Exhibit 99.1

Bit Digital, Inc. Announces Third Quarter of Fiscal Year 2021 Financial Results 

New York, December 23, 2021 /PRNEWSWIRE/ Bit Digital, Inc. (Nasdaq: BTBT) (the “Company”), a bitcoin mining company headquartered in New York, today announced its unaudited financial results for the third quarter ended September 30, 2021.

Financial Highlights for the Third Quarter 2021

Forward Looking Statements

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this news release. Except for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking statements reflecting our current expectations that involve risks and uncertainties (collectively, “forward-looking information”) that is based on expectations, estimates and projections as at the date of this news release. Actual results and the timing of events in this news release includes information about hash rate expansion, diversification of operations, potential further improvements to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially from those discussed in our such forward-looking statements as a result of many factors, including, but not limited to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance as supply chains are disrupted and may prevent the Company from operating its assets; the ability to establish new facilities for bitcoin mining in North America; a decrease in cryptocurrency migrating and then operating its assets; a decrease in cryptocurrency pricing; volume of transaction activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set forth under “Risk Factors” and elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2020 and other documents disclosed under the Company’s filings at www.sec.gov. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

Bitcoin Mining Business

We are a bitcoin mining company with mining operations in the United States and Canada. We commenced our bitcoin mining business in February 2020. Our bitcoin mining operations, hosted by third party hosting providers, use specialized computers, known as miners, to generate bitcoins, a cryptocurrency. The miners use application specific integrated circuit (“ASIC”) chips. These chips enable the miners to apply greater computational power, or “hash rate”, to provide transaction verification services (known as “solving a block”) which helps support the bitcoin blockchain. For every block added, the bitcoin blockchain awards a bitcoin award equal to a set number of bitcoins per block. Miners with a greater hash rate have a higher chance of solving a block and receiving a bitcoin award.

We operate our mining assets with the primary intent of accumulating bitcoin which we may sell for fiat currency from time to time depending on market conditions and management’s determination of our cash flow needs. Our mining strategy has been to mine bitcoins as quickly and as many as possible given the fixed supply of bitcoins. In view of the long delivery lead time to purchase miners from manufacturers like Bitmain Technologies Limited (“Bitmain”) and MicroBT Electronics Technology Co., Ltd (“MicroBT”), we initially chose to acquire miners on the spot market, which can typically result in delivery within a few weeks. In parallel, we also enjoy strategic relationships with leading manufacturers, enabling us to access ASICs on advantageous terms. On October 7, 2021, the Company contracted to purchase an additional 10,000 Antminers from Bitmain under a Sales and Purchase Agreement (the “SPA”) at an estimated cost of $65 million. These miners are expected to increase the Company’s miner hash rate by approximately 1.0 Exahash (“EH/s”). Pro Forma for the announced purchases, our maximum total hash rate is expected to be approximately 2.603 EH/s.

We have signed services agreements with third party hosting partners in North America. These partners operate specialized mining data centers, where they install and operate our miners and provide IT consulting, maintenance, and repair work on-site for us. Our mining facilities in Texas and Nebraska are maintained by Compute North LLC. Our mining facility in Georgia is maintained by Core Scientific, Inc. Our mining facility in New York is maintained by BlockFusion USA, Inc. Our new mining facility in New York will be maintained by Digihost Technologies. Our former mining facility in Alberta, Canada was maintained by Link Global Technologies Inc.

Miner Migration and Geographic Distribution

In October 2020, we commenced our strategy of migrating our mining assets from China to North America. Following the announcement of the Chinese government’s decision to ban bitcoin mining, we immediately suspended our remaining mining operations in mainland China, effective June 21, 2021. Accordingly, we further accelerated our migration strategy that had been ongoing since October 2020. As a result, a greater proportion of our fleet was offline than in the prior quarter, due to more miners being in transit to or awaiting installation in North America. Prior to shipment, we generally refurbish our miners in a facility in Shenzhen, China, to ensure their resilience during transport and operability upon arrival. Miners are securely packaged and shipped by air or by sea, depending on market conditions.

