Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report and with our audited consolidated financial statements included in our Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual business, financial condition, and results of operations could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report and in our Annual Report, particularly under "Item 1A. Risk Factors." See also "Cautionary Statement Regarding Forward-Looking Statements." Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Business Overview

Hut 8 is an energy infrastructure platform integrating power, digital infrastructure, and compute at scale to fuel next-generation, energy-intensive use cases. We take a power-first, innovation-driven approach to developing, commercializing, and operating the critical infrastructure that underpins the breakthrough technologies of today and tomorrow. As of September 30, 2025, our platform spanned 1,020 megawatts of energy capacity under management across 15 sites in the United States and Canada: five Bitcoin mining, hosting, and managed Services sites in Alberta, New York, and Texas, five high performance computing data centers in British Columbia and Ontario, four power generation assets in Ontario, and one non-operational site in Alberta; 1,530 megawatts of energy under development across four sites in Louisiana, Texas, and Illinois; 1,255 megawatts of energy capacity under exclusivity; and 5,865 megawatts of energy capacity under diligence.

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Q3 2025 Highlights

Key Factors Affecting Our Performance

Power constraints

Access to energy is a key factor affecting our ability to meet growing demand for HPC, AI, and Bitcoin mining and to scale our digital infrastructure platform. Power is the foundation of our operations. We acquire, develop, and manage critical energy assets such as interconnects, powered land, and other electrical infrastructure to address the load demands of energy-intensive applications. As competition for power intensifies, our performance depends on originating, commercializing, and optimizing energy capacity at scale. We believe our experience in power origination, infrastructure design, and load optimization positions us to manage these constraints and support continued growth. Our portfolio currently provides access to competitively priced electrical power in the regions where we operate; however, there is no guarantee that we will be able to procure additional power on similar terms, or at all. Market prices for power, capacity, and ancillary services are unpredictable and tend to fluctuate substantially. See "Risk Factors-Risks Related to Our Business and Operations-We are subject to risks associated with our need for significant electrical power" in the Annual Report.

Price of Bitcoin

Our business is heavily dependent on the price of Bitcoin, which has historically experienced significant volatility. We hold a significant amount of Bitcoin in our strategic reserve and have also acquired, and may in the future acquire, additional Bitcoin through at-market purchases. Furthermore, American Bitcoin is a Bitcoin accumulation platform, and its results are consolidated in our financials. In addition, we generate revenue from Bitcoin rewards that are earned through mining operations at our facilities, the majority of which are conducted through American Bitcoin. Under ASU 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets ("ASU 2023-08"), Bitcoin is revalued at fair value at the end of each reporting period, with changes in fair value recognized in net income. As a result, fluctuations in the price of Bitcoin may significantly impact our results of operations.

Bitcoin network difficulty and hashrate

Our business is not only impacted by the volatility in Bitcoin prices, but also by increases in the competition for Bitcoin production, specifically for Bitcoin mining. This increased competition is described as the network hashrate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain, and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Increased difficulty reduces the mining proceeds of the equipment proportionally and eventually requires Bitcoin miners like American Bitcoin, to upgrade their equipment to remain profitable and compete effectively with other miners. Conversely, a decline in network hashrate results in a decrease in difficulty, increasing mining proceeds and profitability.

Block reward and halving

The current Bitcoin reward for solving a block is 3.125 Bitcoin. The Bitcoin network is programmed such that the Bitcoin block reward is halved every 210,000 blocks mined, or approximately every four years. This reduction in reward spreads out the release of Bitcoin over a long period of time as fewer Bitcoin are mined with each halving event. Bitcoin halving events impact the number of Bitcoin that we mine, including through American Bitcoin which, in turn, may have a potential impact on our results of operations. The last halving event occurred in April 2024, and the next halving event is expected to occur in 2028.

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Expansion into AI infrastructure services and other energy-intensive use cases

A key factor affecting our performance is our ability to expand into AI infrastructure services and other energy-intensive use cases. We are leveraging our existing development and operational expertise to develop high-density data centers that support GPU-based workloads for enterprise and hyperscale customers and other next-generation, energy-intensive use cases. Success in this area depends on various factors, including our ability to develop future sites, secure and retain customers, manage capital efficiently, and compete effectively in emerging AI markets. While this expansion may increase operating and capital costs and expose us to execution and market risks, management believes our experience in power origination, development, management, and large-scale digital infrastructure development position us to capture long-term growth opportunities in the evolving AI sector and other next-generation, energy-intensive use cases.

Key Performance Indicators

In addition to our financial results, financial measures under generally accepted accounting principles in the United States of America ("GAAP") financial measures, and non-GAAP financial measures, we use certain key performance indicators to evaluate our business, identify trends, and make strategic decisions.

The following table presents our key performance indicators as of September 30, 2025 and 2024.

⁽¹⁾ Number of Bitcoin in Strategic Reserve includes Bitcoin held in custody, pledged as collateral, or pledged for a miner purchase under an agreement with Bitmain.

⁽²⁾ As of September 30, 2025, of the 13,696 Bitcoin in Strategic Reserve, 10,278 Bitcoin were held by Hut 8, and 3,418 Bitcoin were held by American Bitcoin. As of September 30, 2024, all 9,106 Bitcoin in Strategic Reserve were held by Hut 8 as American Bitcoin had not yet been launched.

Energy Capacity Under Diligence

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Energy Capacity Under Diligence represents sites under active evaluation for large-scale, energy-intensive use cases such as Bitcoin mining, HPC, industrial applications, next-generation manufacturing, and other energy-intensive technologies. At this stage, we engage with utilities, landowners, and other stakeholders to assess critical factors including power availability, infrastructure readiness, fiber connectivity, and overall commercial viability. This metric allows management to better understand our potential opportunities, allowing us to remain selective in our investment decisions while positioning us to respond to market demand signals and emerging opportunities. Energy Capacity Under Diligence as of September 30, 2025 was 5,865 MW compared to 5,553 MW as of September 30, 2024.

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Energy Capacity Under Exclusivity

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Energy Capacity Under Exclusivity represents sites where we have secured a clear path to ownership through either: (i) an exclusivity agreement restricting the sale or use of designated power and/or land capacity by other parties; or (ii) a tendered interconnection agreement, confirming a viable path to securing power and infrastructure for deployment. Management monitors Energy Capacity Under Exclusivity to evaluate potential near-term opportunities prior to making additional investment commitments. Energy Capacity Under Exclusivity as of September 30, 2025 was 1,255 MW compared to 1,458 MW as of September 30, 2024.

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Energy Capacity Under Development

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Energy Capacity Under Development represents sites where we are actively investing in development and commercialization by executing definitive land and/or power agreements, progressing infrastructure design and buildout, and engaging with prospective customers. This phase is monitored by management as it represents the projects that are closest to commencing construction. Energy Capacity Under Development as of September 30, 2025 was 1,530 MW compared to 205 MW as of September 30, 2024. The increase was driven by an increase of 1,325 MW in capacity advancing from exclusivity to development, including 300 MW from our River Bend site, partially offset by 205 MW of energy capacity at our Vega site. Our Vega site advanced from development to the management phase upon energization during the second quarter of 2025. 

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Energy Capacity Under Management

Energy Capacity Under Management comprises all Power assets: Power Generation, Managed Services, ASIC Colocation, CPU Colocation, Bitcoin Mining, Data Center Cloud, and non-operational sites. Management reviews this metric to assess total energy capacity utilization across our operations to drive an efficient allocation of resources. Energy Capacity Under Management as of September 30, 2025 was 1,020 MW compared to 1,117 MW as of September 30, 2024. The decrease was due to the termination of our Managed Services contract with Ionic for five sites that consisted of 302 MW partially offset by the energization of our 205 MW Vega site.

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Number of Bitcoin in Strategic Reserve

Number of Bitcoin in Strategic Reserve represents the number of Bitcoin we own as of each reporting period end date, which is the aggregate number of our Bitcoin held in custody, pledged as collateral, or pledged for a miner purchase, including at American Bitcoin. We have the ability to leverage our Bitcoin in strategic reserve as a flexible financial asset to fund growth initiatives, optimize our balance sheet, and capitalize on emerging market opportunities. Our management uses this metric to assess the value of our Bitcoin in Strategic Reserve and determine when and how to deploy said reserve, including whether to continue to hold the Bitcoin. In addition, as a Bitcoin accumulator, this metric is especially important for evaluating the performance of American Bitcoin. As of September 30, 2025, we had 13,696 Bitcoin in Strategic Reserve, comprising 10,278 Bitcoin held by Hut 8 and 3,418 Bitcoin held by American Bitcoin, compared to 9,106 Bitcoin held in Strategic Reserve by Hut 8 as of September 30, 2024. The increase was attributable to additional Bitcoin mined and purchased over the year, including through American Bitcoin.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we rely on Adjusted EBITDA to evaluate our business, measure our performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income, adjusted for impacts of interest expense, income tax provision, depreciation and amortization, gain on debt extinguishment, our share of unconsolidated joint venture depreciation and amortization, net of basis adjustments, foreign exchange gain or loss, gain or loss on sale of property and equipment, gain on derivatives, gain or loss on other financial liability, gain on warrant liability, the removal of non-recurring transactions, asset contribution costs, loss from discontinued operations, net of taxes, income or loss attributable to non-controlling interests, and stock-based compensation expense in the period presented. You are encouraged to evaluate each of these adjustments and the reasons our Board and management team consider them appropriate for supplemental analysis.

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Our board of directors and management team use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and amortization), and other items (such as non-recurring transactions mentioned above) that impact the comparability of financial results from period to period.

Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

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For a reconciliation to our most directly comparable financial measure calculated and presented in accordance with GAAP, please see "-Results of Operations" below.

Business Segments

We have four reportable business segments: Power, Digital Infrastructure, Compute, and Other.

Power

The Power business segment consists of Power Generation and Managed Services.

Power Generation

We generate revenue from our 80.1% interest in a joint venture with Macquarie Group Limited ("Macquarie"), a global financial services and infrastructure investment firm, which provides capacity and energy to the electrical grid through four natural gas power plants in Ontario, Canada (the "Far North JV"). The power generation facilities were acquired in February 2024 and are connected to the Independent Electricity System Operator ("IESO"), which operates Ontario's power grid. The power generation assets primarily generate revenue from capacity payments and electricity sales, both of which are variable and depend on several factors, including generation capacity in the market, the supply and demand for electricity, and the prevailing price of natural gas.

In the second quarter of 2025, all four of the power plants were awarded five-year capacity contracts with IESO. The contracts were awarded to the Far North JV following successful bids submitted into the competitive IESO Medium-Term 2 ("MT2") capacity auction and will commence on May 1, 2026. The contracts include a weighted average capacity payment of approximately CAD $530 per MW-business day in Year 1 with partial inflation indexation that allows for potential increases over time.

Managed Services

Our Managed Services business provides institutional partners with an end-to-end partnership model for energy infrastructure development, including:

Cash flows in our Managed Services business are generated through a fee structure that is typically fixed based on power capacity under management, with reimbursement of passthrough costs. In addition to the fixed fee, under certain agreements, further cash flows may be driven from incentive bonuses and certain energy management services.

As of September 30, 2025, we managed 280 MW of energy capacity under this program at one site in the United States owned by the King Mountain JV.

Starting April 1, 2025, we began operating as the exclusive provider of managed services to American Bitcoin via the execution of a Master Managed Services Agreement ("MSA"). Under the MSA, we provide American Bitcoin with management, oversight, strategy, compliance, operational, and the other services for American Bitcoin's mining operations colocated at our facilities. The fee structure typically consists of (i) a fixed fee of $1.250/kW-month based on the power capacity of each facility, as well as (ii) designated site level reimbursements. As American Bitcoin is a consolidated subsidiary, all fees under the MSA are eliminated in consolidation.

Digital Infrastructure

The Digital Infrastructure business segment consists of CPU Colocation and ASIC Colocation services.

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CPU Colocation

Our CPU Colocation business spans five locations in Canada (Mississauga, Ontario; Vaughan, Ontario; Kelowna, British Columbia; and two locations in Vancouver, British Columbia) with a total energy capacity of 3 MW and more than 36,000 square feet of geo-diverse data center space powered by predominantly emission-free energy sources. Our infrastructure is designed to support a variety of compute, storage, and network workloads across traditional enterprise, B2B, machine learning, visual effects, and AI. This segment serves computing needs unrelated to Bitcoin Mining. These data centers are geo-diverse and carrier neutral with network diversity and redundancy from multiple telecommunications providers.

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Our CPU Colocation business is based on a fixed-fee model. Customers pay a fixed recurring monthly fee based on a set amount of resources assigned.

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ASIC Colocation

Under our ASIC Colocation business, we enter into contracts to host and operate mining equipment on behalf of third parties within our facilities. These services include the provision, if applicable, and hosting of mining equipment as well as the monitoring, troubleshooting, repair, and maintenance of such equipment. Revenues from ASIC Colocation services are generated through fees that may be fixed or based on profit-sharing arrangements, often with reimbursement for certain pass-through costs, such as electricity.

During the fourth quarter of 2024, our agreement with Ionic Digital Inc. ("Ionic") to host approximately 8,500 miners (0.8 EH/s) at our Alpha site was terminated. As a result, we ceased providing ASIC Colocation services at Alpha and utilized the site solely for self-mining purposes.

Starting April 1, 2025, we began operating as the exclusive provider of ASIC colocation services to American Bitcoin via the execution of a Master Colocation Services Agreement ("CSA"). Under the CSA, we provide ASIC colocation services for American Bitcoin's miners at our facilities. The fee structure typically includes (i) a fixed monthly fee that targets a 25% yield on cost of each facility as of the start of the specific service order under the CSA, subject to an annual increase, as well as (ii) infrastructure-related site level reimbursements. As American Bitcoin is a consolidated subsidiary, all fees under the CSA are eliminated in consolidation.

During 2024, we entered into an ASIC Colocation contract with Bitmain Technologies Georgia Limited ("Bitmain") to host miners at our Vega site. The agreement featured a fixed hosting fee with an option for us to purchase all or a portion of the hosted machines in up to three tranches at a fixed price within six months of energization of the relevant tranches. We completed energization of the miners during June and July 2025. In August 2025, pursuant to our Put Option Agreement with American Bitcoin entered into on March 31, 2025 (the "Put Option Agreement"), we assigned our option to purchase the hosted machines to American Bitcoin. In August 2025, American Bitcoin exercised this option to purchase all of the Bitmain miners hosted at the Vega site, where we then began to provide ASIC colocation services to American Bitcoin under the CSA.

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Compute

The Compute business segment consists of Bitcoin Mining, GPU-as-a-Service, and Data Center Cloud operations.

Bitcoin Mining

Currently, one of our largest revenue streams is derived from Bitcoin Mining.

Our Bitcoin Mining business spanned five sites as of September 30, 2025:

Until April 30, 2024, we also had Bitcoin Mining operations hosted at sites in Kearney, Nebraska and Granbury, Texas. We also previously mined Bitcoin at a site in Drumheller, Alberta, which has been non-operational since March 2024. The closure was due to the site's lack of profitability as a result of several factors, mostly elevated energy costs and underlying voltage issues. We will consider re-energizing Drumheller if market conditions improve.

Bitcoin rewards are received from mining activity through third-party mining pool operators, which allow miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. We provide computing power to mining pools, which use this computing power to operate nodes and validate blocks on the blockchain. The pools then distribute our pro-rata share of Bitcoin mined to us based on the computing power we contribute.

During February and March 2025, our mining activity was reduced due to a planned fleet upgrade, which was completed on April 4, 2025. The fleet upgrade resulted in higher efficiency Antminer S21+ miners at our Salt Creek and Medicine Hat sites, which improved Bitcoin Mining operations.

