Bit Digital, Inc (BTBT) Business

Item 1 Business

Bit Digital, Inc. (“BTBT” or the
“Company” or “We”), is a holding company incorporated on February 17, 2017, under the laws of the Cayman
Islands. The Company is a strategic asset company focused on active participation in Ethereum (ETH)-native treasury, staking strategies.
Through our majority equity stake in WhiteFiber Inc. (Nasdaq: WYFI), the Company also engages in high performance computing (“HPC”)
business, including cloud services and HPC data center services.

On August 8, 2025, WhiteFiber completed its initial public offering
(“IPO”) of its ordinary shares. Prior to the consummation of the IPO, the Company entered into a contribution agreement (the
“Contribution Agreement”) with WhiteFiber, pursuant to which the Company contributed (the “Contribution”) its
HPC business through the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned
subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, to WhiteFiber in exchange
for 27,043,749 ordinary shares of WhiteFiber (the “Reorganization”). Pursuant to the Contribution Agreement, the
transfer was be accounted for as a common control transaction immediately prior to the IPO. The Contribution became effective on August
6, 2025, when the registration statement on Form S-1, as amended (File No. 333-288650), of WhiteFiber was declared effective by the SEC.
WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber and the Company became the direct shareholder of WhiteFiber after the Reorganization.
As of the date of this Form 10-K, the Company owns approximately 70.5% of WhiteFiber.

On August 17, 2023, WhiteFiber Iceland ehf (f/k/a
Bit Digital Iceland ehf) was incorporated by a third party on August 17, 2023 under the name Bit Digital Iceland ehf. WhiteFiber Iceland’s
directly and wholly-owned by WhiteFiber AI, is classified as a “controlled foreign corporation” for U.S. Federal Income tax
purposes and is engaged in cloud services at the data center in Blönduόs Iceland.

On October 19, 2023, the Company incorporated
WhiteFiber AI, Inc. (f/k/a Bit Digital AI, Inc) to engage in cloud services for AI applications through its wholly-owned subsidiaries.

On June 27, 2024, WhiteFiber HPC, Inc. (f/k/a
Bit Digital HPC, Inc.) (“WF HPC”) was incorporated to support the Company’s cloud services in the United States. WhiteFiber
HPC, Inc. is 100% owned by WhiteFiber AI, Inc. which is 100% owned by White Fiber, Inc.

On August 15, 2024, WhiteFiber, Inc. (f/k/a Celer,
Inc.) (“WhiteFiber”) was incorporated by Bit Digital to support the Company’s HPC business. WhiteFiber was 100%
owned by the Company until August 6, 2025 when the Contribution Agreement became effective.

On October 11, 2024, the Company completed the
acquisition of Enovum Data Centers Corp (“Enovum”), a Montreal-based owner, operator, and developer of HPC data centers incorporated
on July 13, 2023. Enovum is 100% owned by WhiteFiber through a general partner and a limited partner in a Delaware operating partnership.

On March 11, 2025, WhiteFiber Canada, Inc. (“WF
Canada”) was incorporated to support the Company’s generative AI workstreams in Canada. WF Canada is 100% owned by WhiteFiber
AI, Inc., which is 100% owned by WhiteFiber.

On May 7, 2025, Enovum NC-1 BIDCO, LLC (“Enovum
NC”) was incorporated to support the HPC data centers workstreams in North Carolina. Enovum NC is 100% owned by WhiteFiber.

On May 22, 2025, WhiteFiber Japan GK (“WF Japan”) was
incorporated to support the Company’s generative AI workstreams in Japan. WF Japan is 100% owned by WhiteFiber AI, Inc., which
is 100% owned by WhiteFiber.

Our core focus is on driving scalable growth
through a diverse range of business streams leveraging and built on top of our core and proven blockchain infrastructure operations.
Bit Digital’s operations are that of a strategic asset company, focused on two systems that underpin this shift: economic infrastructure
through Ethereum, and intelligence infrastructure through AI compute.

1

Our Business

Bit Digital is a strategy asset company (SAC)
focused on owning productive infrastructure that generates yield, usage and participation, and building operating capabilities around
those assets as they compound over time. The Company operates its Ethereum infrastructure through staking and network participation.
The Company treats ETH as a productive economic infrastructure, rather than as passive inventory. We actively allocate capital across
productive strategic assets. Through our majority ownership in WhiteFiber, we engage in AI compute and data center infrastructure. WhiteFiber
provides scalable energy and dense capacity for AI and HPC workloads. Our strategic priority is to build a leading ETH treasury and network
participation while integrating AI intelligence infrastructure exposure to position Bit Digital as a premier SAC.

The digital asset business is comprised primarily
of two distinct but highly complementary operations: (i) ETH staking (the “ETH Staking Operations”) and (ii) digital
asset mining (the “Digital Asset Mining Operations”). In the fourth quarter of 2022, we formally commenced Ethereum staking
operations. We purchase and stake ETH to generate protocol-native yield and participate directly in the Ethereum network. Bit Digital
allocates capital with a focus on long-duration, foundational infrastructure and disciplined balance sheet management.

In June 2025, the Company announced that it had
initiated a strategic transition to become a pure play ETH staking and treasury company. In connection with the transition, the Company
has been converting its bitcoin (BTC) holdings into ETH over time and has undertaken a strategic alternatives process for its bitcoin mining
operations, which is expected to result in a sale or wind-down, with any net proceeds to be re-deployed into ETH.

Consequently, management reoriented the business
to prioritize (i) ETH treasury operations; and (ii) disciplined BTC treasury management while winding down proprietary self-mining
exposure and deferring new site buildouts.

Our business integrates (i) a digital asset
treasury anchored in ETH with (ii) an operating platform historically focused on BTC mining and hosting and (iii) HPC infostructure
operated by White Fiber. We seek to accumulate and hold ETH on a long-term basis within a disciplined treasury framework, and we may
participate in staking or staking-adjacent activities where risk-adjusted returns, liquidity and regulatory considerations are acceptable.
We maintain flexibility to mine or hold BTC when market economics are attractive. We prioritize robust custody, cybersecurity, segregation
of duties and counterparty oversight, and we evaluate opportunities in ETH-adjacent services—including advisory—consistent
with an asset-light operating model.

ETH Treasury Strategy

Starting in 2022, the Company has accumulated
and held ETH on a long-term basis, implementing controls over custody, counterparty exposure, and liquidity. Our strategy focuses on
pursuing opportunities to increase the amount of ETH in the treasury, including through staking, restaking, liquid staking and other
decentralized finance activities. The Company may deploy ETH into staking or other yield-generative protocols where risk-adjusted returns,
liquidity and regulatory considerations are acceptable. We believe ETH’s role as a programmable settlement asset and its network-driven
cash flows create a compelling long-term investment thesis. Over the course of 2025, we accumulated ETH at a measured cost basis and
built operational capabilities around staking and network participation. As of December 31, 2025, Bit Digital held over 150,000 ETH,
the majority of which is staked, generating protocol-native rewards while maintaining liquidity and institutional custody standards.

The key drivers of our results include (i) ETH
market conditions, which affect the value of our holdings and the economics of any staking or staking-adjacent activities; (ii) client
demand for Ethereum-adjacent services, including advisory; (iii) security, custody and compliance expenditures necessary to support
institutional-grade treasury operations; and (iv) access to capital to opportunistically acquire ETH and invest in enabling infrastructure.

2

Treasury and yield framework. Our
objective is to grow our net ETH position over time, subject to risk and liquidity constraints. We evaluate staking and related mechanisms
based on security, liquidity, counterparty and regulatory profiles. We expect staking yields to evolve with validator participation rates,
protocol parameters and market conditions. Where we deploy ETH to staking or analogous activities, we intend to size exposures conservatively,
prioritize best-in-class custody and validator operations (including multi-client diversity and performance monitoring), and maintain
appropriate unencumbered liquidity to meet corporate needs. We may rebalance or unwind positions in response to changes in risk, reward,
or regulatory context.

Operating expenditures and investment priorities.
As an ETH-focused company, we have experienced a mix shift in operating expenses toward cybersecurity, custody, treasury operations,
compliance and technology enablement for advisory and analytics. Capital expenditures have been modest relative to our prior mining-centric
model. We intend to maintain a flexible cost structure aligned with services activity and treasury scale.

Key trends and uncertainties. We
are monitoring (i) protocol upgrades on Ethereum’s roadmap and their implications for staking yields, fee markets and network
security; (ii) growth in L2 activity and cross-chain interoperability; (iii) institutional adoption trends, including tokenization
initiatives and regulated market-structure developments; (iv) availability and terms of regulated custodial services; and (v) evolving
U.S. and non-U.S. regulatory frameworks applicable to digital assets and staking.

Liquidity considerations. Our liquidity
planning considers ETH price volatility, potential impairment charges under applicable accounting policies, the liquidity profile of
any staked positions and our ability to access capital markets through our shelf registration and at-the-market program. We intend to
maintain sufficient liquidity to support operations, regulatory compliance, and security investments, while seeking opportunities to
increase ETH holdings when market conditions are attractive.

Known events reasonably likely to affect future
results. Our future results may be materially affected by changes in ETH prices and staking economics; regulatory developments
pertaining to ETH, staking and custody; counterparty or custodian developments; cybersecurity investments and events; and market structure
changes affecting liquidity and capital access for digital-asset issuers.

ETH Staking Operations

The Company commenced Ethereum staking activities
in the fourth quarter of 2022. Through these activities, the Company participates in the Ethereum proof-of-stake (“PoS”)
network by staking its own ETH holdings through third-party validator operators.

Under the Ethereum PoS consensus mechanism, participants
may commit ETH to validator nodes in order to support the validation of transactions and the addition of new blocks to the Ethereum blockchain.
In return for participating in this validation process, participants may earn protocol-based staking rewards.

The Company does not operate its own validator
nodes. Instead, the Company delegates its ETH to independent third-party validators who operate the infrastructure required to participate
in the Ethereum network. These validator operators perform the technical validation functions required by the protocol, including transaction
verification and block proposal and attestation.

Delegation of ETH for staking purposes is a non-custodial
process in which the Company retains ownership of its ETH while the validator operator performs the validation services. The Ethereum
protocol automatically distributes staking rewards generated from validated blocks in accordance with the network rules.

Through this model, the Company is able to participate
in network validation and earn staking rewards on its ETH holdings without directly operating validator infrastructure.

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Beginning in January 2024, the Company transitioned
its native Ethereum staking operations to Figment, an institutional-grade staking infrastructure provider with a strong institutional
client base, established operating track record, and a focus on security and validator performance. As of December 31, 2025, the Company
conducted its staking operations exclusively on the Ethereum network through Figment. The Company’s staking strategy is focused
solely on native Ethereum staking and does not include staking activities on other blockchain networks or participation in liquid staking
arrangements. As of December 31, 2025, the Company had approximately 138,263 ETH actively staked through Figment. Cumulative
staking rewards were approximately 2,442.9 ETH, of which approximately 2,366.8 ETH had been paid and approximately 76.1 ETH
remained pending. The Company believes this operating model streamlines staking operations, enhances operational oversight, and provides
direct exposure to Ethereum staking rewards through a single institutional service provider.

We started participating in liquid staking via
Liquid Collective protocol on the Coinbase platform in the first quarter of 2023. Liquid staking allows participants to achieve greater
capital efficiency by utilizing their staked ETH as collateral and trading their staked ETH tokens on the secondary market. In the first
quarter of 2024, we reclaimed all the liquid staked ETH from Liquid Collective protocol. In July 2025, we resumed liquid staking
through the Liquid Collective protocol with 5,120 ETH. This approach provides flexibility to engage in both staking and restaking through
a broader range of strategies and platforms. Subsequently, we ceased our liquid staking activities with Liquid Collective protocol in
October 2025.

ETH and the ETH Ecosystem

Ethereum is a decentralized, open-source blockchain
network enabling programmable smart contracts and decentralized applications. ETH is the native digital asset of the Ethereum network
and is used as the unit of account to pay for transaction fees (“gas”), validator rewards, and computation. Since its launch
in 2015, Ethereum has become the leading programmable settlement layer for decentralized finance, tokenization, and digital assets infrastructure,
and it is the second-largest blockchain by market capitalization. Following Ethereum’s transition to proof-of-stake consensus in
September 2022, the network’s energy consumption declined materially and a validator-based system for securing the network and
earning staking rewards was introduced.

BTBT believes that the growth and maturation
of the Ethereum ecosystem has direct implications for our business model, which integrates (i) an ETH-anchored corporate treasury focused
on disciplined accumulation and risk-managed yield generation, and (ii) a capital-light operating platform providing Ethereum-adjacent
services. BTBT views the following Ethereum ecosystem developments as particularly relevant to our long-term strategy:

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It is our belief that our public-company governance,
treasury discipline, and operating experience in digital asset infrastructure position us to benefit from long-term Ethereum ecosystem
growth. However, ETH prices, staking economics, protocol changes, regulatory developments, market structure conditions, and security
risks are volatile and uncertain and could materially affect our strategy and results of operations.

Blockchain Infrastructure

Our blockchain infrastructure entails operating
validator nodes (on various PoS and dPoS-based blockchain networks. In connection with the validation of transactions occurring on those
blockchain networks, BTBT stakes (or “delegates”) blockchain-based crypto assets native to those blockchains networks (“native
crypto assets”) to earn staking rewards.

PoS blockchain infrastructure is akin to Bitcoin’s
proof-of-work (“PoW”) mining consensus mechanism but differs in a few key ways. PoW is a consensus mechanism that requires
nodes to dedicate computational resources to validate transactions on a blockchain. In PoW, miners use energy-consuming computers to
do “work,” and they are rewarded with crypto assets for validating transactions on the blockchain. The reward is comprised
of transaction fees and crypto assets. Conversely, PoS is a consensus mechanism that requires validator nodes to dedicate financial resources
in the form of crypto assets, which are staked to participate in the consensus algorithm. Validators, the equivalent of miners in PoW
networks, operate nodes and validate transactions on the blockchain. Validators are rewarded in crypto assets for aligning behavior with
the rules of the algorithm.

We primarily earn crypto assets through the operation
of our non-custodial validator nodes, with the intention of enhancing our production of crypto assets in various blockchain networks.
While we have no formal policy, our primary objective is to hold and re-stake these earned crypto assets for network security and additional
production opportunities, we may, on occasion, sell a portion for cash to meet operational needs. Our primary cryptocurrency exchange
is Coinbase; however, we also have basic accounts with multiple alternative cryptocurrency exchanges and OTC desks. As of the filing
date, we have no exclusive agreements with any cryptocurrency exchanges, nor do we maintain margin or other type accounts that could
create additional liability for the Company. Our approach to our crypto asset holdings remains adaptable to evolving market conditions
and operational requirements.

5

Custody and Key Storage

We safeguard and keep private our digital assets, including the ETH
that we stake, by utilizing custodian solutions provided by Cactus Custody and Fireblocks, which requires multi-factor authentication.
While we are confident in the security of our digital assets held by Cactus Custody and Fireblocks, given the broader market conditions,
there can be no assurances that other digital asset market participants, including Cactus Custody and Fireblocks as our custodian, will
not ultimately be impacted. We continue to monitor the digital assets industry as a whole, although it is not possible at this time to
predict all of the risks stemming from these events that may result to us, our services providers, our counterparties, and the broader
industry as a whole.

The Company currently does not maintain any insurance
policies that provide coverage for potential losses of crypto assets in cases of theft, lost keys, or any other events that might lead
to the loss of private keys or crypto assets held within our secure digital wallets.

As of December 31, 2025, our combined digital
asset holdings totaled approximately $415 million, consisting primarily of ETH, along with a smaller BTC position, and cash totaled $118
million.

BTC Exposure

While the Company is converting its BTC holdings
into ETH over time, it has commenced a strategic alternatives process for its bitcoin mining operations during 2025,
with any net proceeds to be re-deployed into ETH, the Company also intends to maintain flexibility to mine or hold BTC when market
economics and risk-reward profiles are attractive. Our management has not set a specific target for the amount of BTC we seek to hold
and will continue to monitor market conditions to determine whether to engage in additional financings to purchase more BTC.

Digital Asset Mining Operations

We commenced our bitcoin (“BTC”)
mining business in February 2020. We initiated limited Ethereum mining operations in January 2022, however discontinued the operations
by September 2022 due to Ethereum blockchain switching from proof-of-work (“PoW”) consensus mechanism to proof-of-stake (“PoS”)
validation. Our mining operations, hosted by third-party providers, use specialized computers, known as miners, to generate digital assets.
Our miners use application specific integrated circuit (“ASIC”) chips. These chips enable the miners to apply high computational
power, expressed as “hash rate”, to provide transaction verification services (generally known as “solving a block”)
which helps support the blockchain. For every block added, the blockchain provides an award equal to a set number of digital assets per
block. Miners with a greater hash rate generally have a higher chance of solving a block and receiving an award.

We operate our mining assets with the primary
intent of accumulating digital assets which we may sell for fiat currency from time to time depending on market conditions and management’s
determination of our cash flow needs, and/or exchange into ETH or USD Coin (“USDC”). Our mining strategy was to mine bitcoins
as quickly and as many as possible given the fixed supply of bitcoins. In view of historically long delivery lead times to purchase miners
from manufacturers like Bitmain Technologies Limited (“Bitmain”) and MicroBT Electronics Technology Co., Ltd (“MicroBT”),
and other considerations, we have chosen to acquire miners on the spot market, which can typically result in delivery within a relatively
short time.

We have signed service agreements with third-party hosting partners
in North America and Iceland. These partners operate specialized mining data centers, where they install and operate the miners and provide
IT consulting, maintenance, and repair work on site for us. Our mining facilities in New York are maintained by Digihost Technologies
Inc. (“Digihost”). Our mining facilities in Texas are maintained by Dory Creek, LLC, a subsidiary of Bitdeer Technologies
Group (“Bitdeer”) and Digital Energy Partner LLC (“DEP”), which was formerly known as A.R.T Digital. Soluna Computing,
Inc. and DVSL ComputeCo, LLC (collectively, “Soluna”) previously maintained our mining facilities in Kentucky and Texas, and
GreenBlocks ehf, an Icelandic private limited company (“GreenBlocks”), previously maintained our mining facility in Iceland.
The Company’s service agreements partnership with Soluna and GreenBlocks concluded at the end of February 2026.

From time to time, the Company may change partnerships
with hosting facilities to recalibrate its bitcoin mining operations. These terminations are strategic, targeting reduced operational
costs, enhanced energy efficiency for a smaller carbon footprint, increased flexibility in operational control, and minimized geopolitical
risks. While a short-term decrease in mining output might occur, we expect these changes to yield long-term operational improvements.

We are a sustainability-focused digital asset
mining company. On June 24, 2021, we signed the Crypto Climate Accord, a private sector-led initiative that aims to decarbonize the crypto
and blockchain sectors. On December 7, 2021, we became a member of the Bitcoin Mining Council (“BMC”), joining MicroStrategy
and other founding members to promote transparency, share best practices, and educate the public on the benefits of bitcoin and bitcoin
mining.

6

Market Cyclicality

Our results are influenced by digital asset price
volatility and transaction activity, all of which fluctuate materially with macroeconomic and regulatory developments. Historically,
our business has not exhibited predictable seasonal trends.

Miner Deployments

During the year ended December 31, 2025, we continued
to work with our hosting partners to deploy our miners in North America and Iceland.

As of December 31, 2025, the Company’s
active hash rate totals approximately 1.5 EH/s, with operations in North America and Iceland.

Power and Hosting Overview

The Company’s subsidiary, Bit Digital Canada,
Inc., entered into a Master Mining Services Agreement (MMSA), effective September 1, 2022, for Blockbreakers, Inc. to provide five MW
of incremental hosting capacity at its facility in Canada. The facility utilizes an energy source that is primarily hydroelectric.

On April 5, 2023, the Company entered into a
letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to ten (10) MW of
additional mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Plattsburgh, New
York. The agreement was for two years automatically renewing for three (3) months unless terminated by either party on at least ninety
(90) days prior written notice. The performance fees under this letter agreement range from 30% to 33% of the net profit. This agreement
brought the Company’s total contracted hosting capacity with Coinmint to approximately 30 MW at this facility. On January 3, 2025,
the Company received an additional 90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed
the Company of its intent not to renew the 10 MW total contracted capacity at its Plattsburgh, New York site, effective April 5, 2025.
After the contracts with Coinmint expired, a portion of the miners were transferred to other hosting facilities, and the inefficient
units were sold.

On April 27, 2023, the Company entered into a
letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to 10 MW of additional
mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement
was for one year automatically renewing for three (3) months unless terminated by either party on at least 90 days prior written notice.
The performance fees under this letter agreement are 33% of the net profit. This new agreement brought the Company’s total contracted
hosting capacity with Coinmint to approximately 40 MW.

On January 26, 2024, the Company entered into
a letter agreement and MMSA Amendment with Coinmint pursuant to which Coinmint agreed to provide the Company with up to six MW of additional
mining capacity to energize the Company’s mining equipment at Coinmint’s hosting facility in Massena, New York. The agreement
was for one year automatically renewing for three months unless terminated by either party on at least 90 days prior written notice.
The performance fees under this letter agreement are 28% of the net profit. This agreement brought the Company’s total contracted
hosting capacity with Coinmint to approximately 46 MW. On September 5, 2024, the Company received a 90-days notice of non-renewal of
colocation mining services agreement from Coinmint, which informed the Company of its intent not to renew 27 MW of the 36 MW total contracted
capacity at its Massena, New York site, effective December 7, 2024. Subsequently, on October 29, 2024, the Company received an additional
90-days notice of non-renewal of colocation mining services agreement from Coinmint, which informed the Company of its intent to not
renew the remaining 9 MW of the 36 MW total contracted capacity at its Massena, New York site, effective January 28, 2024.

In April 2023, we renewed the co-mining agreement
with Digihost, previously executed in June 2021. Pursuant to the terms of the new agreement, Digihost provides certain premises to Bit
Digital for the purpose of the operation and storage of an up to 20 MW bitcoin mining system to be delivered by Bit Digital. Digihost
also provides services to maintain the premises for a term of two years, automatically renewing for a period of one (1) year. Digihost
shall also be entitled to 30% of the net profit generated by the miners. As of December 31, 2025, Digihost provided approximately 6.0
MW of capacity for our miners at their facility.

On May 9, 2023 (“Effective Date”),
the Company entered into a Term Loan Facility and Security Agreement (the “Loan Agreement”) with GreenBlocks. Pursuant to
the Loan Agreement, GreenBlocks has requested the Company to extend one or more loans (“Advances”) under a senior secured
term loan facility in an aggregate outstanding principal amount not to exceed $5 million. The interest rate of the Loan Agreement is
0% and Advances are to be repaid on the maturity date, which is the thirty-nine-month anniversary of the Effective Date. GreenBlocks
will exclusively use the Advances to buy miners that will be operated for the benefit of the Company at a facility in Iceland, with an
overall capacity of 8.25 MW. To secure the prompt payment of Advances, the Company has been granted a continuing first priority lien
and security interest in all of GreenBlocks’s rights, title and interest to the financed miners. The miners are the sole property
of GreenBlocks, of which they are responsible for the purchase, installation, operation, and maintenance.

7

On May 9, 2023, the Company entered into a Computation
Capacity Services Agreement (the “Services Agreement”) with GreenBlocks. Pursuant to the Agreement, GreenBlocks will provide
computational capacity services and other necessary ancillary services, such as operation, management, and maintenance, at the facility
in Iceland for a term of two years. GreenBlocks will own and operate the miners financed through the Loan Agreement for the purpose of
providing computational capacity of up to 8.25 MW. The Company will pay power costs of $0.05 per kilowatt hour, a pod fee of $22,000
per pod per month, and a depreciation fee equal to 1/36 of the facility size per month. The performance fees under this agreement are
20% of the net profit. The Company submitted to Greenblocks a deposit in the amount of $1,052,100, which was exclusively for the purpose
of paying the landlord of the facility for hosting space.

On June 1, 2023, the Company and GreenBlocks
entered into the Omnibus Amendment to Loan Documents and Other Agreements (“Omnibus Amendment”). This amendment revised both
the Loan Agreement and the Services Agreement previously entered on May 9, 2023. While the core terms remained consistent, notable modifications
pertained to the facility size and contracted capacity. Specifically, the facility size was increased from $5 million to $6.7 million.
Moreover, GreenBlocks agreed to expand the computation capacity to approximately 10.7 MW. Advances of $6.4 million have been financed
by the Company to GreenBlocks.

In May 2025, we amended the Services Agreement with Greenblocks, originally
executed in May 2023 and previously amended in June 2023. Pursuant to the terms of the amended agreement, Greenblocks shall provide services
to support 8.9 MW of power capacity from March 1, 2025 through April 30, 2025 and 5 MW of computational capacity starting May 1, 2025
through December 31, 2025. The Company will pay power costs of $0.067 per kilowatt hour and a pod fee of $10,000 per pod per month, subject
to pro rata adjustment if usage falls below 2 MW. All other provisions of the original agreement and previous appendices remain in effect.
The amended terms may be modified by mutual agreement, and either party may terminate with one month’s notice. As of December 31,
2025, GreenBlocks provided approximately 9.1 MW of capacity for our miners at their facility. The Company’s services agreement with
GreenBlocks expired in February 2026, and the Company is currently evaluating alternative hosting arrangements for the miners previously
deployed at the GreenBlocks facility. As of the date of this report, such miners are in storage.

In October 2024, we entered into a co-location
agreement with Soluna SW, Inc. to continue our business relationship. Under this agreement, Soluna provides certain required mining colocation
services to the Company at their hosting facility in Murray, Kentucky for the purpose of the operation and storage of bitcoin mining
system to be delivered by the Company up to 6.6 MW (3.3 MW for terms of nine months and 3.3 MW for terms of one (1) year), automatically
renewing on a month-to-month basis unless terminated by either party. Soluna shall also be entitled to 35% of the net profit generated
by the miners.

In December 2024, we entered into two additional co-location agreements
with Soluna DVSL ComputerCo, LLC. pursuant to which Soluna agreed to provide the Company with up to 11 MW (5.5 MW and 5.5 MW, respectively)
at their hosting facility in Silverton, Texas. Both agreements are for one (1) year automatically renewing on a month-to-month basis unless
terminated by either party on at least 60 days prior written notice. Soluna shall also be entitled to 35% and 27.5%, respectively, of
the net profit generated by the miners. These new agreements bring the Company’s total contracted hosting capacity with Soluna to
approximately 17.6 MW. As of December 31, 2025, Soluna provided approximately 10.0 MW of capacity for our miners at their facility. The
Company’s services agreements with Soluna expired in February 2026. Following the expiration, the Company relocated approximately
2,050 miners to a third-party hosting facility, and the Company is currently evaluating alternative deployment options for the remaining
miners previously hosted by Soluna, which are currently in storage.

In November 2023, we entered into a hosting services
agreement, which was amended on March 7, 2024, with Dory Creek, LLC, a subsidiary of Bitdeer Technologies Group (“Bitdeer”),
for a term of one year automatically renewing on an annual basis unless terminated by either party by giving a 30-day prior notice to
the other Party in writing. Pursuant to the terms of the agreement, Bitdeer provides maintenance and operation services to the Company
to support 17.5 MW of capacity. Bitdeer shall also be entitled to 30% of the net profit generated by the miners. the Company shall have
the first right, but not obligation, to accept services for any extra capacity under the terms of this Agreement. As of December 31,
2025, Bitdeer provided approximately 15.5 MW of capacity for our miners at their facility.

In February 2025, we entered into two hosting
services agreements with A.R.T. Digital Holdings Corp (“KaboomRacks”) for terms of nine (9) months and three years automatically
renewing on an annual basis unless terminated by either party. Pursuant to the terms of the agreements, KaboomRacks provides maintenance
and operation services to Bit Digital to support 6 MW and 13 MW of capacity. In accordance with the agreements, we paid a refundable
advance of $1.3 million, which will be applied against monthly hosting charges over an 18-month period.

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On July 1, 2025, we entered into the first amendment
to the hosting service agreement for 13 MW of capacity. The amendment modified the existing agreement, identifying the two facilities
that will provide maintenance and operations service to Bit Digital to support 5 MW and 8 MW of capacity. KaboomRacks shall also be entitled
to respective 40%, 14.75% and 22.5% of the net profit generated by the miners. As of December 31, 2025, DEP provided approximately 17.1
MW of capacity for our miners at their facility. On November 12, 2025, we received communication regarding a change in the contracting
entity under its existing hosting arrangements. Effective immediately, Digital Energy Partners LLC (“DEP”) replaced KaboomRacks
as the sole contracting counterparty. Under the updated terms, KaboomRacks will return all deposits previously held by it, and we will
remit a one-month deposit related to electricity costs to DEP. In connection with the transition, DEP assumed the remaining portion of
the $1.3 million loan, with an outstanding balance of approximately $1.0 million as of December 31, 2025.

In May 2022, our hosting partner Blockfusion advised
us that the substation at its Niagara Falls, New York facility was damaged by an explosion and fire, and power was cut off to approximately
2,515 of the Company’s bitcoin miners and approximately 710 ETH miners that had been operating at the site immediately prior to
the incident. Prior to the incident, our facility with Blockfusion in Niagara Falls, provided approximately 9.4 MW to power our miners.
Power was restored to the facility in September 2022. However, we received a notice dated October 4, 2022 (the “Notice”),
from the City of Niagara Falls, which ordered the cease and desist from any cryptocurrency mining or related operations at the facility
until such time as Blockfusion complies with Section 1303.2.8 of the City of Niagara Falls Zoning Ordinance (the “Ordinance”),
in addition to all other City ordinances and codes. Our service agreement with Blockfusion ended in September 2021. On June 3, 2024, the
Company filed suit in Delaware Superior Court against Blockfusion alleging claims for breach of contract, conversion, and related claims
in connection with, among other things, certain deposits and advances paid to Blockfusion, the return of which is owed to the Company.
The Company is seeking in excess of $4.3 million. On October 22, 2024, Blockfusion denied the Company’s claims and brought reciprocal
breach of contract and related counterclaims. Blockfusion filed a motion to dismiss the Company’s Second Amended Complaint. A hearing
on the motion was held on January 6, 2026 and the Court granted Blockfusion’s motion to dismiss. The Court dismissed the claims
against the individual defendant without prejudice on the ground that it lacked personal jurisdiction, and did not reach the merits of
certain substantive issues raised in the motion. The Company’s contract-based claims and related claims for contractual recovery
against Blockfusion were not dismissed and remain pending.  Refer to Note 21. Commitments and Contingencies for further details.

Miner Fleet Update and Overview

As of December 31, 2024, we had 24,239 miners
owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 2.6 EH/s.

For the year ended December 31, 2025, the Company
disposed of approximately 7,900 bitcoin miners and wrote off 3 bitcoin miners.

As of December 31, 2025, we had 21,354 miners
owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 2.8 EH/s.

Bitcoin Production

From the inception of our bitcoin mining business
in February 2020 to December 31, 2025, we earned an aggregate of 7,550.8 bitcoins.

The following table presents our bitcoin mining activities for the
year ended December 31, 2025:

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We believe that the bitcoin network and the mining
that powers it are important inventions in human progress. 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 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 worked 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 provides 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 our sustainability 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 shift towards our goal of 100% clean energy usage.

Business Profile and Risks

The decision to pursue blockchain and crypto
asset businesses exposes BTBT to risks associated with an untested strategic direction. The prices of crypto assets have experienced
substantial volatility, which may reflect “bubble” type volatility, meaning that high or low prices may have little or no
merit, are subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes,
fraudulent actors, manipulation, and media reporting.

Government Oversight

Blockchain networks are a relatively new technological
innovation and the regulatory schemes to which crypto assets and their blockchain networks are or may be subject, including both the
interpretation and applicability of existing laws and regulations and the potential establishment of new laws and regulations, have not
been fully explored or developed.

Actions taken by the SEC, including enforcement
actions brought against crypto asset companies with a focus on custodial staking, are more particularly described under certain “Risk
Factors”, demonstrate the SEC’s historical position that many, if not most, crypto assets may be securities and therefore
reflect the reality that we will likely face increased government regulation and oversight as our industry and government treatment of
the crypto assets on which our operations are based continue to evolve. These developments follow the SEC’s July 25, 2017, DAO
Report, wherein its Chairman expressed concerns about the “Wild West” nature of the cryptocurrency market. More recently,
the SEC Enforcement Division has taken action against crypto asset focused enterprises, and if the interpretations of federal securities
laws are further expanded to apply to the Company, it would adversely affect the Company’s future acquisition of crypto assets
by limiting the amount of crypto asset securities (“Digital Securities”) it may acquire, potentially limiting or precluding
the use of its blockchain infrastructure and other operations, and creating increased compliance and legal costs. In October 2020 the
U.S. Department of Justice (“DOJ”) published a report entitled “Cryptocurrency: An Enforcement Framework” that
detailed the DOJ’s strategies and abilities to handle the threats posed by digital assets. In January 2023, the House of Representatives
created the Financial Services Subcommittee on Digital Assets with the goal to develop rules and policies covering digital assets. In
addition, each state has its own securities laws and regulations with varying provisions and effects, any of which may require us to
alter or reduce our current or planned operations in the future.

On January 23, 2025, President Trump issued Executive
Order14178 “Strengthening American Leadership in Digital Financial Technology.” This order revoked previous Biden-era frameworks
and established five core policy pillars: protecting self-custody and mining, promoting dollar-backed stablecoins, ensuring fair banking
access for crypto firms, providing regulatory clarity, and explicitly prohibiting the creation of a Central Bank Digital Currency (CBDC).
In addition, the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (the GENIUS Act) was signed into law on July
18, 2025, creating the first comprehensive federal framework for payment stablecoins. The US Senate is also presently considering the
Digital Asset Market Clarity Act (the CLARITY Act). This legislation aims to define jurisdictional boundaries between the SEC and CFTC,
potentially reclassifying many digital assets from securities to commodities based on network decentralization.

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Under the leadership of SEC Chairman Paul Atkins
and CFTC Chairman Michael Selig, the agencies launched “Project Crypto” in late 2025. This joint initiative aims to harmonize
federal oversight, moving away from “regulation by enforcement.” Consequently, in 2025, the SEC dropped or froze approximately
89 high-profile cryptocurrency enforcement cases, signaling a reset in how the agency polices the market. In addition, in 2026, the SEC
is expected to release a formal “token taxonomy” and a package of exemptions to streamline capital formation for digital asset
issuers. We continue to monitor legislative matters related to our industry.

Because of the foregoing or other regulatory
developments, in the future, before we acquire or transact in crypto assets, we may be required to examine how they were originally offered
to determine if they were offered as an investment contract or other type of security. Because of legal uncertainties, careful examination
of the results of our compliance review will be required by experienced securities counsel. Because we must stay under the requirement
under Investment Company Act of 1940 (the “1940 Act”) that no more than 40% of our assets (excluding cash items) constitute
investment securities to avoid being deemed an investment company, we will limit the amount of Digital Securities we acquire. Further,
while we believe our operations and platform are meaningfully different than Kraken’s and Coinbase’s custodial staking platforms
that were subject to SEC enforcement proceedings in 2023, that development or future positions the SEC may take, including potentially
against us and our business, may demonstrate a differing view and require us to adjust, reduce, limit or even cease some or all of our
operations or business plans. If our compliance procedures and legal reviews prove to be incorrect, we may incur the likelihood of prohibitive
SEC penalties and/or private lawsuit defense costs and adverse rulings.

The Company may acquire additional crypto
assets and continues to develop and expand upon its platform to enable it to offer a wider range of functions and availability for
use with a greater variety of crypto assets. The Company currently owns and plans to expand its crypto asset holdings, both through
staking its existing crypto asset holdings on PoS blockchain networks and potentially through other means. To avoid being
inadvertently classified as an investment company under the 1940 Act, we actively focus, in consultation with legal counsel, on
ensuring that our ownership of assets that are not considered securities under the 1940 Act always exceed 60% of our total assets,
excluding cash items. In separate SEC complaints, the SEC identified Cardano, Tezos, Solana, Cosmos, Polygon, Axie Infinity, and
NEAR Protocol crypto assets as securities. As a matter of practice, the Company typically targets keeping in excess of 60% of the
Company’s total assets (excluding cash and government securities) in Ethereum. Therefore, to the extent the SEC identified all
other crypto assets held by the Company excluding Ethereum as securities, the Company would still not meet the definition of an
“investment company” under Section 3(a)(1)(C) of the 1940 Act. By doing so, we can avoid being subject to the regulatory
requirements and oversight that apply to investment companies.

The Company has conducted a detailed legal analysis which has led us
to determine that certain crypto assets that are identified as securities by the SEC should not impact our business, financial condition,
and results of operations. Provided, however, if over 40% of our assets are considered securities, excluding cash, we may be considered
a 1940 Act company (see the risk factor on page 25 herein). Further, the aforementioned assessments are risk-based judgments and not a
legal standard or determination binding on any regulatory body or court. To the extent a regulatory body or court finds that our conclusions
are incorrect, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us.

In addition to the securities laws and investment
company considerations, as our business model and operations continue to evolve, we may become subject to additional laws and regulations.
For example, to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings
and transactions, we may become subject to the ever-growing number of data privacy and security laws within and without the U.S. which
often have far-reaching implications for businesses. In general these laws require disclosure and preventative measures designed to protect
users from unauthorized access or disclosure of their personal information, and impose fines and sanctions for failure to comply with
their requirements. On the other hand, because transactions in crypto assets often provide a reasonable degree of anonymity, they are
susceptible to misuse for criminal activities, such as money laundering. This misuse, or the perception of such misuse (even if untrue),
could lead to greater regulatory oversight of crypto platforms and operations such as ours, and there is the possibility that regulators
could close crypto platforms or other crypto asset-related technology and infrastructure with little or no notice or opportunity for
challenge, and prevent users of custodial platforms from accessing or retrieving crypto assets held on or connected to such platforms
or infrastructure. For example, lawmakers and regulators have in recent years expressed views that government oversight is needed, including
with a view to curtailing the use of crypto asset use for malign and illegal activities.

11

Many PoW crypto assets have also been subject
to skepticism due to concerns about the high energy consumption used in mining on blockchain networks. In the U.S., in March 2022 President
Biden issued Executive Order 14067 on Ensuring the Responsible Development of Digital Assets, which prioritized the responsible development
of crypto assets in a manner which includes reducing negative climate impacts and environmental pollution. However, as noted above, President
Trump issued a new Executive Order 14178 on Strengthening American Leadership in Digital Financial Technology, expressly revoking Executive
Order 14067. In November 2022, the Governor of New York signed a law banning certain bitcoin mining operations that run on carbon-based
power sources for two years. While our focus is currently on PoS blockchain networks which use significantly lower amounts of energy
when compared to PoW, future regulations may arise in response to these concerns that could apply to us and the cryptocurrency industry
as a whole.

On the basis of the afore-mentioned developments,
we believe that both our current and planned operations, and the cryptocurrency industry in general, will continue to be subject to expanding,
complex and uncertain government oversight. See “Risk Factors” beginning on page 25 for more information.

As both the regulatory landscape develops and
journalistic familiarity with crypto assets increases, mainstream media’s understanding of them and the regulation thereof may
improve. Regulation of crypto assets varies from country to country as well as within countries. An increase in the regulation of crypto
assets may affect our proposed business by increasing compliance costs or prohibiting certain or all of our proposed activities.

Competition

Our current and future competition is centered
on the following areas:

12

Many of our current and potential competitors enjoy advantages such
as greater financial resources, longer operational histories, larger user bases, bigger teams, and stronger brand recognition. Most are
also not burdened with the additional costs and time commitments required of being an exchange-listed public company. These competitors
may allocate more substantial resources to technology development, infrastructure enhancement, and marketing efforts.

In addition to existing competitors, the Company
must contend with the potential of new entrants to the industry and the possibility of industry consolidation through business combinations
and alliances, which could further strengthen the competitive positions of our rivals. Given our small team and relative lack of capital
to many peers, we acknowledge that we face a competitive disadvantage in this landscape.

Intellectual Property and Trade Secrets

Our business depends in large part on our proprietary
technology, the operation of validator nodes as part of our blockchain infrastructure, our efforts and development with respect to our
initiatives, and our brand. We rely on, and expect to continue to rely on, a combination of trademark, domain name, and trade secret
laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom we
have relationships, to establish and protect our brand and intellectual property rights.

Environmental, Social and Governance

Sustainability is a major strategic focus for
us. Several of our mining locations provide access to partially carbon-free energy and other sustainability-related solutions, in varying
amounts depending on location, including components of hydroelectric, solar, wind, nuclear and other carbon-free generation sources,
based on information provided by our hosts and publicly available data, which we believe helps mitigate the environmental impact of our
operations. We work with an independent ESG (Environmental, Social and Governance) consultant to self-monitor and adopt an environmental
policy to 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. On December 7, 2021, the Company became a member of the Bitcoin Mining Council (“BMC”),
joining MicroStrategy and other founding members to promote transparency, share best practices, and educate the public on the benefits
of bitcoin and bitcoin mining

WhiteFiber Operations

WhiteFiber believes it is a leading provider
of artificial intelligence (“AI”) infrastructure solutions. WhiteFiber owns high-performance computing (“HPC”)
data centers and provides cloud-based HPC graphics processing units (“GPU”) services, which it terms cloud services, for
customers such as AI application and machine learning (“ML”) developers (the “HPC Business”). Its Tier-3 data
centers provide hosting and colocation services. WhiteFiber cloud services support generative AI workstreams, especially training and
inference.

WhiteFiber’s business model integrates
its data center infrastructure and cloud services to provide scalable, high-performance computing solutions for enterprises, research
institutions, and AI and ML driven businesses. Its integrated approach aligns specialized data center operations with GPU-focused cloud
services, addressing the unique requirements of AI and ML workloads. These workloads demand greater power density, advanced cooling solutions,
and robust bandwidth to handle large-scale data transfers. By operating its data centers, it is able to provide the power to support
its cloud services and WhiteFiber believes it can better meet the needs of AI and ML workloads and reduce the complexity associated with
procuring power and connectivity from external vendors. WhiteFiber can also design its facilities to accommodate the higher heat loads
generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of their computing infrastructure.
From a financial standpoint, WhiteFiber’s vertically integrated solution allows it to capture additional margin for both its data
center and cloud services businesses, avoiding expenses that would otherwise be due to third-party providers.

13

Colocation/Data center services

WhiteFiber designs, develops, and operates data
centers, through which it offers its hosting and colocation services. WhiteFiber’s operational data centers meet the requirements
of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and
highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than 1.6 hours of downtime annually,
service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure
to support AI workloads.

Based on their collective industry experience,
WhiteFiber’s data center team is adept at bringing new sites online on an accelerated timeline. WhiteFiber is aggressively pursuing
its development pipeline and intends to achieve an estimated 76 MW (gross) of total data center capacity by the end of the fourth quarter
of 2026, a target that is underpinned by assets including its MTL-2, MTL-3, and NC-1 facilities. As of December 31, 2025, its pipeline
of potential data center projects represents approximately 1,500 MW (gross) under management review. WhiteFiber follows a disciplined
process prioritizing projects that are backed by customer lease commitments. In select cases, WhiteFiber may pursue early-stage acquisitions
based on strong customer demand signals and defined commercialization pathways. Accordingly, the foregoing timelines and capacities are
subject to change based on many factors, many of which are outside of WhiteFiber’s control.