As of September 30, 2021, we had no miners in China: 79.1% of our fleet was already deployed or awaiting installation in North America, and 20.9% was in transit. As of the date of this report, 100% of our fleet had arrived in North America.  

Power and Hosting Overview 

During the third quarter, the Company signed two new hosting agreements in the United States, representing 135 megawatts (“MW”) of additional power capacity. Both are expected to be powered by a substantial component of renewable and/or carbon-free energy, contributing to our ongoing efforts to decarbonize our mining operations.

On July 22, 2021, we signed a 100 MW agreement with Digihost Technologies (“Digihost”) that is expected to be powered by approximately half renewable and/or carbon free energy sources, subject to finalizing our energy procurement strategy with Digihost. This second agreement brings our total contracted hosting capacity with Digihost to 120 MW. Digihost is expected to deliver the first 20 MW of contracted power capacity during the fourth quarter of 2021. The remaining 100 MW is scheduled for delivery during the first and second quarters of 2022.

On August 25, 2021, we signed a 35 MW hosting agreement with Blockfusion USA (“Blockfusion”) that is expected to be powered primarily from zero carbon emission energy sources. As of the date of this report, Blockfusion had completed the first (of four) phases of miner deployments, representing approximately 5 MW of power consumption. The remaining three phases are scheduled for delivery in fourth quarter of 2021 and the first quarter of 2022. During the term of our agreement and for twelve months thereafter, Bit Digital has a right of first refusal to match any bona fide offer from a third party to finance or acquire securities and/or assets of Blockfusion, and to receive a credit or refund of certain expenses incurred in the development of infrastructure.

As a result of these two new agreements, as of September 30, 2021, the Company had secured hosting capacity sufficient to complete the redeployment of its fleet in North America, with additional signed capacity to facilitate future fleet growth. The Company continues to evaluate additional hosting arrangements with existing and prospective new hosting partners in North America.

Our hosting partner Compute North LLC (“Compute North”) has advised us that its delivery of a portion of its contracted hosting capacity has been delayed. Compute North has not yet determined updated delivery timing for this delayed capacity, which represents a minority of our total hosting contracted with Compute North. Pending revised delivery timing, Bit Digital expects to redirect miner deployments to other hosting partners.

Our hosting partner Link Global Technologies (“Link”) has advised us that Link’s facility in Alberta, Canada that had supplied approximately 3.3 MW for hosting our miners was required to discontinue operations as a result of a permitting dispute. Link is currently evaluating alternative sites to accommodate our miners. In the interim, pending further updates, Bit Digital expects to redirect miners formerly hosted with Link to other hosting partners.

Miner Fleet Overview

During the third quarter, we purchased 851 miners, including 451 Bitmain S17 and 400 Bitmain S19pro models. As of September 30, 2021, these newly purchased miners had already been deployed in North America.

During the quarter, we continued repositioning our fleet by selling 4,200 miners that were deemed to have a lower expected return on invested capital than miners we believe we can purchase, and/or were deemed unsuitable for long-distance migration to North America. The sold miners included 4,000 Bitmain S17 and 200 Bitmain T17 models. As a result, we recognized a $3,789,683 net loss, comprised of a $341,240 gain from sales and a $4,130,923 loss from disposals. In addition, we abandoned 1,407 miners that were deemed to have reached the end of their useful lives, were no longer operational and/or would have been uneconomical or impossible to repair or migrate.

As of September 30, 2021, we had 27,744 miners, with a total maximum hash rate of 1.60 EH/S, a decrease from 32,500 miners and 1.92 EH/s as of June 30, 2021. The reduction was due to the aforementioned sales and disposals of certain miners, partially offset by miner purchases. Our fleet of owned miners comprised the following models: 

On October 7, 2021, we contracted to purchase an additional 10,000 Antminers from Bitmain under a Sales and Purchase Agreement (the “SPA”) at an estimated cost of $65 million. These miners are expected to increase the Company’s miner hash rate by approximately 1.0 Exahash (“EH/s”). Pro Forma for the announced purchases, our maximum total hash rate is expected to be approximately 2.60 EH/s.

Bitcoin Production

From the inception of our bitcoin mining business in February 2020 to September 30, 2021, we earned an aggregate of 3,334.9 bitcoins. The following table presents the number of bitcoins mined on a quarterly basis:

The Company earned 248.4 bitcoins in the third quarter of 2021. The reduction from the second quarter was due to the aforementioned accelerated migration program, in which more miners were offline while in transit to or awaiting installation in North America, as well as miner sales and disposals.

The following table presents our bitcoin mining activities for the third quarter of 2021. During the quarter, the Company exchanged 101.0 bitcoins for same amount of wrapped BTC (“WBTC”). As of September 30, 2021, we had a total of 627.1 bitcoin equivalent on hand, comprised of 526.1 bitcoins and 101.0 WBTC.

Environmental, Social and Governance 

Sustainability is a major strategic focus for us. Our mining locations in the US and Canada provide affordable access to carbon-free energy and other sustainability-related solutions, in varying amounts depending on location, including hydroelectric, solar, wind and other carbon-free sources, which we believe help mitigate the environmental impact of our operations. We work with an independent ESG (Environmental, Social and Governance) consultant to self-monitor, set targets and help us to improve our percentage of green electricity and other sustainability initiatives. As we continue to align ourselves with the future of technology and business, we are dedicated to continuously enhancing sustainability, which we believe future-proofs our operations and the larger bitcoin network.

We believe that the bitcoin network and the mining that powers it are important inventions in human progress, with circa $1 trillion in market cap and bitcoin being used around the world. The process of problem-solving and verifying bitcoin transactions using advanced computers is energy intensive, and scrutiny has been applied to the industry for this reason. It follows that the environmental costs of mining bitcoin should be surveyed and mitigated by every company in our fast-growing sector. We aim to contribute to the acceleration of bitcoin’s decarbonization and act as a role model in our industry, responsibly stewarding digital assets.

We are currently working with Apex Group Ltd, an independent ESG consultancy, to become one the first publicly-listed bitcoin miners to receive an independent ESG rating on our operations, which we anticipate will provide transparency on the environmental sustainability of our operations, as well as other metrics. Apex’s ESG Ratings & Advisory tools allow us to benchmark our ESG performance against international standards and our peers to identify opportunities for improvement and progress over time. We believe this is an integral approach to improving our sustainable practices and mitigating our environmental impact. By measuring the sustainability and footprint of Bit Digital’s mining, we are able to develop targets to continuously improve as we continuously shift towards our goal of 100% clean energy usage.

COVID-19 

In March 2020, the World Health Organization declared the COVID-19 outbreak (“COVID-19”) a global pandemic. We operate in locations that have been impacted by COVID-19, and the pandemic has impacted and could further impact our operations and the operations of our customers as a result of quarantines, various local, state and federal government public health orders, facility and business closures, and travel and logistics restrictions. Conditions may improve or worsen as governments and businesses continue to take actions to respond to the risks of the COVID-19 pandemic. While the COVID-19 pandemic continues to cause uncertainty in the global economy and restrictive measures by governments and businesses remain in place, we expect our business and results of operations may be materially and adversely affected. Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, and industry.

Beginning in the middle of March 2020, the outbreak of COVID-19 led to adverse impacts on the US and global economies, bringing uncertainty to our operations and customer demand. Various local governments issued orders requiring the closure of non-essential businesses and to curtail all unnecessary travel and requiring individuals to comply with various shelter-in-place and social distancing orders. We, however, experienced positive growth from our efforts in investment in miners together with increases in bitcoin market price.

Additionally, we have evaluated the potential impact of the COVID-19 outbreak on our financial statements, including, but not limited to, the impairment of long-lived assets and valuation of cryptocurrencies. Where applicable, we have incorporated judgments and estimates of the expected impact of COVID-19 in the preparation of the financial statements based on information currently available. These judgments and estimates may change, as new events develop and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known.

We continue to actively monitor the situation and may take further actions that alter our operations and business practices as may be required by federal, state or local authorities or that we determine are in the best interests of our partners, customers, suppliers, vendors, employees and shareholders. The extent to which the COVID-19 outbreak will further impact the Company’s financial results will depend on future developments, which are unknown and cannot be predicted, including the duration and ultimate scope of the pandemic, advances in testing, treatment and prevention, as well as actions taken by governments and businesses. With miners transferred to the United States and Canada, the COVID-19 situation continued to create travel and transportation difficulties. The US operations are heavily dependent on our partners, who may also be impacted by COVID-19.

The effectiveness of the COVID-19 vaccine and vaccination programs remains to be verified worldwide, including against variants of the virus. The sweeping nature of the COVID-19 pandemic makes it extremely difficult to predict how the company’s business and operations will be affected in the longer run. So far, the likely overall economic impact of the pandemic is widely viewed as highly negative to the global economy.

Results of operations 

Revenues

We generate revenues from provision of computing power to digital asset mining pools, and receive consideration in the form of digital assets, the value of which is determined using the market price of the related digital asset at the time of receipt. By providing computing power to successfully add a block to the blockchain, the Company is entitled to a fractional share of the fixed cryptocurrency award from the mining pool, which is based on the proportion of computing power the Company contributed to the mining pool to the total computing power contributed by all mining pool participants in solving the current algorithm.

For the three months ended September 30, 2021, we received 248.4 bitcoins from one US mining pool operator. As of September 30, 2021, our maximum hash rate was 1.60 EH/s. For the three months ended September 30, 2021, we recognized revenue of $10,395,894 from mining activity.

For the three months ended September 30, 2020, we received 739.51 bitcoins from one mining pool operator and recognized revenue of $7,909,528.

During the three months ended September 30, 2021, we sold or disposed of certain miner models, partially in anticipation of purchase opportunities for newer, more efficient machines, resulting in a net reduction of 0.32 EH/s in hash rate from the three months ended June 30, 2021. We expect to continue to invest in miners to increase the hash rate capacity.

Cost of revenues

Cost of revenues of $2,607,945 for the three months ended September 30, 2021 was primarily comprised of direct production cost of the mining operations, including utilities and other service charges, but excluding depreciation and amortization expenses which are separately presented.

For the three months ended September 30, 2020, we incurred cost of revenues of $6,210,712 from utilities and other service charges.

We expect an increase in cost of revenues as we continue to focus on expansion and upgrade of our miner fleet.

Depreciation and amortization expenses

For the three months ended September 30, 2021, depreciation and amortization expenses of $3,796,672 represented depreciation of miners based on an estimated useful life of 3 years.

For the three months ended September 30, 2020, depreciation and amortization expenses of $1,171,151 represented depreciation of miners based on an estimated useful life of 3 years.

General and administrative expenses

For the three months ended September 30, 2021, our general and administrative expenses were primarily comprised of professional and consulting expenses of $1,476,397, transportation expenses of $865,634 to relocate certain miners from China to the US, share-based compensation expenses of $16,066,821 related to restricted stock units (“RSUs”) issued to our directors, management and consultants during the third quarter 2021, travel expenses of $338,314, payroll expenses of $149,136 and office expenses of $228,409.   

For the three months ended September 30, 2020, our general and administrative expenses were primarily comprised of professional and consulting expenses of $246,518, office expenses of $34,436, payroll expenses of $56,405 and travel expenses of $50,490.

Realized gain (loss) on exchange of digital assets

We record digital assets at cost and any gains or losses from sales of digital assets are recorded as “Realized gain (loss) on exchange of digital assets” in the consolidated statements of operations. For the three months ended September 30, 2021, we recorded a gain of $129,935 from exchange of 209.6 bitcoins. For the three months ended September 30, 2020, we recorded a loss of $21,721 from sales of 695.7 bitcoins.

Loss from disposal of property and equipment

During the three months ended September 30, 2021, we sold or disposed of certain miner models, partly in anticipation of purchase opportunities for newer, more efficient machines. As a result, we recognized loss of $3,789,683 from sales and disposal of these miners, comprised of a gain of $341,240 from sales of 4,200 miners to three third parties and a loss of $4,130,923 from disposal of 1,407 miners at $nil consideration.

Income tax expense

Income tax expense was $938,578 for the three months ended September 30, 2021, as we generated taxable profits derived from our US and Canada operations.

Income tax expenses was $nil for the three months ended September 30, 2020, as we are not subject to tax on income or capital gain in the Cayman Islands, and we did not generate assessable profits arising in or derived from Hong Kong.

Net income (loss) and earnings (loss) per share

For the three months ended September 30, 2021, our net loss was $20,148,834, representing a change of $20,148,888 from a net income of $54 for the same period of last year.

Loss per share was $0.37 and earnings per share was $0.00 for the three months ended September 30, 2021 and 2020, respectively. Weighted average number of shares was 54,675,621 and 42,297,011 for the three months ended September 30, 2021 and 2020, respectively.

Revenues  

We generate revenues from provision of computing power to digital asset mining pools, and receive consideration in the form of digital assets, the value of which is determined using the market price of the related digital asset at the time of receipt. By providing computing power to successfully add a block to the blockchain, the Company is entitled to a fractional share of the fixed cryptocurrency award from the mining pool operator, which is based on the proportion of computing power the Company contributed to the mining pool to the total computing power contributed by all mining pool participants in solving the current algorithm.

For the nine months ended September 30, 2021, we received 1,824.7 bitcoins from three mining pool operators. As of September 30, 2021, our maximum hash rate was 1.60 EH/s. For the nine months ended September 30, 2021, we recognized revenue of $82,691,638.

For the nine months ended September 30, 2020, we received 814.2 bitcoins from two mining pool operators and recognized revenue of $8,602,226.

During the nine months ended September 30, 2021, we sold or disposed of certain miner models, partially in anticipation of purchase opportunities for newer, more efficient machines. We expect to continue to invest in miners to increase the hash rate capacity. As a result, we expect a continuous increase in revenue for the fiscal year 2021. Also, with more miners operating in the United States and Canada, we expect energy cost per hash to decrease on an overall basis.

Cost of revenues

Cost of revenues of $25,959,323 for the nine months ended September 30, 2021 was primarily comprised of direct production cost of the mining operations, including utilities and other service charges, but excluding depreciation and amortization expenses which are separately presented.

For the nine months ended September 30, 2020, we incurred cost of revenues of $6,866,726 from utilities and other service charges.

We expect an increase in cost of revenues as we continue to focus on expansion and upgrade of our miner fleet.

Depreciation and amortization expenses

For the nine months ended September 30, 2021, depreciation and amortization expenses represented depreciation of 27,744 miners based on an estimated useful life of 3 years.

For the nine months ended September 30, 2020, depreciation and amortization expenses represented depreciation of 22,869 miners based on an estimated useful life of 3 years.

General and administrative expenses

For the nine months ended September 30, 2021, our general and administrative expenses were primarily comprised of professional and consulting expenses of $4,193,784, transportation expenses of $2,015,096 to relocate certain miners from China to North America, shared-based compensation expenses of $16,579,821 related to RSUs issued to our directors, management and consultants, insurance expenses of $924,991, travel expenses of $640,803, payroll expenses of $615,471 and office expenses of $553,019.  

For the nine months ended September 30, 2020, our general and administrative expenses were primarily comprised of stock compensation expenses for consulting services of $456,000, professional and consulting expenses of $541,074, office expenses of $64,211, payroll expenses of $56,405 and travel expenses of $50,490.

Realized gain (loss) on exchange of digital assets

We record digital assets at cost and any gains or losses from sales of digital assets are recorded as “Realized gain (loss) on exchange of digital assets” in the consolidated statements of operations. For the nine months ended September 30, 2021, we recorded a gain of $7,082,587 from exchange of 1,465.9 bitcoins. For the nine months ended September 30, 2020, we recorded a loss of $15,753 from sales of 754.2 bitcoins.

Impairment of digital assets

Impairment of digital assets was $9,045,007 for the nine months ended September 30, 2021, which was recorded to reflect our digital assets at the lower of cost or fair value as of September 30, 2021.

Gain from disposal of property and equipment

During the nine months ended September 30, 2021, we sold or disposed of certain miner models, in anticipation of purchase opportunities for newer, more efficient machines. As a result, we recognized loss of $3,746,247 from sales and disposal of these miners, comprise of a gain of $610,520 from sales of 15,808 miners to three third parties and a loss of $4,356,767 from disposal of 1,779 miners at $nil consideration.

Income tax expense

Income tax expense was $1,322,627 for the nine months ended September 30, 2021, as we generated taxable profits derived from our US and Canada operations.

Income tax expenses was $nil for the nine months ended September 30, 2020, as we are not subject to tax on income or capital gain in the Cayman Islands, and we did not generate assessable profits arising in or derived from Hong Kong.

Net income (loss) and earnings (loss) per share

For the nine months ended September 30, 2021, our net income was $14,298,090, representing a change of $18,858,876 from a net loss of $4,560,786 for the same period of last year, which comprised of a net loss of $726,103 from continuing operations and a net loss of $3,834,683 from discontinued operations.

Earnings per share was $0.28 and loss per share was $0.18 for the nine months ended September 30, 2021 and 2020, respectively. Weighted average number of shares was 50,921,037 and 25,745,900 for the nine months ended September 30, 2021 and 2020, respectively.

Non-GAAP Financial Measures

We are providing supplemental financial measures for (i) non-GAAP income from operations and (ii) non-GAAP net income. These supplemental financial measures are not measurements of financial performance under US GAAP and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions. We believe that these non-GAAP financial measures are also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis.

The following is a reconciliation of non-GAAP income from operations, which excludes the impact of (i) depreciation of property and equipment, and (ii) share based compensation expenses, to its most directly comparable GAAP measures for the periods indicated:

The following is a reconciliation of non-GAAP net income (loss), which excludes the impact of (i) depreciation of property and equipment, (ii) impairment of digital assets, (iii) loss from disposal of property and equipment and (iii) share based compensation expenses, to its most directly comparable GAAP measures for the periods indicated:

Liquidity and capital resources

To date, we have financed our operations primarily through cash flows from operations, working capital loans from our shareholders, and equity financing through public and private offerings of our securities. We plan to support our future operations primarily from cash generated from our operations and equity financings. We may also consider debt, preferred and convertible financing as well. As of September 30, 2021, we had working capital of $60,966,193 as compared with $6,825,455 at December 31, 2020. Working capital included digital assets of $35,020,251 and $6,293,922 as of September 30, 2021 and December 31, 2020, respectively.

As of January 5, 2021, the Company completed the sale of 262,082 Ordinary Shares at $4.50 per share for gross proceeds of $1,179,369 to eleven non-US Persons.

On February 5 and March 12, 2021, the Company completed the sale of subordinated convertible notes in the principal amounts of $1,100,000 and $550,000, respectively, to an accredited institutional investor pursuant to a Securities Purchase Agreement. On May 5, 2021, the convertible notes were automatically converted into 289,662 Ordinary Shares at $5.70 per share.

On May 5, 2021, the Company’s Form F-1 Registration Statement covering the resale of 6,412,500 ordinary shares was declared effective by the SEC. The 6,412,500 ordinary shares consisted of 412,500 shares issuable to Ionic Ventures, LLC (“Ionic”) upon the conversion of $1,650,000 principal amount of senior convertible notes, and 6,000,000 shares issuable to Ionic pursuant to the Purchase Agreement dated as of January 11, 2021. During May 20, 2021 through September 30, 2021, the Company issued a net aggregate of 5,972,194 Ordinary Shares to Ionic for gross proceeds of $36 million. The Company received net proceeds of $33,235,400 after deducting fees payable to broker-dealers and certain other transaction expenses, including fees and expenses of legal counsels in connection with the transactions.

Revenue from Mining Operations

Funding our operations on a go-forward basis will rely significantly on our ability to continue to mine cryptocurrency and the spot or market price of the cryptocurrency we mine. We expect to generate ongoing revenues from the production of digital assets, primarily bitcoin, in our mining facilities. Our ability to liquidate bitcoin at future values will be evaluated from time to time to generate cash for operations. Generating bitcoin, for example, with spot market values which exceed our production and other costs, will determine our ability to report profit margins related to such mining operations, although accounting for our reported profitability is significantly complex. Furthermore, regardless of our ability to generate revenue from our cryptocurrency assets, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy.

The ability to raise funds as equity, debt or conversion of digital assets to maintain our operations is subject to many risks and uncertainties and, even if we were successful, future equity issuances would result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through bitcoin production and successfully convert bitcoin into cash or fund overhead with bitcoin is subject to a number of risks, including regulatory, financial and business risks, many of which are beyond our control. Additionally, the value of bitcoin rewards has been extremely volatile historically, and future prices cannot be predicted.

If we are unable to generate sufficient revenue from our bitcoin production when needed or secure additional sources of funding, it may become necessary to significantly reduce our current rate of expansion or to explore other strategic alternatives.

Cash flows

Operating Activities

Net cash used in operating activities was $11,191,887 for the nine months ended September 30, 2021, mainly derived from (i) net income of $14,298,090 from continuing operations for the nine months adjusted for depreciation expenses of miners of $9,795,703, impairment of digital assets of $9,045,007, loss from sales and disposal of miners of $3,746,247, issuance of ordinary shares to certain service providers as promotion and marketing expenses of $1,446,098, grant of restricted share units to the Company’s directors, senior management and consultants    of $16,576,615 and (ii) net of changes in our operating assets and liabilities, principally comprising of (a) an increase in digital assets of $89,079,726 as rewards to us for provision of mining services, and (b) a change in accounts payable of $25,680,947, primarily because we paid hosting and power cost of $24,078,955 in digital assets.

Net cash used in operating activities was $8,578,704 for the nine months ended September 30, 2020, mainly derived from (i) net loss of $726,103 from continuing operations for the nine months adjusted for noncash provision for depreciation expenses of miners of $1,241,652, and amortization of stock compensation expenses for consulting services of $456,000, and (ii) net changes in our operating assets and liabilities, principally comprising of (a) an increase in digital assets of $8,586,472 as rewards to us for provision of mining services, and (b) an increase in other current assets of $1,196,869, primarily attributable to payment of deposits of $1,172,165 to one service provider who paid utility charges in mining facilities on behalf of us.

Investing Activities

Net cash provided by investing activities was $2,744,450 for the nine months ended September 30, 2021, primarily provided by cash proceeds of $3,539,450 from sales of digital assets, offset by miner purchases of $795,000.

Net cash used in investing activities was $10,851,166 for the nine months ended September 30, 2020, primarily used in purchases of miners of $18,796,938, offset by proceeds of $7,934,446 from sales of digital assets.

Financing Activities

Net cash provided by financing activities was $34,503,400 for the nine months ended September 30, 2021, primarily provided by net proceeds of $33,235,400 from our direct offering with Ionic, an institutional investor, and net proceeds of $1,280,000 from the issuance of convertible notes to Ionic.

Net cash provided by financing activities was $19,935,530 for the nine months ended September 30, 2020, primarily provided by proceeds of $19,800,000 from certain shareholders under private placement transactions and borrowings of $135,530 from related parties.

Off-balance sheet arrangements

We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support or that engages in leasing, hedging or research and development services with us.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with US GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the dates of the consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting periods. The most significant estimates and assumptions include the valuation of digital assets and other current assets, useful lives of property and equipment, the recoverability of long-lived assets, provision necessary for contingent liabilities and realization of deferred tax assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. 

Recently issued and adopted accounting pronouncements

The Company has evaluated all other recently issued accounting pronouncements and believes such pronouncements do not have a material effect on the Company’s financial statements. See Note 2 of the unaudited condensed consolidated financial statements as of September 30, 2021.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BIT DIGITAL, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

For the Three And Nine months Ended September 30, 2021 and 2020

(Expressed in US dollars, except for the number of shares)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BIT DIGITAL, INC.