On March 31, 2025, we launched American Bitcoin. Beginning April 1, 2025, Bitcoin Mining operations previously reported under our Compute segment remain under this segment but operate generally through our majority-owned subsidiary, American Bitcoin.

On August 5, 2025, pursuant to the Put Option Agreement, we assigned our option to purchase up to approximately 17,280 Bitmain Antminer U3S21EXPH ASIC miners (collectively, the "Bitmain Miners"), representing a total of approximately 14.86 EH/s, to American Bitcoin. American Bitcoin exercised the option on August 5, 2025 and entered into an On-Rack Sales and Purchase Agreement (the "ABTC Bitmain Purchase Agreement") with Bitmain to purchase the Bitmain Miners in one or more tranches for a total purchase price of up to approximately $320.0 million, not including any applicable tariffs, duties or similar charges.

Concurrently with the execution of the ABTC Bitmain Purchase Agreement, American Bitcoin purchased 16,299 of the Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314 million, paid through the pledge of Bitcoin at a mutually agreed upon fixed price. Such purchase price was reduced by the application of a deposit and certain expenses of approximately $46.0 million we previously paid to Bitmain and which American Bitcoin has agreed to repay us on or prior to December 31, 2025. In September 2025, American Bitcoin purchased the remaining 981 Bitmain Miners for a total purchase price of $18.9 million, also paid through the pledge of Bitcoin at a mutually agreed upon fixed price. In October 2025, American Bitcoin pledged additional Bitcoin at a mutually agreed upon fixed price, and Bitmain refunded the $46.0 million comprising of the deposit and certain expenses to us satisfying American Bitcoin's repayment obligation. The Bitcoin pledged under the ABTC Bitmain Purchase Agreement has a redemption period of approximately 24 months from each pledge date.

GPU-as-a-Service

Our GPU assets are deployed under our wholly owned subsidiary, Highrise AI, Inc., at a third-party colocation site near Chicago, Illinois. This segment generates recurring revenue through payments made by the provider to us based on fixed infrastructure payments and a revenue share tied to GPU utilization.

Data Center Cloud

Our Data Center Cloud services support both public and private cloud deployments, managed backup, business continuity and disaster recovery services, and high-performance, high-capacity storage solutions at our five HPC locations across Canada. We employ a consumption-based fee structure where customers commit to a baseline level of compute, storage, network, or power usage as defined in their service agreements. Any usage beyond this baseline is typically billed incrementally, so costs are aligned with actual resource consumption and customers are afforded flexibility as their needs evolve.

Other

Equipment Sales and Repairs

We may sell mining equipment when profitable opportunities arise (e.g., if market prices exceed our procurement cost). We may also repair miners for third parties in exchange for a fee, as we have a fully equipped, MicroBT-certified repair center space at our Medicine Hat site.

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Results of Operations

Three Months Ended September 30, 2025 and 2024

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Adjusted EBITDA reconciliation:

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⁽¹⁾ Net of the accretion of fair value differences of depreciable and amortizable assets included in equity in earnings of unconsolidated joint venture in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income in accordance with ASC 323. See Note 10. Investments in unconsolidated joint venture of our Unaudited Condensed Consolidated Financial Statements and the King Mountain JV section below for further detail.

⁽²⁾ Non-recurring transactions for the three months ended September 30, 2025 primarily represent approximately $2.9 million of American Bitcoin related transaction costs. Non-recurring transactions for the three months ended September 30, 2024 represent a $13.5 million contract termination fee received from MARA Holdings and a release of relocation fees that were over-accrued in the prior period.

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Revenue

Total revenue for the three months ended September 30, 2025 and 2024 was $83.5 million and $43.7 million, respectively, and consisted of Power, Digital Infrastructure, and Compute.

Power

Power revenue was $8.4 million and $26.2 million for the three months ended September 30, 2025 and 2024, respectively. This $17.8 million decrease was primarily driven by a $19.7 million decrease in Managed Services revenue due to the termination of the Ionic managed services agreement in December 2024. This decrease was partially offset by a $1.9 million increase in electricity sales through the Far North JV due to an increase in electricity demand in the current year period. We generate intercompany revenue under the MSA between us and American Bitcoin, which is eliminated upon consolidation.

Digital Infrastructure

Digital Infrastructure revenue was $5.1 million and $3.9 million for the three months ended September 30, 2025 and 2024, respectively. This $1.2 million increase was driven by a $1.2 million increase in ASIC Colocation revenue under our colocation agreement with Bitmain as a result of the energization of our Vega site in June 2025. Over August and September 2025, American Bitcoin exercised the option under the ABTC Bitmain Purchase Agreement to purchase all of the Bitmain Miners at our Vega site. Concurrently with American Bitcoin's initial option exercise, we entered into a service order with American Bitcoin under the CSA for the Bitmain Miners at our Vega site, and our colocation agreement with the Bitmain ceased in September 2025. We generate intercompany revenue under the CSA between us and American Bitcoin, which is eliminated upon consolidation.

Compute

Compute revenue was $70.0 million and $13.7 million for the three months ended September 30, 2025 and 2024, respectively. This $56.3 million increase was primarily driven by a $54.3 million increase in Bitcoin Mining revenue (which business is generally conducted under American Bitcoin), largely due to increased mining efficiencies at our Medicine Hat and Salt Creek sites as a result of our fleet upgrade, which not only involved the installation of higher-efficiency machines, but also targeted infrastructure upgrades at our sites to support higher rack-level power density. Additionally, American Bitcoin's purchase of the Bitmain Miners at the Vega site under the ABTC Bitmain Purchase Agreement in August and September 2025 added an additional 14.86 EH/s to American Bitcoin's mining fleet. Both of these factors led to an increase in Bitcoin mined (578 Bitcoin mined during the three months ended September 30, 2025, 563 of which were mined by American Bitcoin, versus 190 Bitcoin mined during the three months ended September 30, 2024). Additionally, there was an increase in the average revenue per Bitcoin mined from $61,100 to $114,121 due to an increase in the price of Bitcoin. The increase was also driven by a $2.6 million increase in revenue from our GPU-as-a-Service offering, Highrise AI, which launched in September 2024. These increases were partially offset by a $0.5 million decrease in revenue from our Data Center Cloud operations due to customer churn.

Cost of revenue

Total cost of revenue was $32.3 million and $17.6 million for the three months ended September 30, 2025 and 2024, respectively, and consisted of Power, Digital Infrastructure, and Compute.

Power

Power cost of revenue was $6.5 million and $5.0 million for the three months ended September 30, 2025 and 2024, respectively. The cost of revenue increased primarily due to a $3.6 increase in cost of revenue related to electricity sales by the Far North JV driven by an increase in electricity demand in the quarter. This increase was partially offset by a decrease in our Managed Services-related operating costs of $2.1 million due to the termination of our Managed Services agreement with Ionic in December 2024.

Digital Infrastructure

Digital Infrastructure cost of revenue was $3.8 million and $3.7 million for the three months ended September 30, 2025 and 2024, respectively. This $0.1 million increase was primarily driven by a $0.1 million increase in the cost of revenue related to CPU Colocation operations due to higher electricity and connectivity costs.

Compute

Compute cost of revenue was $22.0 million and $8.9 million for the three months ended September 30, 2025 and 2024, respectively. This $13.1 million increase was primarily driven by a $13.0 million increase in the cost of revenue related to Bitcoin Mining (which is generally conducted under American Bitcoin), primarily due to the increased consumption resulting from additional miners operating at our sites, increased uptime of those miners, and an increase in the power cost per megawatt hour from $28.40 for the three months ended September 30, 2024 compared to $39.89 for the three months ended September 30, 2025. Additionally, there was a $0.4 million increase in costs of revenues related to our GPU-as-a-Service offering, which launched in September 2024. These increases were partially offset by a $0.3 million decrease in cost of revenues from our Data Center Cloud operations due to customer churn.

Depreciation and amortization

Depreciation and amortization expense was $27.8 million and $10.5 million for the three months ended September 30, 2025 and 2024, respectively. The $17.3 million increase in depreciation was primarily caused by increases in depreciation of (i) $10.8 million in Bitcoin miners owned by American Bitcoin deployed at our Alpha, Medicine Hat, Salt Creek, and Vega sites, (ii) $3.7 million in mining infrastructure primarily due to the Vega site infrastructure being put into service, and (iii) $2.2 million in AI GPUs due to the launch of our GPU-as-a-Service offering in September 2024.

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General and administrative expenses

General and administrative ("G&A") expenses were $25.9 million and $16.2 million for the three months ended September 30, 2025 and 2024, respectively. The $9.7 million increase in G&A expenses was primarily driven by: (i) a $2.6 million increase in marketing, office, and travel costs primarily due to an increase in American Bitcoin-related costs, (ii) a $2.6 million increase in transaction costs related to ABTC Merger, (iii) a $1.8 million increase in professional fees primarily due to legal and tax expenses incurred to support the execution of our growth plan, (iv) a $1.4 million increase in share based payments, and (v) a $1.1 million increase in salary and benefits due to added headcount to support our growth initiatives.

(Gains) losses on digital assets

Gains on digital assets were $76.6 million for the three months ended September 30, 2025, compared to losses on digital assets of $1.6 million for the three months ended September 30, 2024. The gains were primarily due to the increase in Bitcoin price from approximately $107,173 as of June 30, 2025 to approximately $114,068 as of September 30, 2025. In contrast, the price of Bitcoin as of June 30, 2024 was approximately $62,668 increased to approximately $63,301 as of September 30, 2024.

Other income (expense)

Other expense totaled $3.0 million for the three months ended September 30, 2025 and other income totaled $2.9 million for the three months ended September 30, 2024. The decrease of $5.9 million was primarily driven by: (i) a $2.2 million loss in foreign exchange gain due to a strengthening of Canadian dollar to U.S. dollar exchange rate related to our net U.S. dollar denominated liability position in our Canadian dollar functional currency subsidiaries, (ii) a $0.7 million increase in interest expense due to an increase in the amount of average borrowing in 2025, (iii) a $6.0 million decrease in gain on debt extinguishment, and (iv) a $0.2 million increase in the loss on other financial liability. The decrease was partially offset by (i) a $2.4 million decrease in gain on derivatives related to our Bitcoin redemption option and call options, and (ii) a $0.7 million increase in equity in earnings of King Mountain due to the impact of the halving event in April 2024 on Bitcoin Mining revenue.

Income tax

Our income tax provision was $19.0 million and $0.5 million for the three months ended September 30, 2025 and 2024, respectively. This $18.5 million increase was primarily due to an increase in deferred taxes related to the gain on digital assets for the three months ended September 30, 2025.

