Big Digital Energy (BGDE) risk factors, FY2024 10-K

Risks Relating to Our Business and Management

1. 01We have incurred operating losses since inception
2. 02We have experienced management turnover, including turnover of our top executives, which creates uncertainties and could have an adverse effect on our business
3. 03Inflation in the global economy could negatively impact our business and results of operations
4. 04We or our suppliers may not be able to procure or repair hardware that is required in our operations
5. 05The Company’s expansion into the AI and HPC markets may present increased liability and additional risks to our business
6. 06Mining equipment is prone to breakdown, fail or become obsolete
7. 07Any extended outage or limitation of an internet connection at our sites could materially impact our operations and financial performance
8. 08Access to reliable electricity sources at reasonable prices is critical to our growth and profitability
9. 09Cyber-security threats pose a challenge to our business, including the safekeeping of our digital assets, and a risk of reputational damage
10. 10Due to the industry in which we operate, we may not be able to obtain or maintain some types of insurance that operators of similar businesses in other industries would usually obtain, at commercially viable premiums, or at all
11. 11The sale of our digital assets to pay expenses at a time of low digital asset prices could adversely affect our business
12. 12If we fail to grow our hash rate and to effectively manage the renewal of our Miner fleet and other plant and equipment, we may be unable to compete, and our results of operations could suffer
13. 13Digital assets mining is a highly competitive industry
14. 14Global climate change may have an adverse effect on our business operations and financial position
15. 15Banks and financial institutions may cease to provide financial services to persons involved in digital assets transactions

Risks Relating to Digital Assets and Technology

1. 16The digital assets industry and pricing can be volatile
2. 17Corporate collapses of important companies in the Bitcoin ecosystem, such as exchanges, funds, lenders, wallet providers and so on, or other digital assets can also have an impact on confidence and the Bitcoin price
3. 18Significant contributors to all or any digital asset network could propose amendments to the respective network’s protocols and software that, if accepted and authorized by such network, could adversely affect us
4. 19If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects us
5. 20A failure to properly monitor and upgrade the Bitcoin network protocol could damage the Bitcoin network and adversely affect us
6. 21The incentive for Bitcoin mining may decrease over time as the reward decreases
7. 22The impact of the Bitcoin halving, which took place in April 2024 has introduced uncertainly that could materially impact our self-mining revenue or our colocation services customers businesses
8. 23Increasing network difficulty, plays a crucial role in determining the profitability of Digital Assets and Bitcoin mining
9. 24An increase in transaction fees could reduce the price of digital assets
10. 25Digital assets firms may be forced to sell their Bitcoin or digital assets holdings putting downward pressure on the Bitcoin price
11. 26The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect us
12. 27Future digital assets and digital currency development may lessen the usage of Bitcoin
13. 28The development of quantum computing threatens the cryptographic protections of blockchain protocols

Risks Relating to Laws, Regulatory Frameworks, and Legal Action

1. 29We are subject to a highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our business, reputation, prospects or operations. Obtaining and complying with required government permits and approvals may be time-consuming and costly
2. 30Digital assets such as Bitcoin are likely to be more highly regulated
3. 31Bitcoin and Bitcoin mining are presently legal in the U.S.; however, they may become illegal in the future, or subject to regulation (such as caps, taxes or licensing regimes)
4. 32We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002
5. 33Future developments regarding the treatment of digital assets for U.S. federal income and foreign tax purposes could adversely impact our business
6. 34Regulatory intervention by governments could affect the right to acquire, own, hold, sell, exchange or use Bitcoin or other digital assets
7. 35Legislative, regulatory, and litigation threats regarding climate change and energy conservation could add significant burden, costs and reputational damage to our business
8. 36We may be subject to material litigation (including with our lenders and counter-parties counterparties), investigations, or enforcement actions by regulators and governmental authorities that are expensive to support, and if resolved adversely, could harm our business, revenue, and financial results
9. 37Because there has been limited precedent set for financial accounting for Bitcoin and other digital assets, the determinations that we have made for how to account for digital assets transactions may be subject to change

Risks Relating to the Ownership of Our Common Stock and Other Risks

1. 38If we fail to comply with the continued listing standards of The Nasdaq Capital Market (“Nasdaq”), we may be delisted and the price of our Common Stock, our ability to access the capital markets and our financial condition could be negatively impacted
2. 39The trading price of our Common Stock is likely to continue to be volatile
3. 40Our financial results may vary significantly from period to period due to fluctuations in our revenue, operating costs and other factors
4. 41We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline