAP provides the following additional guidance on exit strategies of investment companies:

946-10-55-7: An entity's investment plans also provide evidence of its business purpose and substantive activities. Accordingly, an investment company whose business purpose and substantive activities include realizing capital appreciation should have an exit strategy for how it plans to realize the capital appreciation of its investments. Although the entity may not yet have determined the specific method or timing of disposing of an investment, the fact that it has identified potential exit strategies through which it can realize capital appreciation provides evidence that its business purpose and substantive activities are consistent with those of an investment company. The entity need not document specific exit strategies for each individual investment held for the purpose of realizing capital appreciation but should identify potential exit strategies for different types or portfolios of investments held with the purpose of realizing capital appreciation.

Disposal of investments only during liquidation or to satisfy investor redemptions are not exit strategies. Therefore, an entity should have a plan to dispose of its investments before liquidation when its business purpose and substantive activities include realizing capital appreciation. An investment company whose business purpose and substantive activities are to invest for returns only from investment income does not require an exit strategy for its investments.

As discussed above, the Company presents to investors a strategy as one that "consists of operating one of the largest cryptocurrency mining operations owned by a publicly listed company; identifying unique projects which decentralize markets; combining real world applications with an active development team, strong fundamentals, and large addressable markets."

While the Company's business strategy consists of operating its businesses as activities, the Company has unrealized potential capital appreciation on several investments. While no determination has been made, the Company is monitoring developments around three investments which could generate returns from its investments that are not "exit strategies" of an investment company business. Even if exited, the Company's other activities, such as mining and expansion of its activities in other arenas, reflect a business purpose which is inconsistent with the business purpose and substantive activities of an investment company.

1. Several subsequent goNumerical financings have been at valuation increments reflecting an approximate 15 fold value increase over the value at which the Company's first investment was made, valuing goNumerical's Coinsquare at approximately CAD $430 million. Should an appropriate purchaser of goNumerical seek to acquire all or a controlling interest in goNumerical the Company would evaluate participating in such transaction as a full or partial exit strategy. These opportunities to provide returns on investment are not presented to investors for the purpose of describing the income or capital appreciation or exit strategies of an investment company. At the time of any partial or other disposition the Company would continue to own its other assets being operated for business purposes and would not liquidate or exit all of its investments so as to maintain and continue its business purpose.

2. In October 2017 the Company acquired 52% majority interest in Tess, Inc. ("Tess") for $320,000 cash plus 75,000 shares of Company stock. During the first quarter of 2018, Tess agreed to merge with a Canadian public company Cresval Capital Corp. ("Cresval") which was announced by the Company on January 17, 2018 (See https://www.prnewswire.com/news-releases/riot-blockchains-tesspay-enters-definitive-agreement-for-transaction-with-publicly-traded-cresval-capital-corp-300583740.html). The Company's efforts are consistent with ASC 946-10-55-6 in which with Tess it is "jointly developing, producing, or marketing products with its investees" reflect its business purpose and is inconsistent with the business purpose and substantive activities of an investment company.

Read in the reply ↗

The Company’s responses 2 and 4 state that the Company is exempted from the section 3(a)(1)(C) definition because the Company is primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or business other than that of investing, reinvesting, owning, holding, or trading in securities pursuant to section 3(b)(1) exemption.

Rest of the question

In your response, please provide us with additional sufficient detail to assess your analysis of the exemption. Please include in your response additional sufficient detail on the Tonopah Mining Company of Nevada (26 S.E.C. 426 (1947)) factors you noted in your response. Please note that we are continuing to evaluate your responses, and may have additional comments.

We note for the Staff that this line of comments is directed to activities that only were commenced during the first quarter of 2018 and as such have yet to be included as results of oeprations in any required periodic report filed with the SEC. Accordingly, the Staff is requesting the forward looking views of the Company and its advisors while not considering thetiming disparity between the questions appearing in the Comment relative to reports that would include information requested.

Rest of the answer

As of December 31, 2017 the Company merely had purchased a 10.9% interest in an operating Canadian private company (with warrants to purchase an additional 3.8%) operating in the blockchain/cryptocurrency industry and it owned a revenue generating veterinary license and was evaluating steps associated with exiting from a failed investment in medical machinery and development businesses. The Company has never held itself out or presented itself as an investment manager or investment advisor with respect to any of these businesses, and does not believe its acquisitions and investment strategy to indicate to the contrary to investors.

The Staff seeks analysis of the five-part test in Tonopah Mining Company of Nevada. The SEC's 1947 decision in In re Tonopah Mining established a five factor test for determining whether a company is primarily engaged in the business of investing in securities. The factors are: 1) the company's history; 2) the way it presents itself to the public; 3) the activities of its officers and directors; 4) the nature of its assets; and 5) the sources of its income. In 2007 the Seventh Circuit decided against the SEC in an important ruling, SEC v. National Presto Industries2 qualifying the five factor test. None of the five factors would be applicable to the Company in the context of the October 2017 8-K, nor as of the Annual Report filing.

Medical and Drug Development Businesses. Prior to October 2017 and as described in each of the Company's periodic reports through and including the Quarterly Report on Form 10-Q for the period ended September 30, 2017 the Company was solely engaged with its own staff, management, assets and employees in drug development and medical equipment business and at no time within the periodic reporting period of the Staff comments had any investment company type activities appeared in its periodic reports.

1)

The company's history.

Drug development and medical equipment has been pursued since at least 2012 under various names. As stated in the Company's 2012 Registration Statement on Form S-1:

________________________

2 2007 U.S. App. LEXIS 11345 (7th Cir. 2007).

We are developing a blood test, AppyScore™, that is intended to be used by emergency department physicians to aid them in the rule out decision of possible appendicitis in children, adolescent and young adult (ages 2-20) patients that present with abdominal pain. We are aware of no blood test that is cleared by the Food and Drug Administration (FDA) for the purpose of aiding in the ruling out of appendicitis and are not aware of any current competitors in this area. We expect the main benefit of AppyScore will be to provide the physician with objective information that will aid in the identification of patients at low risk for appendicitis and thereby potentially reducing the number of expensive and potentially hazardous computed tomography (CT) scans that are currently performed on these patients. In addition, we believe the test will potentially save significant costs through both the reduction of CT scans and improved patient throughput in crowded emergency departments. We are in the final stages of development and intend to commence an FDA pivotal trial in the summer of 2012 and potentially commence marketing AppyScore outside the United States in the second half of 2012.

As stated in the Company's Quarterly Report on Form 10-Q filed November 30, 2017:

Note 8. Animal Health License Agreements:

Effective May 1, 2004, Washington University in St. Louis ("WU") and the Company entered into an Exclusive License Agreement ("WU License Agreement"), which granted the Company exclusive license and right to sublicense WU's technology (as defined under the WU License Agreement) for veterinary products worldwide, except where such products are prohibited under U.S. laws for export. The term of the WU License Agreement continues until the expiration of the last of WU's patents (as defined in the WU License Agreement) expire. The Company agreed to pay minimum annual royalties of $20,000 during the term of the WU License Agreement and such amounts are creditable against future royalties. Royalties payable to WU under the WU License Agreement for covered product sales by the Company carry a mid-single digit royalty rate and for sublicense fees received by the Company carry a low double-digit royalty rate. The WU License Agreement contains customary terms for confidentiality, prosecution and infringement provisions for licensed patents, publication rights, indemnification and insurance coverage. The WU License Agreement is cancelable by the Company with ninety days advance notice at any time and by WU with sixty days advance notice if the Company materially breaches the WU License Agreement and fails to cure such breach.

In July 2012, the Company entered into an Exclusive License Agreement (the "License Agreement") with Ceva Santé Animale S.A. ("Licensee"), pursuant to which the Company granted the Licensee an exclusive royalty-bearing license, until December 31, 2028, to the Company's intellectual property and other assets, including patent rights and know-how, relating to recombinant single chain reproductive hormone technology for use in non-human mammals (the "Company's Animal Health Assets"). The License Agreement is subject to termination by the Licensee (a) for convenience on 180 days prior written notice, (b) in the Licensee's discretion in the event of a sale or other disposal of the Company's animal health assets, (c) in the Licensee's discretion upon a change in control of the Company, (d) for a material breach of the License Agreement by the Company, or (e) in the Licensee's discretion, if the Company becomes insolvent. The License Agreement is also terminable by the Company if there is a material breach of the License Agreement by the Licensee, or if the Licensee challenges the Company's ownership of designated intellectual property. The License Agreement includes a sublicense of the technology licensed to the Company by WU. Under the terms of the WU License Agreement, a portion of license fees and royalties the Company receives from sublicensing agreements will be paid to WU. The obligation for such license fees due to WU is included in accrued expenses at September 30, 2017.

Under the License Agreement, the Licensee obtained a worldwide exclusive license to develop, seek regulatory approval for and offer to sell, market, distribute, import and export luteinizing hormone ("LH") and/or follicle-stimulating hormone ("FSH") products for bovine (cattle), equine and swine in the field of the assistance and facilitation of reproduction in bovine, equine and swine animals.

Under the License Agreement, as of September 30, 2017, the following future milestone payments are provided, assuming future milestones are successfully achieved:

● milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;

potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and royalties, at low double digit rates, based on sales of licensed products.

Revenue recognition related to the License Agreement and WU License Agreement is based primarily on the Company's consideration of ASC 808-10-45, "Accounting for Collaborative Arrangements." For financial reporting purposes, the license fees and milestone payments received from the License Agreement, net of the amounts due to third parties, including WU, have been recorded as deferred revenue and are amortized over the term of the License Agreement. License fees and milestone revenue currently totaling a net of approximately $1,556,000 commenced being amortized into income upon the July 2012 date of milestone achievement. As of September 30, 2017, deferred revenue of $96,698 has been classified as a current liability and $992,792 has been classified as a long-term liability. The current liability represents the next twelve months' portion of the amortizable milestone revenue. During each of the nine months ended September 30, 2017 and 2016, $72,524 was recorded as the amortized license fee revenue arising from the License Agreement.

During the quarter ended March 31, 2017, the Company made the decision to discontinue the operations of its wholly-owned subsidiary BDI. BDI had developed a proprietary Enhanced Surface Plasmon Resonance technology platform for the detection of molecular interactions. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017 of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. The Company expects to dispose of the assets and operations during 2017 by selling the assets and licensing the intellectual property rights. The Company has recognized the exit of BDI in accordance with Accounting Standards Codification (ASC) 205-20, Discontinued Operations. As such, the historical results of BDI, following its 2016 acquisition, have been classified as discontinued operations.

2)

The way it presents itself to the public.

In October 2017 the Company held itself out to the public with the following statements, as appeared in its press release. Investment exposure in blockchain technology (goNumerical and Tess) was first exposed to the risks and volatility enumerated in a new set of important Risk Factors which were filed October 23, 2017.

(See https://www.sec.gov/Archives/edgar/data/1167419/000107997317000595/riot_8k.htm).

About Riot Blockchain (October 17, 2017 press release) below also presents how the Company presents itself to the public:

Riot Blockchain Inc. (formerly Bioptix, Inc.) leverages its expertise and network to build and support blockchain technology companies. It is establishing an Advisory Board with technical experience intending to become a leading authority and supporter of blockchain and provides investment exposure3 to the rapidly growing blockchain ecosystem. For more information, visit http://www.riotblockchain.com/.

The company continues to generate revenues and expects to continue to generate revenues and maintain its existing Bioptix business line and its royalty license stemming from an Exclusive License Agreement with Ceva Santé Animale S.A. ("Licensee"), providing an exclusive worldwide royalty-bearing license, until December 31, 2028, to develop, seek regulatory approval for and offer to sell, market, distribute, import and export luteinizing hormone ("LH") and/or follicle-stimulating hormone ("FSH") products for cattle, equine and swine for the assistance and facilitation of reproduction.

(See https://www.riotblockchain.com/news-media/press-releases/detail/10/bioptix-changing-name-to-riot-blockchain-as-company-shifts)

3)

The activities of its officers and directors.

Through the first quarter of 2018 the officers and directors of the Company are actively engaged in running the majority and wholly-owned businesses, and not as mere investment managers. Their day to day jobs consist of overseeing the mining operation, hiring, financial reporting, acquisition of assets to be used in the business (servers) and their deployment, software, cybersecurity, and interacting with the managements of its subsidiary and minority owned businesses. Additionally, management participates in capital formation activities, legal and regulatory review and policy, efforts to launch new operating businesses (such as Tess and Logical) and other active management functions associated with the operation of the businesses.

__________________________

3 The Company believes this phrase was used once in a release and has since ceased using the phrase investment exposure to the rapidly growing blockchain ecosystem in its public filings and releases but asserts that the meaning was intended to reflect that an investor would be able to invest in a managed blockchain operating business.

4)

The nature of its assets.

As described above, the Company's consolidated subsidiaries as of the date hereof consist of Kairos Global Technology Inc. ("Kairos") (100%) whose activities consist of blockchain verification and transaction services generating cryptocurrency assets for the Company utilizing specialized computer equipment owned by the Company which are expected to be reported as fixed assets and the subsequent depreciation recorded as a component of operating activities, Tess (52%) involved in developing blockchain and payment solutions for the travel industry for further license or sale which is expected to be a component of the Company's core operating activities, Digital Green Energy, Inc. ("Green") (100%) seeking to identify environmentally friendly projects with large energy capacity and cost-effective rates for mining and data center projects which is expected to be a component of the Company's core operating activities, and Logical (92.5%) which is seeking to develop a licensed cryptocurrency exchange which is expected to be a component of the Company's core operating activities. As noted previously, each of these businesses develops, produces and markets or plans to develop, produce and market products and services (other than investment management services) for/to its customers and the Company does not provide any investment management services.

5)

The sources of its income.

Prior to the fourth quarter of 2017 all of the Company's income was from drug development, animal health licensing and medical equipment sales and services. During the fourth quarter of 2017 the Company began to realize revenues (and income) from operating its specialized servers generating cryptocurrency.

Prior to the "Presto" ruling, the most important factor in the eyes of the SEC was the nature of the company's assets. The Seventh Circuit, however, considered this focus to be too myopic. The court asked "[w]hat sense would it make to enact a law using 40 percent as a threshold in Section 3(a)(1)(C)," yet convert Section 3(b)(1) into still another purely numbers-based test? The court weighed all five factors in the Tonopah test to conclude that Presto was not an investment company. Unlike other companies that had been found to be inadvertent investment companies, Presto still had active business operations and its managers spent roughly 95 percent of their time running the company's consumer products and military ordnance business. In addition, although Presto's balance sheet may have been heavily weighted with investment securities, its public representations and business focus were those of an operating company. The court's analysis gave significant weight to this last point, looking closely at "the beliefs the company is likely to induce in investors." As in Presto, the Company's public representations and business focus are clearly those of an operating company. Investors are not likely to be induced into thinking the Company is an investment company. As discussed above, its historical development and public representations of policy illuminate how the Company is primarily engaged in the business of acquiring, operating and supporting (through management and investments) blockchain related non-investment company businesses and mining for its own account, and its management spends the vast majority of its time overseeing and executing this strategy (i.e., not engaging in short-term securities trading or investing activities). Currently Riot and its majority owned subsidiaries employ a total of approximately 24 employees, 3 of whom are less than full time. Of the total employees, 7 are executives and officers (all hands-on in day-to-day operations), 6 are in finance, accounting and administrative, (including the Company's public reporting functions), 5 are focused on sales and marketing like functions, 4 are dedicated to technical services for platform, web and software development and 2 are in business development, one of whom is part-time.