Nine Months Ended September 30, 2025 and 2024

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Adjusted EBITDA reconciliation:

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⁽¹⁾ Net of the accretion of fair value differences of depreciable and amortizable assets included in equity in earnings of unconsolidated joint venture in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income in accordance with ASC 323. See Note 10. Investments in unconsolidated joint venture of our Unaudited Condensed Consolidated Financial Statements and the King Mountain JV section below for further detail.

⁽²⁾ Non-recurring transactions for the nine months ended September 30, 2025 primarily represent approximately $7.6 million of American Bitcoin-related transaction costs, and $0.5 million of restructuring costs. Non-recurring transactions for the nine months ended September 30, 2024 represent approximately $3.8 million of restructuring costs and $1.7 million related to the Far North transaction costs, offset by a $13.5 million contract termination fee received from MARA Holdings, and $2.2 million tax refund.

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Revenue

Total revenue for the nine months ended September 30, 2025 and 2024 was $146.6 million and $130.7 million, respectively, and consisted of Power, Digital Infrastructure, Compute, and Other.

Power

Power revenue was $18.2 million and $46.7 million for the nine months ended September 30, 2025 and 2024, respectively. This $28.5 million decrease was primarily driven by a $35.9 million decrease in Managed Services revenue due to the $13.5 million in contract termination fees received from MARA Holdings in the prior year period, as well as thetermination of the Ionic managed services agreement in December 2024. These decreases were partially offset by a $7.4 million increase in electricity sales through the Far North JV due to an increase in electricity demand during 2025. We generate intercompany revenue under the MSA between us and American Bitcoin, which is eliminated upon consolidation.

Digital Infrastructure

Digital Infrastructure revenue was $7.9 million and $15.0 million for the nine months ended September 30, 2025 and 2024, respectively. This $7.1 million decrease was primarily driven by a $6.8 million decrease in ASIC Colocation revenue as a result of the termination of our colocation agreement with Ionic during the fourth quarter of 2024, and a $0.3 million decrease in CPU Colocation revenue due to customer churn. We generate intercompany revenue under the CSA between us and American Bitcoin, which is eliminated upon consolidation.

Compute

Compute revenue was $120.4 million and $61.5 million for the nine months ended September 30, 2025 and 2024, respectively. This $58.9 million increase was primarily driven by a $52.7 million increase in Bitcoin mining revenue (which business is generally conducted under American Bitcoin beginning April 1, 2025), largely due to increase in the average revenue per Bitcoin mined from approximately $56,252 to $106,399 due to the increase in Bitcoin price. There was also a slight increase in Bitcoin mined (1,021 Bitcoin mined during the nine months ended September 30, 2025, 871 of which were mined by American Bitcoin, versus 993 Bitcoin mined during the nine months ended September 30, 2024). The increase was also driven by a $7.1 million increase in revenue from our GPU-as-a-Service offering, which launched in September 2024. The increases were partially offset by a $1.0 million decrease in revenue from our Data Center Cloud operations due to customer churn.

Other

Other revenue was nil and $7.5 million for the nine months ended September 30, 2025 and 2024, respectively. This $7.5 million decrease was due to no equipment sales during the nine months ended September 30, 2025, while there was $7.5 million of equipment sales during the nine months ended September 30, 2024.

Cost of revenue

Total cost of revenue was $72.8 million and $66.3 million for the nine months ended September 30, 2025 and 2024, respectively, and consisted of Power, Digital Infrastructure, Compute, and Other.

Power

Power cost of revenue was $15.1 million and $14.1 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in cost of revenue of $1.0 million was primarily due to a $7.6 million increase in cost of revenue related to the increase in electricity sales by the Far North JV, partially offset by a decrease in our Managed Services related operating costs of $6.6 million due to the termination of our Ionic managed services agreement in December 2024.

Digital Infrastructure

Digital Infrastructure cost of revenue was $7.5 million and $12.6 million for the nine months ended September 30, 2025 and 2024, respectively. This $5.1 million decrease was primarily driven by a $6.1 million decrease in ASIC Colocation cost of revenue as a result of the termination of our colocation agreement with Ionic during the fourth quarter of 2024, partially offset by a $1.0 million increase in the cost of revenue related to CPU Colocation operations due to higher electricity and connectivity costs.

Compute

Compute cost of revenue was $50.2 million and $35.2 million for the nine months ended September 30, 2025 and 2024, respectively. This $15.0 million increase was primarily driven by a $14.1 million increase in Bitcoin mining costs due to increased uptime as American Bitcoin began mining at the Vega site during the quarter ended September 30, 2025, and an increase in the power cost per megawatt hour from $41.45 for the nine months ended September 30, 2024 to $43.26 for the nine months ended September 30, 2025. Additionally, there was a $2.1 million increase in costs related to our GPU-as-a-Service offering that launched in September 2024. The increase was partially offset by a $1.2 million decrease in costs related to Data Center Cloud due to customer churn.

Other

Other cost of revenue was nil and $4.4 million for the nine months ended September 30, 2025 and 2024, respectively. This $4.4 million decrease was a result of no equipment sold for the nine months ended September 30, 2025.

Depreciation and amortization

Depreciation and amortization expense was $62.2 million and $33.5 million for the nine months ended September 30, 2025 and 2024, respectively. The increase of $28.7 million was primarilydriven by (i) a $13.9 million increase in Bitcoin miners deployed at our Medicine Hat, Salt Creek and Vega sites, (ii) a $6.4 million increase in AI GPUs following the launch of our GPU-as-a-Service platform in September 2024, (iii) a $5.5 million increase in mining infrastructure primarily due to the Vega site infrastructure being put into service, and (iv) a $2.2 million increase in power plants through the Far North JV.