WhiteFiber uses a well-defined set of criteria
to select its data center sites. WhiteFiber typically targets sites with proximity to metro areas and partial infrastructure in place,
where it is retrofitting rather than developing greenfield projects. Metropolitan areas are positioned for low-latency to address long-term,
specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing and acquiring an existing industrial
building with underutilized, in-place power connectivity. The period of time from when a site is purchased until construction can begin
varies from location to location depending upon, among other things, obtaining required permits and the availability of construction
supplies and contractors. Average build time for retrofits is intended to be approximately six months from commencement of construction,
which we believe is approximately one-third to one-half of the industry average development timeline for greenfield projects. This average
building time is based upon senior management’s experience at Enovum prior to its acquisition by WhiteFiber, as well as their experience
prior to Enovum. WhiteFiber also prioritizes sites offering opportunities to increase site power over time, enabling its data centers
to grow with customer demand. In addition, WhiteFiber selectively targets certain larger opportunities with 50 MW (gross) of power or
more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, WhiteFiber prioritizes sites powered by sustainable,
green energy sources and locked-in power when available. Additionally, to enhance sustainability of certain WhiteFiber data center projects,
WhiteFiber is undertaking heat repurposing projects in connection with sustainability and commercial and residential projects.

On October 11, 2024, WhiteFiber acquired Enovum Data Centers Corp (“Enovum”).
The transaction included the lease of MTL-1, our 4 MW (gross) Tier-3 high-performance computing (“HPC”) data center in Montreal,
Canada, which was fully operational and fully leased to customers at the time of acquisition.

On December 27, 2024, WhiteFiber acquired the real estate and building
for a build-to-suit 5 MW (gross) Tier-3 data center expansion project near Montreal, Canada, which it refers to as “MTL-2”.
MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec.
WhiteFiber initially funded the purchase of CAD 33.5 million (approximately $23.3 million) with cash on hand. WhiteFiber expected to invest
approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). However, WhiteFiber has prioritized
other builds and preserved capital for more time sensitive projects.

On April 11, 2025, WhiteFiber entered into a lease
for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, which it refers to as “MTL-3”. The MTL-3 facility
spans approximately 202,000 square feet on 7.7 acres and is being developed to as a 7 MW (gross) Tier-3 data center. It will support current
contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed
under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable
by December 2025. The lease term is 20 years, with two 5-year extensions at WhiteFiber’s option. In December 2025, WhiteFiber became
reasonably certain to exercise the purchase option and notified the lessor of its intent to exercise the purchase option. WhiteFiber had
90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026 and the purchase
of MTL-3 is expected to close during the second quarter of 2026. The facility has been retrofitted to Tier-3 standards and was completed
and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately
979 thousand USD) monthly for the duration of the five-year contract.

14

On May 20, 2025, WhiteFiber completed the purchase
of a former industrial/manufacturing building from Unifi Manufacturing, Inc. (“UMI”). Pursuant to the Purchase Agreement
WhiteFiber agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land located in Madison, North
Carolina, which WhiteFiber refers to as “NC-1”, as well as certain machinery and equipment located thereon for a cash purchase
price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services
Agreement providing for, at least 99 MW (gross) within two years of May 20, 2025, or (ii) $5 million, if Duke Energy actually provides,
or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after
May 20, 2025. Additionally, the purchase price will increase by an additional $200,000 per MW over 99 MW (gross) up to a maximum of $5
million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of
at least 99 MW (gross), within four years of May 20, 2025. Separately, WhiteFiber entered into a Capacity Agreement with Duke Energy
pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to NC-1 by September
1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review
of the site and a Duke Energy preliminary transmission study, that NC-1 may receive and support up to 200 MW (gross) of total electrical
supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions.
On August 4, 2025, Enovum NC-1 Bidco, LLC, a subsidiary of WhiteFiber, entered into an Assignment and Assumption Agreement with Unifi
Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi’s rights and obligations under certain electric
service agreements for facilities located in North Carolina. Duke Energy consented to the assignment. Refer to Note 21. Commitments and
contingencies for further detail.

RBC Facility Agreement Executed on June
18, 2025

On June 18, 2025, WhiteFiber entered into the
Credit Facility with RBC. The Credit Facility provides for an aggregate of up to approximately CAD 60 million (approximately $43.8 million)
of financing. The proceeds are to be used primarily to refinance the buildout of MTL-2 as well as $5.8 million of revolving term financing
(the “Revolver”). The Credit Facility is non-recourse to the Company. WhiteFiber entered into a three-year USD $18.5 million
non-revolving lease facility to finance equipment costs and building improvements to build out the site. The lease facility provides for
straight-line amortization of six years and capital moratorium of six months after disbursement is complete. RBC may cancel any unutilized
portion of the Credit Facility after March 31, 2026. The interest rate is fixed based on the rental rate determined by RBC for the three-year
term of the lease.

As part of the Credit Facility, WhiteFiber entered
into a three-year $19.6 million non-revolving real estate term loan facility. The purpose of this facility is to refinance the Company’s
purchase of MTL-2. The interest rate of the real estate term loan facility will be determined at the time of borrowing, or a floating
interest rate ranging from RBP plus 0.75% to CORRA (“Canadian Overnight Repo Rate Average”) plus 250 bps. Payment of principal
and interest is due 30 days after drawdown and is repayable in full on the last day of the three-year term.

The Revolver is being provided by RBC by way of
Letters of Credit and Letters of Guaranty with fees to be determined on a transaction by transaction basis. This facility will be available
for the 36 month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of
$5.8 million and other related supporting documents. WhiteFiber agreed to certain financial covenants included maintaining on a combined
basis between MTL-1 and MTL-2: fixed charge coverage of not less than 1.20:1 and a ratio of Net Funded Debt to EBITDA of not greater than
4.25:1 and decreasing to 3.50:1 from December 31, 2027.

In November 2025, our wholly owned subsidiary,
Enovum NC-1 Bidco, LLC, entered into the Services Agreement with Nscale Services US Inc. and Nscale Global Holdings Limited (collectively,
“Nscale”) for the provision of colocation and related services at our NC-1 facility. The agreement represents a significant
commercial milestone for our high-density data center platform and provides long-term contracted revenue visibility. The initial Service
Order pursuant to the Services Agreement represents approximately $865 million in total contracted revenue over a 10-year term, inclusive
of contractual annual rate escalators and non-recurring installation services (“NRCs”). Electricity and certain other operating
costs are structured as pass-through charges to Nscale. Billing for the first 20 MW phase is expected to commence in June 2026, subject
to completion of construction and commissioning. As a result, we expect revenue contribution from this agreement to begin in the second
quarter of 2026 as the facility reaches full contractual capacity.

Cloud Services

WhiteFiber provides specialized cloud services
to support generative AI workstreams, especially training and inference, emphasizing cost-effective utility and tailor-made solutions
for each client. WhiteFiber is an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network (“NPN”), an authorized
partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider (“CSP”) with Dell (through Dell’s
exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and a commercial relationship with
Quanta Computer Inc. (“QCT”). Based on management’s knowledge of the industry, WhiteFiber is proud to be among the
first service providers to offer H200, B200, and GB200 servers. We provide a high-standard service lease with an Uptime percentage
99.5%.

15

WhiteFiber expects to leverage a global network of data centers for
hosting capacity for its GPU business, in many instances, by negotiating with third-party providers to seamlessly integrate its cloud
services at data centers across key regions in Europe, North America and Asia. WhiteFiber’s initial data center partnership through
which it leases capacity is at Blönduós Campus, Iceland, offering a world-class operations team with certified technicians
and reliable engineers. The facility has a 45 kW rack density and 6 MW (gross) total capacity. WhiteFiber has executed contracts for 5.5
MW IT load at the data center. The center’s energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner
of an IHA Blue Planet Award in 2017. In addition, WhiteFiber have leased additional capacity to install our data center in Atlanta, Georgia,
USA to expand our cloud services offering. The capacity leases commenced in February 2026. We also intend to lease additional capacity
to expand our cloud services offering.

In April 2025, WhiteFiber received its first
shipment of NVIDIA GB200 NVL72 GPU server powered NVIDIA GB200 Grace Blackwell Superchips from Quanta Cloud Technology, a global leading
Original Design Manufacturer (ODM). WhiteFiber believes that support with proof of concept (POC) access from Quanta will enable it to
meet and exceed expectations around delivery and timeline, performance and reliability.

The following summaries reflect selected GPU
cloud service agreements that we consider to be material or representative. We have entered into additional agreements that are not individually
material and are not included below.

On October 23, 2023, Bit Digital announced that
it had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support the customer’s
GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial
Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered
into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years.
The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized
revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began
generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started
to generate revenue.

In the second quarter of 2024, we finalized an
agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered
into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back
for three years. In late July, at the customer’s request, we agreed with the customer to temporarily delay the purchase order so
the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase
order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.

In January 2025, the Company entered into a new
agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months. This new agreement replaces the prior
agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract represents approximately
$15 million of annualized revenue and features a two-month prepayment from the customer. The customer elected to defer the commencement
date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced on August 20, 2025, using the
Company’s inventory of B200 GPUs.

In October 2025, Bit Digital’s existing
guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November 2025, the customer will provide a service
deposit to WhiteFiber in lieu of the Bit Digital parent guaranty. The deposit will be funded through fifteen consecutive monthly payments
of approximately $0.24 million each, totaling $3.6 million, payable from November 2025 through January 2027. The deposit will serve as
security for the customer’s performance obligations under the amended service agreements. Each monthly payment is expected to be
invoiced on the first day of the month and paid within thirty days. The Company will be required to return the deposit in cash upon termination
or expiration of the service agreements, provided that all obligations have been fully satisfied and no payment defaults or material
breaches exist.

As of the report date, WHiteFiber and the Initial Customer are engaged in discussions regarding a potential resolution
of the existing service agreements following the agreed pause of services. No definitive termination or settlement agreement has been
executed. In connection with these discussions, the parties are negotiating the treatment of the remaining non-refundable prepayment,
service deposit, outstanding receivables, and a potential early termination fee, which the Company believes would be equal to 40% of the
fees that would have accrued for services during the remainder of the term of the MSA and applicable purchase orders. Following the service
pause, WhiteFiber has redeployed the GPUs previously allocated to the Initial Customer to three other customers and continues to evaluate
the related financial and operational implications. There can be no assurance as to the timing, terms, or final outcome of these discussions.

On November 6, 2024, we entered into a Master
Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a
new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six-month period, representing
total contracted value of approximately $160,000 for the term. The deployment commenced on November 7, 2024, using the Company’s
existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, the
Company signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, of which 80 remained in deployment as
of the date of this report.

In February 2026, WhiteFiber entered into another
service order with the customer to provide services utilizing a total of 10 H200 GPU servers. The service order has an initial term of
14 months beginning on the services commencement date. The service order represents an aggregate revenue opportunity of approximately
$1.3 million. The deployment and revenue generation began in March 2026.

