BTC Digital Ltd. Quarterly Report: Financial Statements and Analysis
BTC Digital Ltd. Quarterly Report: Financial Statements and Analysis
BTC Digital Ltd. reported a market value of $90.799 million for non-affiliate held ordinary shares as of March 31, 2024. The company had 2,610,785 outstanding ordinary shares, par value $0.06 per share. The financial report highlights the company’s financial condition and results of operations, market risk, controls and procedures, legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, and other information.
Overview
BTC Digital Ltd. is a U.S.-based crypto asset technology company focused on bitcoin mining. For the first quarter of 2024, the company generated most of its $2.65 million revenue from bitcoin mining and mining machine resales.
As of March 31, 2024, the company owned 2,021 mining machines with a total hash rate of 213PH/s. For the first quarter, BTC Digital mined 12.407 bitcoins worth around $0.7 million. To diversify revenue, the company also resells mining machines and rents them out to customers.
The company attributes its growth since 2022 to strengths in diversified revenue streams, a dedicated team focused on regulatory compliance, and experienced management. BTC Digital believes continued investment in R&D and partnerships will support long-term growth.
Results of Operations
| Financial Results (USD) | Q1 2023 | % of Revenue | Q1 2024 | % of Revenue |
|---|---|---|---|---|
| Revenue | $0.91 million | 100% | $2.65 million | 100% |
| Cost of Revenues | $1.25 million | 137.8% | $2.78 million | 104.8% |
| Gross Loss | $0.34 million | 37.8% | $0.13 million | 4.8% |
| Operating Expenses | $0.66 million | 72.4% | $0.94 million | 35.5% |
| Loss from Operations | $1.00 million | 110.3% | $1.07 million | 40.3% |
| Net Loss | $0.98 million | 108.0% | $0.73 million | 27.6% |
BTC Digital grew Q1 2024 revenue 192% year-over-year to $2.65 million through increased bitcoin mining and new mining machine resales. Higher cost of revenues, including resale costs, contributed to a gross loss for the quarter. The net loss narrowed from $0.98 million in Q1 2023 to $0.73 million in Q1 2024 due to higher revenue.
Non-GAAP Financial Measures
In addition to GAAP metrics, BTC Digital uses non-GAAP adjusted net income and adjusted EBITDA to evaluate financial performance, as shown below:
| Non-GAAP Financial Measures (USD) | Q1 2023 | Q1 2024 |
|---|---|---|
| Adjusted Net Loss | $0.98 million | $0.16 million |
| Adjusted EBITDA | -$0.11 million | $0.71 million |
Adjusted EBITDA swung positive year-over-year due to higher revenue and gross profit in Q1 2024. The adjusted net loss also narrowed significantly.
Taxation
As BTC Digital is incorporated in the Cayman Islands, it does not pay income or capital gains taxes under current Cayman Islands law. Subsidiaries in Hong Kong have a 16.5% income tax rate, while the U.S.-based subsidiary Meten Block Chain LLC pays an 8.7% Delaware corporate tax rate.
Critical Accounting Policies
Key accounting policies requiring estimates and judgements include share-based compensation for employees. BTC Digital uses a discounted cash flow model to determine share-based compensation expenses.
Liquidity and Capital Resources
BTC Digital had $32,000 in cash and equivalents at March 31, 2024. Operating activities generated positive cash flow of $0.17 million in Q1 2024. Investing activities used $0.84 million for equipment purchases and repayment of related party advances.
If existing resources are insufficient to meet requirements, BTC Digital may seek additional financing. However, equity or debt financing could lead to further dilution or financial covenants.
| Cash Flow (USD millions) | Q1 2023 | Q1 2024 |
|---|---|---|
| Net Cash from Operating Activities | $6.18 | $0.17 |
| Net Cash for Investing Activities | -$2.33 | -$0.84 |
| Cash at End of Period | $3.61 | $0.03 |
Capital Expenditures
Capital expenditures totaled $2.3 million in Q1 2023 and $0.6 million in Q1 2024. BTC Digital expects to fund future capital spending needs through operating and financing activities.
Trend Information
BTC Digital is not aware of any trends that could materially affect near-term net revenue, profitability, liquidity or capital resources. However, the company remains exposed to bitcoin price volatility.
JOBS Act
As an emerging growth company under the JOBS Act, BTC Digital is exempt from certain SEC reporting requirements and auditor attestation rules. The company is taking advantage of these reduced regulatory burdens but this may increase risk and limit investor visibility.
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