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We note your response to comment 3 in your letter dated April 24, 2018. We are not issuing further comments related to your analysis of the section 3(b)(1) exemption at this time. Our decision not to issue additional comments should not be interpreted to mean that we agree with your analysis.

The Company notes the staff’s response. Read in the reply ↗

We note your assertion that your digital assets meet the definition of intangible assets, which suggests they are subject to ASC 350-30. We are unable to identify a scope exception in ASC 350-30 that permits accounting for intangible assets at fair value each reporting period. If your digital assets are within the scope of ASC 350-30, please revise your accounting to comply with those requirements

While digital assets may meet the definition of an intangible asset in ASC 350-30, paragraph 15-3 states that only the following transactions are within its scope:

a.

Intangible assets acquired individually or with a group of other assets (but not the recognition and initial measurement of those acquired in a business combination or an acquisition by a not-for-profit entity) b.

Intangible assets (other than goodwill) that an entity recognizes in accordance with Subtopic 805-20 or 958-805 after they have been initially recognized and measured, except for those identified in the following

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paragraph c.

Costs of internally developing identifiable intangible assets that an entity recognizes as assets

The Company notes that it is receiving consideration in exchange for providing verification services (a revenue transaction) rather than acquiring an intangible asset either individually, as a group, or part of a business combination. Therefore, the Company concluded that the revenue transaction is not within the scope of the transactions listed in ASC 350-30-15-3(a) and (b).

Under ASC 350-30-25-3, the costs of internally developing intangible assets are recognized as an expense when incurred. PwC’s Point of View, Cryptocurrencies Time to Consider Plan B (March 2018), provides the following further guidance that might apply to the recognition of intangible assets for miners:

When cryptocurrency is purchased, the intangible asset would be measured at the price paid or consideration given to obtain the cryptocurrency. However, the question for miners is more complicated. Unlike a direct purchase, miners are awarded units, but they incur costs of computing equipment, electricity, and other expenses. At issue for the miners is whether the associated costs should be capitalized as an intangible asset or expensed.

There is not a lot of guidance on accounting for the costs incurred to internally-develop intangible assets, but it generally limits capitalization. Notwithstanding, existing guidance may not preclude capitalization for certain costs incurred by miners to obtain cryptocurrencies. Miners may need to analogize to other areas of US GAAP where explicit guidance exists (e.g., internal-use software or film production).

For miners of digital assets, this would result in capitalizing the costs of the computing equipment, electricity, and other expenses incurred in performing the verification service as intangible assets. This would result in significant discrepancies in amounts recognized as intangible assets between a mining company and a company which purchases an equal amount of the digital currency on an exchange.

A further issue created by classifying digital currencies as an intangible asset is the impairment model associated with the subsequent accounting for intangible assets. Presumably, a digital asset would be subject to amortization, in which case it would be subject to impairment if it is subsequently determined to have a finite useful life. Because the prices of many cryptocurrencies are extremely volatile, there are practical challenges with making judgments associated with when the intangible assets are “more likely than not” to be impaired.

While digital assets meet the technical definition of intangible assets in ASC 350-30, that definition was developed based on guidance that was issued more than 40 years ago in APB Opinion No. 17, Intangible Assets, which did not contemplate the nature of digital currencies. Rather, the guidance focuses on intangible assets like trademarks, patents, and customer relationships that are typically held for long periods of time and do not have quoted prices in active markets.

Due to the issues noted above, the Company concluded that the digital currency received in exchange for performing a verification service is not within the scope of the three transactions listed in ASC 350-30 and that it would not be appropriate to analogize to the guidance in ASC 350-30 for the subsequent measurement of digital assets. Rather, the Company concluded that it is more appropriate to analogize to the guidance in ASC 825 on accounting for financial instruments in order to subsequently measure the digital assets that it receives in exchange for providing verification services.

To the extent the staff concludes further disclosure of the above is necessary, such information will be included in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 and thereafter.

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We refer to your statement in the penultimate paragraph on page 4 that you participate in mining pools. Please expand your discussion to disclose any pool fee that you are required to pay.

The following additional language will be added by amendment:

A mining pool is the pooling of resources by miners, who share their processing power over a network and split rewards according to the amount of work they contributed to the probability of finding a block. Mining pools emerged in response to the growing difficulty and available hashing power that competes to discover blocks on the Bitcoin blockchain. Riot participates in mining pools.

The mining pool operator provides a service that coordinates the workers.

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Fees are paid to the mining pool operator to cover the costs of maintaining the pool. The pool uses software that coordinates the pool members’ hashing power, identifies new block rewards, records how much work all the participants are doing, and assigns block rewards in-proportion to the participants’ efforts. While we do not pay pool fees directly, pool fees are deducted from amounts we may otherwise earn.fees (and payouts) fluctuate and historically have been approximately 2% on average.

Mining pools are subject to various risks such as disruption and down time. Riot has software that monitors its pool performance and reward rates to monitor credits for our contributed hashing power. In the event that a pool experiences down time or not yielding returns, our results may be impacted.

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We note your risk factor disclosures regarding the potential adverse effects that could occur to your business in case you suffer a loss of cryptocurrency as a result of hackers and other cybersecurity threats. Expand your disclosure to describe your custodial practices for digital assets.

Risks Due to Hacking or Adverse Software Event

In order to minimize risk, Riot has established processes to manage wallets that are associated with our cryptocurrency holdings. There can be no assurances that any processes we have adopted or will adopt in the future are or will be secure or effective, and we would suffer significant and immediate adverse effects if we suffered a loss of our cryptocurrency due to an adverse software or cybersecurity event.

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Riot utilizes several layers of threat reduction techniques, including: (i) the use of hardware wallets to store sensitive private key information; (ii) performance of transactions offline; and (iii) offline generation and use of private keys.

At present, the Company is evaluating several third-party custodial wallet alternatives, but there can be no assurance Riot will utilize such services, as other new options may develop in the future, and if a custodial wallet is used there can be no assurance that such services will be more secure than those the Company presently employs.

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You state in the fourth paragraph on page 4 that you are building a cryptocurrency mining operation for "primarily Bitcoin." You also state on page 5 that you believe Logical Brokerage will allow you to investigate the establishment of a digital currency exchange, and that in addition to Bitcoin, the exchange would provide services for other "digital currencies," such as Ethereum and Litecoin.

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We also note that an investor presentation you have furnished with your March 14, 2018 Form 8-K references USD Minute-Tokens in connection with your TessPay business. Please disclose the types of cryptocurrencies that you are mining or expect to mine other than Bitcoin, or for which you expect Logical Brokerage or other subsidiaries will provide services, describe the nature and characteristics of each of these assets, and provide a detailed analysis explaining why you believe these other cryptocurrencies are not securities as defined in Section 2(a)(1) of the Securities Act.

On June 6, 2018 SEC Chairman Jay Clayton stated in a press interview that “Bitcoin” is not a security. This statement was closely followed by William Hinman, Director of the Division of Corporation Finance, who issued a statement on June 14, 2018 that “Ethereum” is also not a security. In light of similarities, we believe that the SEC will evaluate Bitcoin Cash and Litecoin and may similarly conclude these cryptocurrencies are not securities.