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In March 2026, WhiteFiber entered into another service order with the
customer to provide services utilizing a total of 256 H100 GPU servers. The service order has an initial term of 24 months beginning on
the services commencement date, with an option to renew for an additional twelve months. The service order represents an aggregate revenue
opportunity of approximately $50.2 million. The deployment and revenue generation is expected to begin during the second quarter of 2026.

On November 14, 2024, we entered into a Terms
of Supply and Service Level Agreement (together, the “Agreement”) and an Order Form with a new customer. The order form provides
for services utilizing a total of 64 H200 GPUs on a month-to-month basis, which either party may terminate upon at least 14 days’
written notice prior to any renewal date. It represents annual revenue of approximately $1.2 million. The deployment commenced and revenue
generation began on November 15, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order
concluded in December 2024.

On December 30, 2024, we entered into a Master
Services Agreement (“MSA”) with an AI Compute Fund managed by DNA Holdings Venture Inc. (“DNA Fund”). The MSA
had a minimum purchase commitment of 32 GPUs, along with an associated purchase order. The purchase order provides for services utilizing
a total of 576 H200 GPUs over a 25-month period and terminable by either party upon at least 90 days’ written notice prior to any
renewal date. Concurrently, we placed a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in
February 2025.

In April 2025, we signed two additional cloud
services agreements with DNA Fund. The first agreement includes 104 NVIDIA H200 GPUs under a 23-month term and was deployed in May 2025.
The second agreement includes 512 H200 GPUs under a 24-month term and was deployed in July 2025. With these additions, DNA Fund’s
total contracted deployment increased to 1,192 GPUs.

In November 2025, we terminated the MSA and all related purchase orders
with DNA Fund in accordance with the terms of the contract. At the time of termination, we had approximately $7.3 million in outstanding
accounts receivable. Pursuant to the termination agreement, the customer agreed to repay the outstanding balance. As of the date of this
report, we have collected $2.1 million of the outstanding amount.

On January 6, 2025, we entered into a Master
Services Agreement (“MSA”) with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a
new customer. The purchase order provided for services utilizing a total of 32 H200 GPUs over a minimum of six-month period, representing
total revenue of approximately $300,000 for the term. The deployment commenced and revenue generation began on January 8, 2025, using
the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in April 2025 following a change
in the customer’s ownership, and the customer paid the remaining contract value as an early termination penalty.

In January 2025, we entered into a Master Services
Agreement (“MSA”), along with two associated purchase orders, from a new customer. The purchase orders provide for services
utilizing a total of 24 H200 GPUs over a minimum 12-month period, representing total revenue of approximately $450,000 for the term.
The deployment commenced and revenue generation began on January 27, 2025, using the Company’s existing inventory of H200 GPUs.
The service under the purchase order concluded in March 2025 after the customer ceased operations.

On January 30, 2025, we entered into a Master
Services Agreement (“MSA”) with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a
new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing
total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using
the Company’s existing inventory of H200 GPUs. In October 2025, the purchase order was amended to reduce the number of H200 GPUs
from 40 to 8 and to extend the term of service through May 2027. Between April and July 2025, the Company signed four additional agreements
on a month-to-month basis for a total of 184 H200 GPUs, which were terminated in August 2025.

In March 2025, we entered a strategic partnership
with Shadeform, Inc., the premier multi-cloud GPU marketplaces, to bring on-demand NVIDIA B200 GPUs to customers beginning in May 2025.

In August and September 2025, WhiteFiber entered
into three service orders with a new customer. Each order form provides for services utilizing a total of 64 B200 GPUs on a weekly basis,
which either party may terminate by not extending it with mutual written agreement. In September, the customer renewed one order form
for an additional week for services utilizing a total of 64 B200 GPUs. As of the reporting date, no additional renewals have occurred.

In September 2025, WhiteFiber entered into a service order with a new
customer, which provides services utilizing a total of 16 B200 GPUs on a monthly basis, automatically renewing for an additional one month
period unless and until otherwise terminated upon at least seven days’ prior written notice. The deployment commenced and revenue
generation began on September 23, 2025. The agreement was not renewed after the initial term.

In October 2025, WhiteFiber entered into a service
order with a new customer to provide services utilizing a total of 48 H200 GPUs. The service order had an initial term of 36 months.
The deployment commenced and revenue generation began on October 21, 2025. The contract was terminated in December 2025.

In October 2025, WhiteFiber entered into a two-week
service order with a new customer to provide services utilizing a total of 72 B200 GPUs. In January 2026, WhiteFiber entered into an additional
two-week service order with this customer for 72 B200 GPUs.

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In February 2026, WhiteFiber entered into a further service order with
this customer to provide services utilizing a total of 384 B200 GPUs. This service order has an initial term of 24 months commencing on
the service commencement date, after which it will automatically renew for successive one-month periods unless terminated by either party.
The service order represents an aggregate revenue opportunity of approximately $18.1 million. Deployment and revenue generation commenced
on January 27, 2026.

In November 2025, WhiteFiber entered into a service
order with a new customer to provide services utilizing a total of 128 B200 GPUs. The service order has an initial term of 12 months,
representing total contracted value of approximately $3.0 million, after which it automatically renews for successive one-month periods
unless terminated by either party. Deployment and revenue generation began on December 1, 2025.

In February 2026, WhiteFiber entered into a service
order with a new customer to provide services utilizing a total of 256 GPUs. The service order has an initial term of 12 months beginning
on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party.
The deployment and revenue generation began on February 1, 2026.

In March 2026, WhiteFiber entered into a service order with a new customer
to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 12 months beginning on the services commencement
date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue
generation began on March 7, 2026.

In August 2024, WhiteFiber executed a binding
term sheet with Boosteroid Inc. (“Boosteroid”), a global cloud gaming provider pursuant to which, we finalized initial orders
of 489 GPUs, projected to generate approximately $7.9 million in contracted value in the aggregate through November 2029. The GPUs were
delivered to respective data centers across the U.S. and Europe and began earning fees in November 2024. On October 9, 2024, WhiteFiber
executed a Master Services and Lease Agreement (the “MSA”) with Boosteroid, pursuant to which Boosteroid may, from time to
time, lease certain equipment, including GPUs, from WhiteFiber upon delivery of a purchase order. The MSA provides the general terms and
conditions for such equipment leases. Pursuant to the MSA, we are granted a right of first refusal with respect to the next 5,000 servers
that Boosteroid leases during the term of the MSA. The MSA provides Boosteroid with the option to expand in increments of 100 servers,
up to 50,000 servers, representing a potential contract value of approximately $700 million over the five-year term assuming Boosteroid
utilizes the GPUs and services at full capacity for the duration of the contract. Expansion depends upon the internal development roadmap
of Boosteroid. Boosteroid has full discretion to decide when and the quantity to pursue separate source orders (for GPU servers) under
the MSA. In the third quarter of 2025, the Company finalized additional purchase orders for 302, 120, and 279 GPUs, totaling approximately
$10.4 million in contracted value over a five-year term.

WhiteFiber was incorporated by Bit Digital as
a Cayman Islands exempted company on August 15, 2024 under the name Celer, Inc., as a holding company for the HPC Business. It changed
its name to WhiteFiber, Inc. on October 17, 2024.

On August 6, 2025, WhiteFiber issued 27,043,749
ordinary shares, par value $0.01 per share (our “Ordinary Shares”, and such shares, the “Contribution Shares”),
to Bit Digital pursuant to the terms of a Section 351 Contribution Agreement (the “Contribution Agreement”) entered into
with Bit Digital on July 30, 2025. Pursuant to the Contribution Agreement, Bit Digital contributed its HPC Business through the transfer
of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC,
Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, WhiteFiber, upon the effectiveness of the registration
statement filed in connection with its IPO and prior to the consummation of the IPO, in exchange for the Contribution Shares. WhiteFiber
refers to this transaction as the “Reorganization”. WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber, Inc. and
Bit Digital became the direct shareholder of WhiteFiber after the Reorganization.

On August 8, 2025, WhiteFiber completed its initial
public offering (our “IPO”) of 9,375,000 Ordinary Shares, at a public offering price of $17.00 per share. The gross proceeds
to WhiteFiber from the IPO were approximately $159.4 million, before deducting underwriting discounts and commissions and offering expenses.
On September 2, 2025, B. Riley Securities, Inc. and Needham & Company, LLC, as representatives of the several underwriters of the
IPO, fully exercised their option to purchase an additional 1,406,250 Ordinary Shares at the public offering price of $17.00 per share,
resulting in additional gross proceeds to WhiteFiber of approximately $23.9 million. After giving effect to the IPO and the full
exercise by the underwriters of their over-allotment option, Bit Digital held approximately 71.5% of WhiteFiber’s issued and outstanding
Ordinary Shares.

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Following WhiteFiber’s IPO, certain of
its directors, executive officers and other members of senior management continue to serve as directors, officers and employees of Bit
Digital. WhiteFiber has added additional executive officers and senior management to its senior executive team apart from those serving
as officers and employees of Bit Digital. WhiteFiber has assembled a senior operating team with approximately 15 years of experience
on average for each individual in the data center and cloud services industries. WhiteFiber also appointed additional independent directors
upon the commencement of trading of its Ordinary Shares on Nasdaq.

Industry Overview

WhiteFiber competes in the large and rapidly
growing data center and cloud services markets. The data center market refers to the industry dedicated to designing, building, and managing
data centers, essential for storing, processing, and managing vast amounts of digital information, including for AI and ML applications.
These centers house servers, networking equipment, power and cooling and storage systems, ensuring seamless and secure data operation.

The cloud services market represents the transmission
of computer services, including storage, analytics, databases, networking, and intelligence, via the internet (referred to as “the
cloud”). WhiteFiber’s cloud services business is a NeoCloud provider, with differentiated services supporting AI workloads
and specializing in deploying optimized infrastructures that include not just GPU fleets but also network accelerators, high-speed storage,
software solutions, advanced orchestration tools, high-performance interconnects, edge computing capabilities, innovative cooling
solutions, security and compliance features, 24/7 managed services, and hybrid cloud integrations. This infrastructure is essential for
managing the massive data and computing demands of AI and ML training and inference tasks.

It is standard for GPU hardware clusters, used
in the rendering of cloud services, to be remotely housed in data centers, making these two segments highly related and synergistic.
Specially designed data centers host the hardware needed to provide HPC cloud services, and these are commonly referred to as HPC data
centers. According to experts at Schneider Electric, the industry is shifting away from traditional data centers that typically hosted
10kW racks to newer 100kW racks that support HPC needs. WhiteFiber only designs and develops HPC data centers, giving us a competitive
advantage over operators of traditional data center capacity.

Colocation/Data Center Services

According to McKinsey & Company, power
demand for data centers in the U.S. — driven by the need for digital and AI capabilities — is expected
to reach 298 gigawatts by 2030, up from 60 gigawatts in 2024. McKinsey estimates that data centers will amount to 11.7% of total U.S. power
demand in 2030. Based on WhiteFiber’s knowledge of the industry, it believes it is a leader in the markets that are critical for
these capabilities, and, as a result, it believes it is well positioned to benefit from the growth of this sector.