General and administrative expenses

G&A expenses were $77.1 million and $54.1 million for the nine months ended September 30, 2025 and 2024, respectively. The $23.0 million increase in G&A expenses was driven by: (i) a $7.5 million increase in transaction costs related to the ABTC Merger, (ii) an $8.2 million increase in salary and benefit expenses due to added headcount to support our growth initiatives, (iii) a $5.0 million increase in professional fees primarily due to legal and tax expenses incurred to support the execution of our growth initiatives, (iv) a $2.3 million increase in sales tax expenses, as we received a $2.2 million refund of sales taxes in Canada during the nine months ended September 30, 2024, and (v) a $1.3 million increase in share based payments. These increases were offset by (i) a $3.4 million decrease in restructuring expenses, and (ii) a $1.6 million decrease in Far North JV acquisition costs.

Gains on digital assets

Gains on digital assets were $181.8 million and $201.2 million for the nine months ended September 30, 2025 and 2024, respectively. The gains were due to the increase in Bitcoin price from approximately $93,354 as of December 31, 2024 compared to approximately $114,068 as of September 30, 2025 while the price of Bitcoin as of December 31, 2023 of approximately $42,288 increased to approximately $63,303 as of September 30, 2024.

Other income (expense)

Other expense was $32.7 million for the nine months ended September 30, 2025, compared to other income of $13.1 million for the nine months ended September 30, 2024. The decrease of $45.8 million was primarily driven by (i) a $4.3 million increase in interest expense due to an increase in the amount of average borrowing in 2025, (ii) a $22.8 million in asset contribution costs related to non-controlling interest portion of American Bitcoin, (iii) a $6.0 million decrease in gain on debt extinguishment, (iv) a $12.3 million decrease in gains on derivatives related to our Bitcoin redemption option and call options, and (v) a $3.8 million decrease in equity in earnings of King Mountain JV due to the impact of the halving event in April 2024 on Bitcoin Mining revenue. This was partially offset by (i) a $2.6 million gain in foreign exchange, and (ii) a $0.7 million gain on other financial liability.

Income tax

Our income tax provision was $26.4 million for the nine months ended September 30, 2025, compared to $3.0 for the nine months ended September 30, 2024. The increase in income tax provision was primarily due to an increase in deferred taxes related to the gains on digital assets for the nine months ended September 30, 2025.

Loss from discontinued operations

Loss from discontinued operations was nil and $9.4 million for the nine months ended September 30, 2025 and 2024, respectively. On March 6, 2024, we announced the closure of our Drumheller site in Alberta, Canada in connection with restructuring and optimization initiatives designed to strengthen financial performance. Of the $9.4 million loss related to the closure of our Drumheller site, the impairment of the long-term assets contributed $6.1 million and the remaining $3.3 million loss was from other operational activities.

King Mountain JV

The King Mountain JV is a 50% joint venture with one of the world's largest renewable energy producers. The King Mountain JV has 280 MW of self-mining and hosting operations located behind-the-meter at a wind farm in McCamey, Texas.

As of September 30, 2025, the King Mountain JV owned approximately 18,000 miners for self-mining (about 1.8EH/s) and hosted approximately 67,200 miners (about 7.8 EH/s) for a single hosting customer at its wholly-owned King Mountain site, which has a total capacity of 280 MW.

We account for the King Mountain JV using the equity method of accounting, resulting in reporting the King Mountain JV as an unconsolidated joint venture. Additionally, our 50% portion of any distributions from the King Mountain JV are used to pay down the TZRC Secured Promissory Note. See Note 10. Investment in unconsolidated joint venture and Note 11. Loans, notes payable, and other financial liabilities to the consolidated financial statements found elsewhere in this Quarterly Report for additional information on the King Mountain JV and TZRC Secured Promissory Note.

Below are the condensed consolidated income statements for the King Mountain JV for the three and nine months ended September 30, 2025 and 2024:

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Our board of directors and management team also evaluate Adjusted EBITDA for the King Mountain JV, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before depreciation and amortization and interest income. We use Adjusted EBITDA to assess the King Mountain JV's financial performance because it allows us to compare the operating performance on a consistent basis across periods by removing the effects of the King Mountain JV's capital structure.

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Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. This non-GAAP financial measure should not be considered as an alternative to the most directly comparable GAAP financial measure. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

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Liquidity and Capital Resources

Our primary sources of liquidity include our cash and cash equivalents, debt facilities, strategic Bitcoin reserve, equity sales, and the cash flows generated from operations. Historically, our primary cash needs have been for working capital to support equipment financing, including the purchase of additional Bitcoin miners, and growth initiatives, including infrastructure purchases, development opportunities, and acquisitions.

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In August 2025, we borrowed the remaining $65.0 million of the available capacity under our Credit Agreement with Coinbase Credit, Inc. (as amended, the "Coinbase Credit Agreement") to bring our total borrowed amount to $130.0 million.