Rest of the answer

At the present time, Logical Brokerage is in the planning stage, and its plan of operation is not complete as it pursues regulatory authorization to perform exchange-type functions for digital assets. However, the Company will initially consider serving as an exchange for Bitcoin and Ethereum which as noted, the SEC has stated do not meet the United States Supreme Court Howey-test definition of security at this time. If the SEC takes a similar position the Company will consider evaluating the inclusion of Bitcoin Cash and Litecoin. Any future activities will necessarily be evaluated on a case by case basis as criteria are developed to evaluate digital assets seeking to utilize the platform and client certification processes.

The Company only mines Bitcoin, Bitcoin Cash, and Litecoin, which may be considered for RiotX and our TessPay’s proposed tokens are not presently being considered and do not presently exist while TessPay is developing its business. At the present time the inclusion of additional digital assets have not been addressed by the Company and when addressed will be the subject of review which would include evaluating whether additional digital assets that seek to be registered for sale on the exchange would be permitted, whether activities will require further licensing or regulation by Logical Brokerage, and future interpretations by regulators in order to comply with applicable rules and regulation in effect from time to time.

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Please revise this section to also discuss the competition in the field of digital currency exchanges applicable to Logical Brokerage's business.

We believe there are several companies operating digital currency exchange operations in the United States that will be competitors to Logical Brokerage and more potential competitors are expected to emerge. Little information is known about these companies inasmuch as they are privately owned and reliable information about their size and operations is not known. The current known competitors include: Read in the reply ↗

Please revise your statement that Overstock.com Inc. is one of your competitors to distinguish the activities of its subsidiary, Medici Ventures, from the activities of its retail business and to clarify that Medici Ventures may be considered one of your competitors. Government Regulation, page 6

The following additional information will be added by amendment:

Of the competitors, we believe Overstock is among the best known as an e-retailer, Overstock has been investing in blockchain and cryptocurrency startups for several years through Medici Ventures, its wholly-owned subsidiary according to public reports by Overstock. Medici has more than a dozen portfolio companies, including tZero. T Zero is a wholly-owned subsidiary of Overstock.com that focuses on the development and commercialization of financial technology (“fintech”) with blockchain technology.

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In doing so, tZero hopes to bring greater efficiency and transparency to capital markets. On April 8, 2018 tZero, the blockchain subsidiary of Overstock.com, announced the release of a demo version of the prototype of its security token trading software which demonstrates how security tokens may be traded on the platform. tZero’s trading platform has been developed to compete with traditional stock exchanges by integrating cryptographically-secured distributed ledgers with existing market processes to reduce settlement time and costs, and increase transparency and efficiency. tZero has not set a launch date.

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Please expand your disclosure to discuss the effect of existing or probable governmental regulations on your Logical Brokerage business, including financial services and consumer protection laws, and any regulations relating to required state money transmitter licenses.

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Please also discuss whether the operations of Logical Brokerage will trigger any obligations under the Securities Act or Securities Exchange Act, including any requirements to register as a national securities exchange, alternative trading system or broker-dealer, or any obligations to register with the CFTC as a futures exchange. Refer to Items 101(h)(4)(viii) and (ix) of Regulation S-K.

Exchanges for securities must be registered as a national securities exchange or must be exempt from such registration requirement (e.g., registered broker-dealers operating as alternative trading systems). As a result, we do not currently intend for our planned cryptocurrency exchange operations through our Logical Brokerage subsidiary to allow trading in cryptocurrencies (including cryptocurrencies issued in ICOs) that may be classified as securities.

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Rather, we anticipate that such operations would, at least initially, facilitate the exchange of digital currencies like Bitcoin, Ethereum, and potentially Litecoin and Bitcoin Cash. Consistent with recent statements of SEC senior staff members, we do not believe that such digital currencies are securities. This sentiment is echoed in Notice 2014-21 published by the Internal Revenue Service (the “IRS”) on March 23, 2018 which calls for digital currency to be treated as property for U.S. federal tax purposes. However, if regulatory changes or interpretations were to require the regulation of Bitcoin or other digital currencies as securities under the U.S. securities laws or if the SEC were to otherwise take the position that digital currencies may only trade on or are otherwise subject to the rules of a national securities exchange unless exempt from such requirements, the required registrations and regulatory compliance steps could result in extraordinary expenses or burdens to us or potentially require us to discontinue (or cease pursuing) cryptocurrency exchange operations, which would have an adverse effect on our plans and our business or operations.

Logical Brokerage is a CFTC-registered introducing broker and is subject to oversight by the CFTC and the NFA. The CFTC and NFA do not have functional oversight over cryptocurrency exchanges, but the CFTC has authority to bring enforcement actions arising from perceived fraud and/or manipulation. As a result, we must comply with CFTC and NFA requirements applicable to introducing brokers, including complying with anti-money laundering requirements.

Because Logical Brokerage’s proposed activities will likely constitute a money services business (“MSB”) under regulations promulgated by the FinCEN under the authority of the Bank Secrecy Act, Logical Brokerage has registered with FinCEN as an MSB, is instituting an anti-money laundering program, and is adopting policies and procedures requiring it to make certain reports to FinCEN and maintain certain records. Logical Brokerage Corp (LBC) is presently registered as an Introducing Broker with the NFA and CFTC, NFA#0458756, an MSB # 31000125058756 and a Money Transmitter for the state of Florida, # FT230000224),

Further, it is likely that Logical Brokerage’s proposed activities will constitute "money transmitter" activities or be otherwise regulated (e.g., by New York under its so-called “Bitlicense” regime) under one or more state laws. As a result, Logical Brokerage will seek appropriate licenses or otherwise register with appropriate state regulators and comply with state regulations that may include the implementation of anti-money laundering programs, cyber security, consumer protection, financial and reporting requirements, and maintenance of certain records and other operational requirements, as required. Without a required money transmitter license, we could not engage in money transmitter activities with persons residing in the relevant state (or from such state), or engage in other activities (e.g., custody) requiring another license such as a Bitlicense. Logical Brokerage has already commenced applying for appropriate licenses in Florida and will continue to evaluate or seek to obtain state money transmitter licenses, as necessary, on a state by state basis. In addition, it is possible that other regulations may apply to our currency exchange operations, such as consumer protection laws, however we have not evaluated the impact or requirements of such other laws currently, as we are focused initially on compliance requirements of the various laws described above. Our inability to comply with any rules or regulations or federal or state laws applicable to our planned Logical Brokerage activities, or decision to discontinue to pursue or inability to continue such activities once commenced, would have a material adverse effect on our business and operations.

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We refer to your disclosure here, on page 5 and elsewhere that you are investigating the establishment of a cryptocurrency exchange, which may also provide futures and securitized token trading. Please revise your disclosures to discuss the current operations of Logical Brokerage and provide details regarding your specific plan to establish a digital currency exchange, including whether the exchange will participate

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in initial coin offerings. Please also disclose the specific states in which you intend to operate and how you intend to limit trading to only participants from such states.

Logical Brokerage Corp (“LBC”) is presently registered as an Introducing Broker with the NFA and CFTC, NFA#0458756.* LBC has no customers and has done no business since it was acquired on March 23, 2018. LBC now has the dba of RIOTX. LBC is a 92.5% owned subsidiary of RIOT Blockchain Inc. LBC, under the dba RIOTX, is investigating the launch of a licensed cryptocurrency exchange in the United States focused on retail clients. Through multiple trusted and vetted third parties, LBC intends to offer retail clients the opportunity to safely buy and sell a variety of cryptocurrencies.

Rest of the answer

These would initially consist of Bitcoin, Bitcoin cash, Ethereum, and Litecoin.

LBC may in the future offer futures trading to qualified customers, but presently has no plans to do so. LBC presently has no plans to offer securitized token trading or participate in initial coin offerings in any way.