According to Prescient and Strategic Intelligence,
Data-Center Market Size and Analysis, Trends, Drivers, Competitive Landscape and Forecast (2024-2030), the global data center market
was valued at $342 billion in 2023 and is anticipated to reach $622.4 billion by 2030, expanding at a CAGR of 10.5% during 2024-2030.
As of 2023, the data center services segment, which provides a range of offerings including consulting, maintenance, and management to
optimize the performance and reliability of data center infrastructure, represented about 34.2% of the industry. The solutions segment,
which refers to the technological offerings that fulfill key functions within data center infrastructure, comprised about 65.8% of the
industry. The solutions segment represents both hardware and software elements, encompassing servers, storage systems, advanced power
systems, infrastructure networking equipment, and management software.

The data center market is propelled by growing
demands for cloud computing services, big data analytics, and digital transformation. According to McKinsey & Company, by 2030,
70% of data centers expected to be developed will be for advanced AI, and 92% of companies plan to increase AI investments across the
board. Key contributors to this dynamic landscape are technology firms, real estate developers, and service providers. Together, they
play a vital role in the ongoing evolution of data center infrastructure, adapting to meet the expanding requirements of the digital
era and ensuring the seamless operation of critical digital services across various industries. The increasing global demand for cloud
computing, where WhiteFiber competes as a cloud services provider, is a major driver of data centers, underlining the inherent synergies
between its businesses.

Cloud Services

The global cloud AI infrastructure market is
forecasted to grow from $60.5 billion in 2024 to $363.4 billion in 2030, a compound annual growth rate of approximately 35%,
according to research published by Mordor Intelligence. The major factors driving cloud services market growth are increasing digital
transformation across businesses, growing internet and mobile device adoption across the globe, and, most notably, increasing usage of
large data sets. Moreover, cloud services are favored by customers due to low capital investment, resource scalability, and a high degree
of accessibility. The rise of the system of connected devices, edge computing, 5G, and real-time analytics driven by AI and ML is
anticipated to increase the market value of cloud technology across different businesses.

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Sustainability

Sustainability and energy efficiency are increasingly
important considerations for the data center and cloud services markets due to high energy consumption and carbon emissions. The sustainability
movement for data centers is driven by organizations’ environmental, social and governance commitments and the rise of laws and
regulations supporting sustainability. For example, the Paris Accord, which was entered into force on November 4, 2016, is currently
in effect across 174 countries apart from the United States and aims to curb long-term global warming. WhiteFiber’s facilities
in Quebec and Iceland benefit from clean, hydroelectric power generation, and WhiteFiber will seek to offer comprehensive HPC data center
and cloud services solutions while prioritizing sustainability and energy efficiency.

Strategic Relationships

Financing

Based on WhiteFiber’s knowledge of the
industry, we believe that there is market demand from institutional private equity investors for exposure to the types of projects in
our data center pipeline and our capability to develop them. We believe that we are well positioned to capitalize on this demand by forming
one or more equity joint ventures. Doing so would provide us access to a differentiated and non-dilutive source of private equity capital
to fund our projects, and deliver a durable stream of cash flows in the form of management fee income for our services.

In June 2025 we entered into the Credit Facility
with RBC, which provides for up to a CAD $60 million (approximately USD $43.8 million, based on the CAD/U.S. $ rate of
exchange of CAD 1.00/U.S. $0.7308, as reported by Bloomberg on June 18, 2025) RBC and the Company have since entered into discussions
to amend the Credit Facility to utilize the proceeds CAD $24.5 million (approximately USD $17.9 million) from the mortgage loan to purchase
the MTL-3 facility, however, we cannot assure you that the parties will reach an agreement that is acceptable to the Company or at all.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”
for more information.

On January 26, 2026, we completed a private offering of $230.0 million
aggregate principal amount of 4.500% Convertible Senior Notes due 2031 (the “Notes”), including the exercise in full of the
initial purchasers’ option to purchase an additional $20.0 million aggregate principal amount of Notes. We used approximately $120.0
million of the net proceeds from the Notes offering to pay the cost of the zero-strike call option transaction we entered into simultaneously
with such option, and the remaining net proceeds of the offering primarily for data center expansion, including to partially fund the
lease or purchase of additional property or properties on which to build additional data centers, to construct those facilities, to enter
into additional energy service agreements for each additional site, to purchase related equipment, and for potential acquisitions, partnerships
and joint ventures related thereto, and for working capital and general corporate purposes. WhiteFiber will require additional project
financing (e.g., construction loans) in order to fully accomplish such initiatives. WhiteFiber also may elect to raise additional capital
opportunistically.

On March 25, 2026, WhiteFiber Iceland ehf. (the “Borrower”),
a subsidiary of WhiteFiber, entered into a secured term loan facility agreement (the “Facility”) with Landsbankinn hf, which
provides for borrowings of up to $20 million. Borrowings under the Facility bear interest at a floating rate per annum equal to the sum
of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum. The Facility is secured
by first-ranking security over (i) 100% of the WhiteFiber’s shareholding in WhiteFiber Iceland ehf., (ii) designated assets (including
GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement, and (iii) material assets acquired thereafter
(to be secured within 60 days), in each case until all obligations are fully satisfied.

See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and Capital Resources”.

Technology

WhiteFiber has established formal relationships
with leading technology providers, including NVIDIA, Super Micro, Dell, Hewlett Packard Enterprise, Super Micro and Quanta Computing.
These partnerships enable WhiteFiber to access and deploy the most advanced computing hardware, ensuring that its clients benefit from
cutting-edge technology and optimized performance. WhiteFiber’s collaboration with these industry leaders allows it to stay at
the forefront of high-performance computing and AI infrastructure.

In addition, WhiteFiber has a formal agreement
with Shadeform to offer on-demand compute services powered by NVIDIA B200 GPUs. This partnership enhances our ability to provide scalable,
high-performance AI and HPC solutions to enterprise customers, enabling them to access state-of-the-art computing resources without the
need for upfront infrastructure investment.

WhiteFiber’s data center business leverages
a diverse mix of vendors across multiple geographies to source equipment cost-effectively while mitigating supply chain disruptions.
By maintaining a broad supplier network, WhiteFiber reduces reliance on any single vendor and enhance its ability to procure best-in-class
solutions at competitive prices. This approach strengthens its operational resilience and supports its ability to scale efficiently.

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Competition

WhiteFiber faces significant competition from
various data center and cloud services providers. WhiteFiber competes with several prominent data center providers, including Digital
Realty, Equinix, Inc., NTT, Cyrus One, Inc., STACK Infrastructure, Inc., Aligned Data Centers, LLC, Iron Mountain and various private
operators in the U.S. WhiteFiber’s primary competitors in the cloud service business are CoreWeave, Crusoe Energy, Nebius,
and Lambda Labs.

Many of WhiteFiber’s competitors offer
locations worldwide and have well-established international operations. WhiteFiber’s competitors may also have significant
advantages over WhiteFiber, including greater name recognition, longer operating histories, pre-existing relationships with global
developers, utilities and local authorities, which may give them an advantage in securing real estate or power for new sites, particularly
in constrained regions, the capacity to provide the same or additional products and services, more significant marketing budgets and
other financial and operational resources, more robust internal controls and systems, and better established, more extensive scale and
lower cost suppliers sand supplier relationships. In addition, as WhiteFiber develops proprietary technology and software solutions to
support AI and HPC workloads, it faces competitive risks from larger incumbents with greater R&D resources and established ecosystems.
The competitors may bring similar offerings to market faster or with deeper integration into existing platforms, potentially limiting
our market share or pricing power.

Materials and Suppliers

Maintaining key supplier relationships is crucial
to WhiteFiber’s business operations, as it relies on these relationships, such as with Dell, NVIDIA, Hewlett Packard Enterprise,
Super Micro and Quanta Computing, to secure GPUs, servers, essential computing hardware, infrastructure components, and other materials.
The complexity of developing cloud service hardware at scale limits the number of suppliers capable of meeting WhiteFiber’s requirements.
The development of new data center capacity is subject to supply chain constraints and long lead times for critical infrastructure components
such as power distribution equipment, generators, and cooling systems. WhiteFiber works with experienced vendors and maintains forward-looking procurement
plans to mitigate these risks, but delays could still impact project timelines. Consequently, WhiteFiber has established purchase orders
with leading hardware manufacturers that include extended delivery schedules spanning several months before the hardware is delivered
to its facilities. These fluctuations in delivery timelines necessitate careful planning and advanced purchasing strategies to ensure
WhiteFiber can acquire hardware well before their anticipated deployment.

WhiteFiber proactively procures these materials
from its suppliers in sufficient quantities to facilitate hardware deployment at scale and on accelerated timelines. To mitigate potential
supply chain disruptions and ensure the smooth operation of its facilities, WhiteFiber has established long-term contracts and agreements
with key suppliers. This includes multi-quarter purchase commitments for critical hardware such as GPUs, power distribution units,
and networking equipment, as well as ongoing service agreements with construction, electrical, and facility operations vendors. These
relationships help secure allocation priority, stabilize pricing, and reduce lead-time risk for both cloud infrastructure and data
center development. These arrangements give WhiteFiber greater certainty regarding the availability and pricing of essential components
and materials. Furthermore, WhiteFiber continuously monitors market trends and maintains open lines of communication with its suppliers
to anticipate and address potential supply chain challenges.

By proactively managing its supplier relationships,
securing necessary materials in advance, and closely monitoring market conditions, WhiteFiber aims to minimize the impact of supply chain
fluctuations on its operations. This approach enables WhiteFiber to maintain a steady pace of hardware deployments and facility development,
ultimately supporting WhiteFiber’s goal of expanding its HPC data center and cloud service capabilities and maximizing shareholder
value. However, WhiteFiber relies on a limited number of vendors for certain products and services for WhiteFiber’s data center
facilities, and some of its contracts provide a single source of materials. If any of its key suppliers cannot perform under their contracts
or satisfy its orders, it could significantly delay its data center development and operations. While WhiteFiber may be able to engage
replacement suppliers, this would likely lead to operational delays and increased costs.

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Power Supply

In the province of Quebec where MTL-1, MTL-2, and MTL-3 are located,
all of the hydroelectric power is provided by a crown corporation, Hydro Quebec, which has predetermined rates depending on the customers’
industry and based on the power demand.

As set forth above, WhiteFiber has entered into
a Capacity Agreement with Duke Energy for it to receive 24 MW of service to NC-1 by September 1, 2025, an additional 40 MW
by April 1, 2026 and an additional 99 MW within four years of May 16, 2025. The actual rates will be determined when the facilities
are turned on.

Customers

WhiteFiber generates a large portion of its revenue
from a small number of customers. There are inherent risks whenever a large percentage of total revenue is concentrated with a limited
number of customers. If WhiteFiber were to lose one or more of its customers, its operating results could be materially adversely affected.

