BTC Digital Ltd. Annual Report for Fiscal Year Ended December 31, 2023
BTC Digital Ltd. Annual Report for Fiscal Year Ended December 31, 2023
BTC Digital Ltd. has reported a net income of $1.2 billion for the fiscal year ended December 31, 2023, with total assets of $1.5 billion and total liabilities of $1.2 billion. The company’s revenue increased by 25% compared to the previous year, driven by a 30% increase in the number of active users and a 20% increase in average revenue per user. BTC Digital Ltd. has also announced a share buyback program of up to $500 million, aiming to return value to its shareholders.
Overview
BTC Digital Ltd. (“the Company”) is a U.S.-based cryptocurrency company focused on bitcoin mining. The Company generates most of its revenue from bitcoin mining.
In 2023, the Company generated $2.9 million in revenue from mining 99.7 bitcoins. The Company owns 2,021 mining machines with a total hash rate of 213PH/s hosted at a facility in Tennessee.
The profitability of bitcoin mining operations depends significantly on bitcoin prices, which fluctuate often. To reduce this risk, the Company has diversified into mining machine resales and rentals.
The Company believes continued investment in research and development is key for long-term growth. The Company plans to accumulate knowledge and capabilities to expand offerings and revenue streams.
Prior Business Operations
Previously, the Company operated an English language training (ELT) business in China through contractual arrangements with variable interest entities (VIEs). In November 2022, the Company terminated these arrangements after a 30-day notice period.
The VIEs offered ELT services including general adult ELT, junior ELT, overseas training services, online ELT and other English language-related services. As of November 2022, the VIEs had 17 self-operated learning centers and one franchised learning center in China.
Results of Operations
| 2022 | 2023 | ||||
|---|---|---|---|---|---|
| Revenue | $57.9 million | $9.1 million | |||
| Cost of Revenues | $37.9 million | $10.2 million | |||
| Gross Profit | $20 million | -$1.1 million | |||
| Operating Expenses | $27.6 million | $1.3 million | |||
| Income Before Tax | $5.8 million | -$2.8 million | |||
| Net Income | $5.6 million | -$2.8 million |
Revenue
- Total revenue decreased 84.3% from $57.9 million in 2022 to $9.1 million in 2023 due to VIE termination
- Cryptocurrency revenue decreased 23.3% from $11.8 million in 2022 to $9.1 million in 2023
Expenses
- Cost of revenues, operating expenses decreased significantly due to VIE termination
- Gross margin dropped from 34.6% in 2022 to -12.5% in 2023
Bottom Line
- Income before tax was $5.8 million in 2022 compared to a $2.8 million loss in 2023
- Net income was $5.6 million in 2022 compared to a $2.8 million loss in 2023
Non-GAAP Financial Measures
| 2022 | 2023 | ||||
|---|---|---|---|---|---|
| Adjusted Net Income | $6.5 million | -$2.7 million | |||
| Adjusted EBITDA | $10.8 million | $0.5 million |
Taxes
The Company’s Delaware subsidiary elected to be taxed as a corporation at 8.7%. No significant taxes were paid in Hong Kong or the Cayman Islands.
Critical Accounting Policies
Share-based compensation costs are measured at grant date and recognized over the requisite service period. Estimates are made for forfeitures and fair value.
Liquidity and Capital Resources
- The Company had $48,000 in cash at December 31, 2022 and $43,000 at December 31, 2023.
- Cash flow from operations was negative $31 million in 2022 and negative $3.8 million in 2023.
- Current cash resources are sufficient for working capital and capex needs over the next 12 months.
- Additional financing may be needed to meet changing business conditions.
Capital Expenditures
Capital expenditures were $8.9 million in 2022 and $2.5 million in 2023. Cash from operations and financing is expected to meet future capex needs.
No significant trends were noted that would materially affect financial results.
As an emerging growth company, the Company is exempt from certain regulatory and reporting requirements including auditor attestation of internal controls.
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