LBC intends to investigate proper licensing and suitability to be able to serve customers in all states except Wyoming and Hawaii. LBC intends to use vetted and licensed third-party companies for several features, including the latest identification and geo-location technology to ensure trading is limited to participants from states in which the Company may offer its services.

LBC has registered with FinCEN as a Money Service Business (“MSB”), MSB# 31000125058756, and has received a Money Transmitter License for the state of Florida, License Number FT230000224, from which operations would be based.

*Note: Neither the CFTC nor the NFA regulate spot-market cryptocurrency transactions.

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Based on your Item 10 disclosures, it does not appear that your management team has specific experience in the cryptocurrency industry. If true, please expand this risk factor to highlight your management team's lack of industry experience.

Our management team suffers from limited experience in blockchain, digital assets and cryptocurrency. Inasmuch as the industry is in its infancy and few people would be able to describe themselves as having extensive experience when it comes to cryptocurrency, the Company nevertheless believes blockchain, digital assets and cryptocurrency are an emerging asset class.

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The Company believes it has attracted persons from a diverse community of entrepreneurs, programmers and others who have embraced a common belief and value system that blockchain based transactions and digital assets including cryptocurrency can evolve into a means to conduct business and effect payments. Our employees and management team possess skillsets aligned with blockchain, digital assets and cryptocurrency, including Christopher Ensey, or Chief Operating Officer, experienced in cybersecurity, and employees who have experience managing and operating large data center sites and employment with Bitcoin computer manufacturing. Should these skills not be compatible with the needs of our business, and we cannot hire qualified personnel or management, the results could have a material adverse effect on our business and operations.

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Please expand your disclosures regarding your director Remo Mancini to explain the principal business of Sandstone Strategies, and regarding your CFO Robby Chang to identify the organization in which he was part of the five-person multi-strategy hedge fund team.

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We also refer to your statement that your director Jason Les is qualified as a director based on the fact that he has been active in the cryptocurrency industry and brings technical expertise in this industry. Please revise your disclosure to discuss the specific experience, qualifications, and skills Mr. Les has in this industry. Refer to Item 401(e) of Regulation S-K.

The following additional information will be filed by amendment.

Sandstone Strategies is a company wholly-owned by Remo Mancini ICD.D, our director. Sandstone Strategies is not paid any additional compensation by the Company and all compensation payable by the Company to Mr. Mancini for board fees and reimbursements have been paid directly to Sandstone which does not perform any other business services.

Robby Chang has served as our Chief Financial Officer since February 2018. On February 27, 2018 the Board of Directors appointed Mr.

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Chang to the position of Chief Financial Officer and to serve as Principal Accounting Officer effective upon completion of the Company's 2017 audit and filing of its Annual Report on Form 10-K for the year ended December 31, 2017. Mr. Chang was employed by Cantor Fitzgerald Canada from 2011-2018 as Managing Director, Senior Analyst, and Head of Metals & Mining. Previously, Mr. Chang held various positions as Institutional Equity Research Analyst and Director, Research and Trading, and Portfolio Manager for several financial companies. While at Cantor Fitzgerald Canada, he provided research coverage in precious metals, base metals, lithium, and uranium. He was recognized by Bloomberg as the "Best Precious Metals Analyst" in Q1 2016. Mr. Chang has been frequently quoted by and has been a regular guest of several media outlets including: Bloomberg, Reuters, CNBC, and the Wall Street Journal. Mr. Chang has 23 years of experience in the financial services industry including as Director of Research/Portfolio Manager at a Canadian investment firm that managed $3 billion in assets and serving on a five-person multi-strategy hedge fund team for Blair Franklin Capital Partners where he specialized in equity and derivative investments. Mr. Chang holds a Masters of Business Administration from the University of Toronto. While Mr. Chang has not previously served as a chief financial officer of a public company and does not maintain a certified public accounting license or have experience in public accounting which present risks to the Company and requires that we utilize outside services for review and preparation of our financial statements and reports, Mr. Chang brings technical expertise with regards to institutional portfolio investing and relations and valuation skills applicable to comparable non cryptocurrency mining operations which we believe are valuable but necessarily require we incur additional costs associated with regulatory compliance and SEC reporting.

Jason Les has served as a Director of the Company since November 2017 and also serves on the Advisory Board. He is a certified Bitcoin developer and participates extensively in the Bitcoin development community. Mr. Les is a contributor to open source development for Bitcoin related software and has been selected by various media outlets as a commentator on Bitcoin. Mr. Les is lead technical consultant to CoinCentral.com, a popular Bitcoin and cryptocurrency news source and is a producer of technical Bitcoin education materials. Additionally, he is an active participant in cryptocurrency mining social networks and has operated a personal mining operation for the past 18 months.

Mr. Les played professional poker for over ten years where he has been regarded as one of the best in the game and twice selected as the human benchmark to test artificial intelligence in “Man vs Machine” at Carnegie Mellon University. After extensively studying game theory, Mr. Les developed mathematical models that were used to construct an approximation of a Nash equilibrium strategy for poker that was the foundation of his playing prior to transitioning to the Bitcoin industry. During the course of his poker career, Mr. Les first gained interest in Bitcoin in 2013. Mr. Les graduated from U.C. Irvine in 2010 with a B.S. in Information and Computer Science. Mr. Les is qualified as a director based on the fact that he has been active in the cryptocurrency industry and brings technical expertise with regards to cryptocurrency mining, protocol development, and general evaluation of the industry.

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We note your disclosure that there were no related party transactions since January 1, 2017 except for certain employment agreements. However, we note that in Note 13 in your Form 10-K, you disclose that Barry Honig and Catherine DeFrancesco, who were each a beneficial owner of more than 5% of your common stock at the time, were also shareholders of Kairos at the time of its acquisition. We recognize that Mr.

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Honig filed an amendment on February 13, 2018 to Schedule 13D stating that he ceased to be a beneficial owner of more than 5% of your common stock on November 28, 2017, which is subsequent to your acquisition of Kairos. Please revise your disclosure to include these transactions, or explain why each was not considered to be a related party transaction. Refer to Item 404 of Regulation S-K. Notes to Condensed Consolidated Financial Statements Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements

The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed April 17, 2018 included the following statement with respect to Note 13 and disclosed the interests of the named persons in the Kairos and other transactions, as follows:

Note 13. Related Party Transactions:

Per Schedules 13D filed with the Securities and Exchange Commission, each of Barry Honig (together with other group members) and Catherine Johanna DeFrancesco beneficially owned greater than 10% of the dispositive and voting power of the Company's common stock. Mr.

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Honig reported beneficial ownership of approximately 11.2% of the Company's common stock as of January 5, 2017 and Ms. DeFrancesco reported beneficial ownership of approximately 11.45% of the Company's common stock as of January 10, 2017. Mr. Honig invested $1,750,000 in the March 2017 Convertible Note Private Placement (see Note 7). GRQ Consultants, Inc., a related party of Mr. Honig, received a cash payment of $50,000 for diligence services in connection with the Company's investment in Coinsquare (see Note 4). Each of Mr. Honig and Ms. DeFrancesco was a shareholder of Kairos at the time of its acquisition by the Company (see Note 2), with Mr. Honig having owned approximately 8.6% of Kairos and Ms. DeFrancesco having owned approximately 6.3% of Kairos. Each of Mr. Honig and Ms. DeFrancesco invested in the December 2017 Common Share Private Placement, with Mr. Honig investing $500,000 and Ms. DeFrancesco investing $360,000 (see Note 7).