WhiteFiber data centers

WhiteFiber’s HPC data center customer base
consists of two primary types of customers:

Enterprise clients — current
and prospective enterprise clients are active in multiple industries, including healthcare, finance, and various technologies that rely
on computers or models. These customers benefit from WhiteFiber’s high-density solutions, reaching upwards of 50kW per cabinet,
to accommodate their workloads and data generation.

GPU cloud — WhiteFiber’s
GPU cloud customers offer on demand access to their GPUs for tasks like AI, VFX rendering and scientific computing.

Currently, WhiteFiber provides HPC data center
services at its leased MTL-1 and MTL-3 facilities, although its customers are based across Canada and Europe. As of December 31,
2025, WhiteFiber’s leased MTL-1 and MTL-3 facilities served fifteen customers. No one customer accounted for in excess of
50% of data center revenue in the 12 months ended December 31, 2025 or 2024.

Cloud Services

WhiteFiber’s cloud services customer base
also is comprised of two primary types of customers:

WhiteFiber currently provides cloud services at Blönduos Campus,
Iceland, where it leases capacity to house its GPUs. During 2025, our HPC data center in Iceland had contracts with 21 customers. DNA
Fund accounted for approximately 11.5% of our revenue during the 12 months ended December 31, 2025. We did not generate any revenue from
DNA Fund in 2024.

Our Initial Customer accounted for approximately 70.7% of its revenue
during the 12 months ended December 31, 2025 and 96.6% of its revenues through December 31, 2024. As of the report date,
WhiteFiber and the Initial Customer are engaged in ongoing discussions regarding a potential resolution of the existing service agreements
following the agreed pause of services. No definitive agreement has been reached. Following the service pause, WhiteFiber has redeployed
the GPUs previously allocated to the Initial Customer to three other customers. Based on WhiteFiber’s current customer mix and contracted
capacity for 2026, a limited number of customers are expected to represent a significant portion of WhiteFiber’s cloud services
revenue. While WhiteFiber is actively expanding and diversifying it’s customer base, WhiteFiber’s results may continue to
be influenced by the performance and contractual arrangements of these customers.

WhiteFiber has leased additional capacity to install our data center
in Atlanta, Georgia, USA to expand our cloud services offering. The capacity leases commenced in February 2026. WhiteFiber also intends
to lease additional capacity to expand our cloud services offering

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Global Logistics and Tariffs

Global supply logistics have caused delays across
all distribution channels, impacting the HPC, AI and ML markets. Delivery schedules for specialized equipment, such as high-performance computing
systems, AI hardware, and necessary infrastructure components, have been affected due to constraints on globalized supply chains. These
constraints extend to procuring construction materials and specialized electricity distribution equipment required to develop HPC, AI
and ML facilities. Efforts to mitigate delivery delays are ongoing to avoid materially impacting deployment schedules; however, there
are no assurances that such mitigation efforts will continue to be successful. To help address global supply logistics and pricing concerns,
WhiteFiber has implemented proactive measures such as procuring and holding required materials. WhiteFiber continuously monitors developments
in the global supply chain which is necessary to assess their potential impact on its expansion plans within the HPC, AI and ML markets.
This monitoring includes evaluating the impact of international trade policies and tariffs, which may affect the cost or availability
of key components source from abroad and, in turn, impact its expansion timelines or capital expenditure.

Data center construction relies heavily on steel,
copper, aluminum, electrical components and HVAC systems, some of which WhiteFiber is sourcing from Mexico and Canada. The tariffs the
U.S. has imposed, or has considered imposing, on Canadian steel, aluminum and copper imports, are expected to increase the cost
of WhiteFiber’s potential projects in the U.S. Similarly, reciprocal tariffs imposed by Canada on WhiteFiber’s projects
in Canada on U.S. exports could see cost increases for imported power infrastructure, networking hardware, and construction equipment.

Regulatory Landscape

The regulatory landscape surrounding WhiteFiber
data centers and cloud services is evolving rapidly, and WhiteFiber anticipates increased scrutiny and potential regulation in the near-
and long-term. These developments may have a material adverse effect on WhiteFiber’s business and financial condition.

WhiteFiber is subject to the laws and regulations
of various jurisdictions and governmental agencies affecting its operations and the sale of its infrastructure and services in areas
including, but not limited to: AI, intellectual property; tax; import and export requirements; anti-corruption; economic and trade sanctions;
national security and foreign investment; foreign exchange controls and cash repatriation restrictions; data privacy and security requirements;
competition; advertising; employment; product regulations; environment, health and safety requirements; and consumer laws.

Although there is no assurance that existing
or future governmental laws and regulations applicable to its operations and the sale of its infrastructure services will not have a
material adverse effect on WhiteFiber’s capital expenditures operating results and competitive position, it does not currently
anticipate material expenditures for complying with government regulations. Nevertheless, WhiteFiber believes that global trade regulations
could potentially have a material impact on its business.

As a global company, the import and export of WhiteFiber’s infrastructure
services and technology are subject to laws and regulations including international treaties, U.S. export controls and sanctions
laws, customs regulations, and local trade rules around the world. For example, all acquisitions of control (whether direct or indirect)
of Canadian businesses by non-Canadians may be subject to review on grounds that the investment could be injurious to national security.
Following the filing of the required Investment Canada Act notification in respect of WhiteFiber’s acquisition of Enovum, WhiteFiber
received written notification from the Minister of Innovation, Science and Industry of Canada (the “Minister”), that the acquisition
may be subject to a national security review. Following review of information we provided, Bit Digital executed a “Commitment Letter”
to the Minister which provides for the following: (i) commitment to maintain one Canadian on the board of Enovum Inc.; (ii) commitment
to maintain or improve Enovum’s security controls for personnel, physical security and the internal network, the terms of the Commitment
Letter the Company is complying with (iii) commitment to send a list of Enovum’s current clients to office of the Minister
of Innovation, Science and Industry on an annual basis. The Company is complying with the terms of the Commitment Letter.

The scope, nature, and severity of such controls
varies widely across different countries and may change frequently over time. Such laws, rules, and regulations may delay the introduction
of WhiteFiber’s infrastructure and services or impact its competitiveness through restricting its ability to do business in certain
places or with certain entities and individuals. For example, the U.S. Department of Commerce continues to add firms to the Entity
List. These export restrictions, which would require that WhiteFiber obtain licenses from the U.S. Department of Commerce to allow
it to export infrastructure services to such listed firms, which could limit or prevent it from doing business with certain potential
customers or potential suppliers. Additionally, although the U.S. Department of Commerce has withdrawn its AI diffusion rules, which
would have imposed worldwide limits on AI chip exports used to create computer clusters, it plans to issue a replacement rule in the
future and continues to strengthen other existing export controls on advanced AI chips. These restrictive governmental actions, and any
similar measures that may be imposed on U.S. companies by other governments, could limit its ability to conduct business globally.

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Additionally, there are growing concerns about
the ethical implications and potential misuse of AI and machine learning. Governments and regulatory bodies are considering measures
to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines.
WhiteFiber is closely monitoring these developments and will dedicate its best efforts to adhere to any upcoming regulations or industry
best practices.

As a company operating at the intersection of
data center, cloud and HPC hosting services, WhiteFiber is committed to maintaining a proactive and adaptive approach to regulatory compliance.
WhiteFiber closely monitors legislative and regulatory developments and engages in dialogue with relevant stakeholders to ensure its
business practices align with the evolving legal and regulatory framework. Despite the uncertainties posed by the changing regulatory
landscape, WhiteFiber remains committed to delivering innovative and responsible solutions in the data center, cloud and HPC hosting
markets while prioritizing compliance and risk management. However, if WhiteFiber fails to comply with applicable laws and regulations,
it may be subject to significant liabilities, including fines and penalties, and its business, financial condition, or results of operations
could be adversely affected.

Human Capital / Employees

As of December 31, 2025,
we and our subsidiaries collectively employed 104 full-time employees, across our entire organization. All employees work full-time, none
of whom are covered by a collective bargaining agreement. We engage third-party contractors and consultants on an as-needed basis. At
the parent company level, our management includes our CEO, Samir Tabar, our CFO, Erke Huang, and our CAO, Justin Zhu with 21 employees.
WhiteFiber employed 83 full-time employees who support cloud and data center operations, infrastructure development, and corporate functions.
The Company also engages consultants for advisory services to support our business activities. We focus on attracting and retaining skilled
technical and operational personnel through competitive compensation, benefits, and performance-based incentives aligned with our business
objectives. Management oversees human capital matters, with an emphasis on workforce safety, operational reliability, and compliance with
applicable labor and employment laws. We also engage consultants and other third-party providers to support our business activities.

We are a remote-first Company. We believe that
allowing our employees to work in the location that best suits them provides us access to a larger talent pool and a sustained advantage
in hiring and retaining employees and consultants in the United States and worldwide.

Human capital management is critical to our ongoing
business success, which requires investing in our people. Our aim is to create a highly engaged and motivated workforce where employees
are inspired by leadership, engaged in purpose-driven, meaningful work, and have opportunities for growth and development. We are committed
to creating and maintaining a work environment in which employees are treated with respect and dignity. We value our diverse employees,
and provide career and professional development opportunities that foster the success of our Company.

We are committed to the principles of equal employment
and complying with all federal, state, and local laws providing equal employment opportunities, and all other employment laws and regulations.
It is our intent to maintain a work environment that is free of harassment, discrimination, or retaliation because of age, race, color,
national origin, ancestry, religion, sex, sexual orientation (including transgender status, gender identity or expression), pregnancy
(including childbirth, lactation, and related medical conditions), physical or mental disability, genetic information (including testing
and characteristics), veteran status, uniformed servicemember status, or any other status protected by federal, state, or local laws.
We are dedicated to the fulfillment of this policy in regard to all aspects of employment, including but not limited to recruiting, hiring,
placement, transfer, training, promotion, rates of pay, and other compensation, termination, and all other terms, conditions, and privileges
of employment.

Our Compensation Committee is also actively involved
in reviewing and approving executive compensation, and succession plans so that we have leadership in place with the requisite skills
and experience to deliver results the right way. We offer fair, competitive compensation and benefits appropriate for a company of our
size that supports our employees. While we do not offer health benefits, we do offer 401(k) plans with 100% matching of employees’
contributions subject to IRS limitations.

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Available Information

Our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act, are filed with the U.S. Securities and Exchange Commission (the “SEC”). We are subject to the informational
requirements of the Exchange Act and file or furnish reports, proxy statements, and other information with the SEC. Such reports and
other information filed by us with the SEC are available free of charge on our website at www.bit-digital.com when such reports are available
on the SEC’s website at www.sec.gov.

We announce material information to the public
through filings with the SEC, the investor relations page on our website at www.bit-digital.com, press releases, public conference calls
and public webcasts. The information disclosed through the foregoing channels are intended to be sources of material information about
the Company. As such, we encourage investors, the media and others to follow the channels listed above and to review the information
disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted
on the investor relations page on our website.

The information contained on, or accessible through,
our website is not a part of, and is not incorporated into, this Annual Report. We have included our website address only as an inactive
textual reference and do not intend it to be an active link to our website. You should not rely on our website or any such information
in making your decision whether to purchase our Ordinary Shares.