On August 25, 2025, we entered into the Two Prime Credit Agreement, which provides for a revolving credit facility of up to $200.0 million. Amounts borrowed under the Two Prime Credit Agreement bear interest at a fixed rate equal to 7.99% per annum. The facility matures 364 days after the date of the first borrowing. We may repay any outstanding amounts borrowed, in whole or in party, without premium or penalty, at any time prior to the Maturity Date. On or prior to a drawdown, we are required to pledge, as collateral, Bitcoin with a custodian to be held in a segregated custody account under our ownership, such that the initial margin ratio of principal outstanding amount of the loan and the fair value of collateral is equal to or greater than 160%. If the value of the collateral under the credit facility decreased past a specified margin, we may be required to post additional Bitcoin as collateral. As of September 30, 2025, we have not borrowed any amount under the Two Prime Credit Agreement.

On August 22, 2025, we established our $1.0 billion 2025 ATM, which replaced our prior $500 million 2024 ATM program that launched on December 4, 2024. As of August 22, 2025, prior to its termination, we had issued and sold shares under the 2024 ATM for gross proceeds of $299.4 million at a weighted average price of $27.83 per share. For reference, our average share price from commencement of the 2024 ATM until August 22, 2025 was $18.61 per share. As of September 30, 2025, we issued and sold 635,659 shares under the 2025 ATM for gross proceeds of $22.9 million at a weighted average issuance price of $35.97 per share. For reference, our average share price from commencement of the 2025 ATM through September 30, 2025 was $31.04 per share.

On September 3, 2025, American Bitcoin established a $2.1 billion at-the-market equity program (the "American Bitcoin 2025 ATM"). As of September 30, 2025, American Bitcoin issued and sold 11,017,341 shares of Class A common stock under the American Bitcoin 2025 ATM for gross proceeds of $90.0 million at a weighted average issuance price per share of $8.17.

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Our ability to meet our anticipated cash requirements will depend on various factors including our ability to maintain our existing business, enter into new lines of business, provide new offerings, compete with existing and new competitors in existing and new markets and offerings, acquire new businesses or pursue strategic transactions, and respond to global and domestic economic, geopolitical, social conditions and their impact on demand for our offerings.

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We believe that cash flows generated from operating activities, our strategic Bitcoin reserve, and financings, along with our credit facilities will meet our anticipated cash requirements in the short-term. On a long-term basis, we plan to rely on access to the capital markets for any long-term funding not provided by operating cash flows, cash on hand, and our strategic Bitcoin reserve.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

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Operating Activities

Net cash used in operating activities was $81.9 million and $46.9 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash used in operating activities for the nine months ended September 30, 2025 resulted from net income and related adjustments of $62.1 million in addition to unfavorable changes in working capital of $19.8 million. Net cash used in operating activities for the nine months ended September 30, 2024 resulting from net income and related adjustments of $27.9 million and unfavorable changes in working capital of $19.0 million.

Investing Activities

Net cash used in investing activities totaled $451.8 million for the nine months ended September 30, 2025, primarily consisting of $287.8 million in Bitcoin purchased by American Bitcoin, $147.9 million in property and equipment purchases primarily related to the Vega build out, $25.0 million in other digital assets purchased, and $1.0 million related to other intangibles purchases. These outflows were partially offset by $5.2 million in proceeds from the sale of property and equipment, $3.7 million in proceeds from Bitcoin sales, and $0.9 million in cash acquired in the ABTC Merger. Net cash used in investing activities totaled $60.7 million for the nine months ended September 30, 2024, primarily consisting of $78.1 million in purchases of property and equipment primarily related to AI cluster under our GPU-as-a-Service business and from the Salt Creek buildout, $48.5 million in deposits paid on property and equipment, and $6.4 million cash paid in exchange for shares in Ionic Digital. These outflows were partially offset by $65.6 million in proceeds from Bitcoin sales, $4.9 million in proceeds from the sale of property and equipment, and $1.8 million in cash added as part of the Far North JV acquisition.

Financing Activities

Net cash provided by financing activities was $487.6 million for the nine months ended September 30, 2025, primarily consisting of $65.0 million in proceeds under the Coinbase Credit Agreement, $9.5 million in net proceeds from covered call options premiums, $3.5 million in proceeds from funding in relation to our GPU-as-a-Service business segment, $205.3 million in net cash proceeds from the issuance and sale of American Bitcoin's Class A common stock through a Common Stock Purchase Agreement for a private placement with certain accredited investors, $88.0 million in proceeds from the issuance of American Bitcoin's Class A common stock through the American Bitcoin 2025 ATM, and $154.8 million in net proceeds from the issuance of our common stock through our 2024 ATM and 2025 ATM. These inflows were partially offset by $36.5 million of repayments of loans payable, and $2.2 million used in principal payments on finance leases. Net cash provided by financing activities was $149.6 million for nine months ended September 30, 2024, primarily consisting of $150.0 million in proceeds from the Coatue convertible note, $20.8 million in proceeds from covered call options premiums, $14.8 million in proceeds under the Coinbase Credit Agreement, and $0.5 million in proceeds from the issuance of our common stock from stock option exercises. This was partially offset by $34.0 million in repayment of loans and notes payable.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our Unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Unaudited Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. We evaluate our estimates and assumptions on an ongoing basis and base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for the judgments we make about the carrying value of assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from these estimates. Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position, and statement of cash flows.

There have been no material changes to our critical accounting policies and estimates disclosed in the Annual Report other than as described in Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements in our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Use of 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. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, impairment analysis of finite-lived intangibles and digital assets, and current and deferred income tax assets (including the associated valuation allowance) and liabilities.

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