We note the staff’s observation that the Company’s amended Form 10-K filed April 30, 2018 adding Part III information, Item 13, and will insert additional information in Item 13 from the above quoted language. The Company will add additional explanatory information by amendment to the amended Form 10-K by a further amendment to Item 13 of the amendment in accordance with “Smaller Reporting Company” requirements of Item 404(d) of Regulation S-K as follows1:

The below will be added by amendment:

Item 13.

As previously reported by us, per Schedules 13D filed with the Securities and Exchange Commission, certain persons reported that they had beneficially owned greater than 10% of the dispositive and voting power of the Company's common stock.

Mr. Barry Honig reported beneficial ownership of approximately 11.2% of the Company's common stock as of January 5, 2017 (based upon 4,503,971 shares outstanding at that time). Pursuant to Schedule 13D/A filed by Mr. Honig on February 12, 2018 Mr. Honig reported that he ceased to be the beneficial owner of more than 5% of the common stock of the Company on November 28, 2017. Mr. Honig invested $1,750,000 in the March 2017 Convertible Note Private Placement (see Note 7 of the 10-K) and $500,000 in the December 2017 Common Shares Private Placement (see Note 7 of the 10K). GRQ Consultants, Inc., a related party of Mr. Honig, received a cash payment of $50,000 for diligence services in connection with the Company's investment in Coinsquare (see Note 4 of the 10-K).

Ms. Catherine Joanna DeFrancesco reported beneficial ownership of approximately 11.45% of the Company's common stock as of January 10, 2017 (based upon 4,503,971 shares outstanding at that time). Per Schedule 13D/A filed by Ms. DeFrancesco with the SEC, Ms. DeFrancesco reported that she beneficially owned greater than 5% of the dispositive and voting power of the Company's common stock on January 10, 2017. Ms. DeFrancesco reported beneficial ownership of approximately 11.45% of the Company's common stock as of January 10, 2017. Ms. DeFrancesco invested $360,000 in the Company’s December 2017 Common Shares Private Placement (see Note 7 of the 10K).

1 (d) Smaller reporting companies. A registrant that qualifies as a “smaller reporting company,” as defined by § 229.10(f)(1), must provide the following information in order to comply with this Item:

(1) The information required by paragraph (a) of this Item for the period specified there for a transaction in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the smaller reporting company's total assets at year-end for the last two completed fiscal years;

(2) The information required by paragraph (c) of this Item; and

(3) A list of all parents of the smaller reporting company showing the basis of control and as to each parent, the percentage of voting securities owned or other basis of control by its immediate parent, if any.

Instruction to Item 404(d). 2. For smaller reporting companies information shall be given for the period specified in paragraph (a) of this Item and, in addition, for the fiscal year preceding the small reporting company's last fiscal year.

As previously disclosed, on November 1, 2017, the Company entered into a business combination share exchange agreement (the “Agreement”) with Kairos Global Technology, Inc., a Nevada corporation (“Kairos”) and on November 3, 2017, closed on the agreement. Under the Agreement, the shareholders of Kairos agreed to exchange all outstanding shares of Kairos’ common stock to the Company and the Company agreed to issue an aggregate of 1,750,001 shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock”) which are convertible into an aggregate of 1,750,001 shares of the Company’s common stock (the “Kairos Transaction”) to such shareholders. The shareholders of Kairos also will also be entitled to a royalty (the “Royalty”) to be paid from cash flow generated from operations, which shall entitle such shareholders to receive 40% of the gross profits generated on a monthly basis until they have received a total of $1,000,000, at which point the royalty is extinguished.

Mr. Honig was a shareholder of Kairos at the time of its acquisition by the Company on November 3, 2017 (see Note 2 of the 10-K). Based upon information provided by Kairos at the closing of the Kairos Transaction, Mr. Honig owned approximately 8.6% of Kairos. Accordingly, Mr. Honig would receive his proportionate allocation of the purchase price shares of Series B Preferred Stock and Royalty described above. As of November 3, 2017 the closing price per share of common stock of the Company as reported on NASDAQ was $6.75 per share. Accordingly, the pro rata consideration received by Mr. Honig in the transaction would have been equal to the value of approximately 150,500 shares of common stock upon conversion of Series B Preferred Stock.

Ms. DeFrancesco was a shareholder of Kairos at the time of its acquisition by the Company on November 3, 2017 (see Note 2 of the 10-K). Based upon information provided by Kairos at the closing of the Kairos Transaction Ms. DeFrancesco owned approximately 6.3% of Kairos. Accordingly, Ms. DeFrancesco would receive her proportionate allocation of the purchase price shares of Series B Preferred Stock and Royalty described above. As of November 3, 2017 the closing price per share of common stock of the Company as reported on NASDAQ was $6.75 per share. The pro rata consideration received by Ms. DeFrancesco in the transaction would have been equal to the value of approximately 110,250 shares of common stock upon conversion of Series B Preferred Stock.

Conversion of Series B Preferred Stock into common stock is subject to various restrictions and limitations including as set forth in the Certificate of Designation as well as restrictions and limitations on conversion pursuant to NASDAQ rules prior to shareholder approval of the Series B Preferred Stock.

Notes to Condensed Consolidated Financial Statements

Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements

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In order to help us evaluate your assertion that the bitcoin mining you do is within the scope of ASC 606, please address the following: • Describe for us the nature of the mining activities you perform, including a discussion of 1) any arrangements (explicit or implicit) related to these activities and counterparties involved with these activities and 2) any cash or non-cash consideration received by the company in

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connection with the mining activities; • Provide to us both your ASC 606-10-15 scoping analysis and your “Step 1: Identify the contract with the customer” analysis that identifies your customer and how you meet the criteria in ASC 606-10-25-1; and • Tell us the accounting alternatives you considered and rejected, and the reasons why, in arriving at your conclusion that your bitcoin mining is within the scope of ASC 606.

Mining cryptocurrency in exchange for consideration is an output of the Company’s ordinary business activities. Therefore, the Company determined that its transaction verification service is within the scope of ASC 606.

Transaction verification services are not governed by a written contract but rather by customary business practices as described in paragraph 606-10-25-2. The Company attempts to be the first vendor to solve an algorithm that verifies an individual transaction in exchange for cryptocurrency coins automatically awarded by the cryptocurrency system.

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Each verified cryptocurrency transaction is a separate contract that is fulfilled when a vendor transfers the verified transaction to the blockchain, and receives the cryptocurrency coins, which is noncash consideration. The customer is the cryptocurrency system itself – the digital currency protocol.

We concluded that the contract arises at the point that a vendor is the first to solve the algorithm and transfers the verified transaction to the blockchain. At that point in time, the Company has the right to receive the awarded cryptocurrency in exchange for the completed verification service. Prior to that time, many vendors are competing to provide the service, but no individual vendor has a legal obligation to perform or a right to any consideration.

Because the cryptocurrency that the Company receives can be exchanged for cash, the risk, timing, or amount of the Company’s future cash flows is expected to change and the contract has commercial substance. Additionally, because the cryptocurrency is automatically awarded when the transaction is verified, it is probable that the Company will collect the consideration to which it is entitled.

To the extent the staff concludes further disclosure of the above is necessary, such information will be included in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 and thereafter.

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We note your policy that bitcoin mined is non-cash consideration and thus must be included in the transaction price at fair value at the inception of the contract. Please provide your analysis, with specific citation to authoritative accounting literature, that clarifies how your use of the average U.S. dollar spot price of the related cryptocurrency on the date of receipt complies with ASC 820.

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In your analysis, please identify how you determined your principal or most advantageous market and whether the price in that market required adjustment to arrive at ASC 820 fair value, and the reasons why or why not.

The Company’s Bitcoin is transacted in the over the counter ("OTC") market. The Company transacts with Cumberland Mining, one of the largest principal OTC traders and liquidity providers in the cryptocurrency space. The Company utilizes information providers such as CoinMarketCap.com to obtain fair value information on its Bitcoin. CoinMarketCap.com aggregates executed transactions from various sources, similar to other pricing services such as Bloomberg for fixed income securities that transact in an OTC market.

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CoinMarketCap.com offers additional tools such as historical pricing data, market capitalization, twenty-four hour trading volume and circulating supply. The CoinMarketCap.com price represents the Company's best estimate of fair value, and due to the mechanism of Bitcoin creation (i.e., mining) and the distribute ledger technology underlying Bitcoin, the circulating supply of Bitcoin at any one time can be easily verified. The Bitcoin market is liquid and execution is efficient, thus precluding the need to adjust the price to arrive at the fair value of Bitcoin in accordance with ASC 820.

To the extent the staff concludes further disclosure of the above is necessary, such information will be included in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 and thereafter.

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We note your responses to comments 2, 13 and 14 in your letter dated June 29, 2018. We are not issuing additional comments with respect to these issues at this time. Our decision not to issue additional comments should not be interpreted to mean that we agree with your analysis.

The Company notes the staff’s response. Read in the reply ↗

We acknowledge your revised disclosures in response to prior comment 5. Please reconcile your revised disclosures on page 5, which state that Logical Brokerage will initially serve as an exchange for Bitcoin and Ethereum, and your revised disclosures on page 6, which state that the the initial cryptocurrencies on Logical Brokerage will consist of Bitcoin, Bitcoin cash, Ethereum, and Litecoin.

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In addition, if you plan for the exchange to also be a platform for Litecoin and Bitcoin cash, please confirm that in future filings you will expand your second risk factor on page 27 to disclose your additional regulatory obligations if these cryptocurrencies are determined to be securities.

Logical Brokerage is currently in the planning stage, and its plan of operation is not complete. The cyrptocurrencies that will initially be traded on the exchange have not yet been determined, and will depend on regulatory approvals. Such initial crypotocurrencies may include Bitcoin and Ethereum, and possibly other cryptocurrencies. The Company will clarify this in future filings, and expand its risk factor disclosure to disclose possible additional regulatory obligations if such additional crypotcurrencies are determined to be securities. Read in the reply ↗

We acknowledge your revised disclosure in response to prior comment 9. However, please tell us, and in future filings, explain, what retail clients going through "multiple trusted and vetted third parties" to buy and sell on your planned exchange.

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means In addition, explain whether residents of Wyoming and Hawaii would be permitted to use the exchange platform during visits to other states, and if not, how you plan to limit their ability to do so. Lastly, tell us, and in future filings, explain your potential consequences if such residents are found to have used Logical Brokerage's services despite your efforts to prevent them from doing so.

Logical Brokerage Corporation is evaluating licensing relationships with several software service providers that enable the operation of its cryptocurrency exchange. Logical Brokerage may engage identity verification and compliance providers to support services for “know your customer” and anti-money laundering proofing. Logical Brokerage may also engage financial services partners as required for banking, custody of cryptocurrency, payment processing, marketing, and core platform products for trading services.

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Logical Brokerage will vet these third parties for their compliance with applicable laws and data privacy standards.

All users registered on Logical Brokerage’s exchange platform will be required to supply proper documentation in accordance with KYC and AML standards. In addition to third party verification services, Logical Brokerage will validate user documentation and KYC information directly. Users of Logical Brokerage’s website will be required to provide proof of residence in the United States of America and within states where Logical Brokerage is licensed and approved to offer exchanges services. Users residing outside of these areas will not be allowed to fund trading accounts or access Logical Brokerage services. Logical Brokerage will make commercially reasonable efforts to block inappropriate access utilizing potential methods such as IP address whitelisting and geolocation services. User accounts that have provided false or fraudulent documentation, violate our terms of service, or compliance requirements will be shut down in accordance with Logical Brokerage’s KYC / AML policy and end user license agreement.

The Company will include such disclosure in its future filings.

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We acknowledge your revised disclosure in response to prior comment 9. In future filings, please expand your disclosures to more fully discuss steps you have taken in preparing to launch your cryptocurrency exchange. In addition, if such launch is expected to require material commitments for capital expenditures or will have a material effect on your liquidity, revise to include these disclosures.

The Company included expanded disclosures in the June 30, 2018 Form 10-Q, Item 2, under Liquidity and Capital Resources in the discussion of RiotX, discussing the initial steps being taken to prepare for launching the cryptocurrency exchange and will expand its disclosures as appropriate, in future filings to more fully discuss steps it has taken in preparing to launch its cryptocurrency exchange and to revise its disclosures regarding capital expenditures and liquidity. Read in the reply ↗

We acknowledge your revised disclosure in response to prior comment 4. In future filings, please expand your disclosure in the Business section to discuss your current or planned security and custodial practices with respect to your digital exchange.

The Company will expand its disclosures as appropriate, in the Business section to discuss its current or planned security and custodial practices with respect to the digital exchange. Read in the reply ↗

We acknowledge your revised disclosure in response to prior comment 11 and reissue the comment as it does not describe the principal business of Sandstone Strategies. Please note that Item 403 (e) requires a description of the business background of each director, including the name and principal business of any corporation or other organization in which such director was employed or carried out his occupation.

The Company has added the following disclosure in the Company’s 10-Q for the period ended June 30, 2018:

The following biographical information regarding Remo Mancini, a director of the Company, supplements the Company’s Form 10-K for the year ended December 31, 2017:

Remo Mancini has been a director of the Company since February 2018. Mr. Mancini presently serves as a professional director on boards with significant experience at senior levels in both government and the private sector. He served in the Legislative Assembly of Ontario, Canada (Liberal Party member) from 1975-1993.

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During this time Mr. Mancini held a number of notable positions including Minister of Revenue, Parliamentary Assistant to the Premier, Official Opposition Party House Leader, and Chairman of the Public Accounts Committee. He combines his experience as a former Canadian and U.S. senior corporate executive, corporate director and former Ontario Cabinet Minister to bring a valuable perspective to business affairs, senior executive management, and corporate governance. This extensive experience in both the public and private sector positions him to lead organizations, offer insightful decisive management guidance, and board leadership. He has served on a number of Boards of both publicly listed and private companies. He has earned the internationally recognized designation of ICD.D and is a graduate of the Directors Education Program offered by the Institute of Corporate Directors and the University of Toronto's Rotman School of Management. Mr. Mancini is the sole owner and President of Sandstone Strategies Inc., established in 2004. Mr. Mancini’s services are the sole activity provided by Sandstone Strategies Inc., which serves as a professional services corporation for Mr. Mancini that is compensated when Mr. Mancini’s services are sought. In the past 10 years Mr. Mancini has provided services for Melior Resources Inc., Estrella International Energy Services Ltd., Niocan, Inc., Cadman Resources Inc., and Niocan Inc., through which he has received compensation paid to Sandstone Strategies. Sandstone has no employees other than Mr. Mancini.

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In your July 30, 2010 response to comment 2 of our June 30, 2010 comment letter regarding your Form 10-K for the year ended December 31, 2009, you stated that you believed that your development and supply agreement with the manufacturer of your APPY1 reader was not then material because the Company had no obligation to purchase the reader and had no significant financial obligations prior to its development.

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In addition, you indicated that the manufacturing agreement would be a material agreement “when development of the Instrument is complete, and the LRE Agreement proceeds to the supply stage.” The disclosure in your Form 10-K for the year ended December 31, 2013 appears to indicate that the reader is now fully developed and “manufactured by a well-established vender[sic] in Germany.” In addition, we note that you intend to pursue full-scale launch of APPY1 in Europe in 2013 which suggests that your manufacturing agreement for the APPY1 reader has entered the supply stage. In light of these changed circumstances, your manufacturing agreement relating to the APPY1 reader appears to now represent a material contract under Item 601(b)(10). As such, please revise your disclosure to include a description of the material terms of this agreement, such as each parties’ rights and obligations, including payment obligations, the duration, and any termination provisions. Please also file this agreement as an exhibit.

The Product Development and Supply Agreement (the “LRE Agreement”) with LRE MEDICAL GMBH (“LRE”) continues to be monitored by the Company as to its materiality to our business. We do not believe the LRE Agreement is a material contract for the Company at this time within the meaning of Section 601(b)(10) of Regulation S-K for the following reasons. First, our APPY1 sales and marketing activities in Europe have not risen to the level of a full-scale commercial launch in 2013.

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We are currently working with agents in Europe to establish relationships with key opinion leaders at general, pediatric, community and academic hospitals in three to five countries in Europe. The Company will work with these key opinion leaders and hospitals for the purpose of completing well-defined outcome studies for our APPY1 Suite of products over the coming months. Such studies are designed to further demonstrate the clinical utility and economic value of APPY1. To date in 2013, such marketing activities have progressed but have not moved into the second phase of the EU launch, a full scale sales and distribution effort. The manufacture of reader instruments (the “Instrument”) by LRE for us under the LRE Agreement has allowed us to place and/or sell a limited number of Instruments in Europe as part of these ongoing market development activities and we expect the volume of Instruments will rise once we begin full-scale sales activities.

Second, as we have disclosed in our filings, the LRE Agreement is a two-stage agreement, a development stage and a supply stage. The development stage was substantially completed in mid-2013, wherein LRE substantially completed development of the Instrument, that when combined with a lateral flow immunoassay detection product, constitutes one item in our APPY1 product offerings.

Third, as our market development activities progress, we have evaluated additional APPY1 product development needs and market considerations, and realize that we may focus our activities away from reliance on the Instrument to run the APPY1 diagnostic tests in the clinical setting. While important to these early product development efforts, the importance and materiality of the LRE Agreement may lessen over time.

Finally, the Company believes the LRE is not a “sole source” supplier of instrument such as this reader, and could be replaced, if necessary. Further, the LRE Agreement does not obligate the Company to purchase a required material number of Instruments in any given period, or obligate the Company to make material financial commitments for Instruments not sold. The Company’s relationship with LRE is good, and the Company has no current intent to terminate the LRE Agreement, however, these provisions allow the Company to remain flexible with respect to procurement of the Instruments.

Based upon these factors and considerations, the Company continues to believe that the LRE Agreement was not a material contract of the Company requiring filing under Item 10(b)(10) of Regulation S-K for the period covered by the Form 10-K report, and that the LRE Agreement will not meet such standard for the year ending December 31, 2013. The Company will continue to monitor and evaluate its disclosure regarding the LRE Agreement for future filings.

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Please provide an expanded description of your July 2012 License Agreement that describes the duration and termination provisions of the agreement. Please also confirm that the counter-party to this agreement is Ceva Santé Animale S.A. and confirm that you will disclose this fact in future filings.

The Exclusive License Agreement, dated July 25, 2013 (the “License Agreement”), between the Company and Ceva Santé Animale S.A. (the “Licensee”) has no established term, other than the royalties term; royalties are payable to the Company until December 31, 2028. The License Agreement is subject to termination by the Licensee (a) for convenience on 180 days prior written notice, (b) in the Licensee’s discretion in the event of a sale or other disposal of the Company’s animal health assets, (c) in the Licensee’s discretion upon a change in control of the Company, (d) for a material breach of

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the License Agreement by the Company; or (e) in the Licensee’s discretion, if the Company becomes insolvent. The License Agreement is also terminable by the Company if there is a material breach of the License Agreement by the Licensee, or if the Licensee challenges the Company’s ownership of designated intellectual property. Our relationship with the Licensee is good and we are aware of no current or intended termination of the License Agreement. As the development and commercialization of the Company’s animal health assets, both those substantial assets owned and licensed directly to the Licensee, and those sub-licensed from Washington University through the Company to the Licensee are no longer material to the ongoing business of the Company, we do not believe the termination of the License Agreement would have a material adverse impact on the Company. We commit to providing this updated disclosure in future filings.

We confirm that the counter-party to the License Agreement is Ceva Santé Animale S.A. and also confirm that we will disclose this fact in future filings.

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Please revise your disclosure to identify the expiration dates of the following patents:  your acute appendicitis testing technology patents granted in the United States (Nos. 7,501,256, 7,659,087 and 7,670,769);  your recombinant bovine follicle stimulating hormone technology patents granted in Europe (No. 2134165) and New Zealand (No.

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579740);  your bovine pregnancy test technology patents granted in the United States (Nos. 7,393,696 and 7,687,281); and  your pregnancy detection patents granted in Australia (No. 2003243199), New Zealand (Nos. 536229 & 572488), and the United States (No. 7,842,513).

We commit to making the following disclosure regarding the expiration dates of patents in future filings:

acute appendicitis testing technology patents granted in the United States (Nos. 7,501,256 (expires February 7, 2026), 7,659,087 (expires July 25, 2025) and 7,670,789 (expires July 25, 2025));

recombinant bovine follicle stimulating hormone technology patents granted in Europe (No. 2134165) and New Zealand (No. 579740), both of which expire on October 12, 2028;

bovine pregnancy test technology patents granted in the United States (No. 7,393,696 (expires May 30, 2025) and No.

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7,687,281 (expires May 6, 2023)); and pregnancy detection patents granted in Australia (No. 2003243199), New Zealand (No. 536229 and No. 572488), and the United States (No. 7,842,513), all of which expire on May 2, 2023.

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In addition, the Registrant hereby acknowledges that:

the Registrant is responsible for the adequacy and accuracy of the disclosure in the 2012 Form 10-K;

Staff comments or changes to disclosure in response to Staff comments in the 2012 Form 10-K do not foreclose the Commission from taking any action with respect to the 2012 Form 10-K; and the Registrant may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

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We note your disclosure that you are seeking to increase your authorized shares in order to provide the company with the ability to pursue financing or other strategic opportunities. Please disclose whether you currently have, or do not have, any plans with respect to the increased number of authorized shares of common stock available for issuance if Proposal Two is approved.

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If such plans exist, please disclose all material information.

We would propose to include the following disclosure in Proposal Two of our Proxy Statement for our 2013 Annual Meeting of Shareholders. We would appreciate the opportunity to address any comments the Staff may have to this additional disclosure prior to making an amended filing, and would propose that such filing be a definitive proxy statement on Schedule 14A.

“As a company with significant capital needs for its product development, clinical and regulatory activities, the Company continues to pursue equity financing as a principal means of raising capital.

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In June and November 2012, the Company completed public offerings of a total of 8,337,900 shares of its Common Stock. In December 2012, the Company also issued "engagement award" stock options to purchase a total of 451,066 shares of Common Stock, which included 384,842 stock options granted to its executive officers and non-employee directors. The Company expects to pursue additional capital-raising transactions in 2013 to support its APPY1 product development efforts. While we believe our current authorized but unissued shares of Common Stock will be sufficient for any near-term capital-raising transaction, and we do not have any current plans with respect to issuance of the increased number of authorized shares of Common Stock, we also believe that the requested increase in authorized shares will provide us with the ability to pursue additional future transactions.”

Securities and Exchange Commission

In addition, the Company hereby acknowledges that:

· the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

staff comments or changes to disclosure in response to staff comments in the filing do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

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