Keel Infrastructure (KEEL) risk factors, FY2025 10-K

Other

1. 01Efficiency of Mining Machines and HPC and AI Hardware
2. 02As we plan to operate our facilities to support HPC and AI uses, our future performance and success will depend in part on our ability to access the latest generation of high-performance networking and storage equipment required to operate our HPC data centers
3. 03In addition to our financial results and U.S. GAAP financial measures, we use certain key performance indicators to evaluate our business, identify trends, and make strategic decisions
4. 04Installed Watts/TH efficiency 19 21 35 (10 )% (40 )%
5. 05During FY 2024 the cost per kWh was $0.047 compared to $0.049 in FY 2023. The 5% decrease is mainly due to lower cost in North American Bitcoin data centers
6. 06Average watts/Average TH measures the energy efficiency of our active Mining fleet by calculating the average power consumption in watts required to generate one TH per second of computational capacity. Lower Watts/TH indicates greater fleet efficiency, which directly impacts operating costs and Mining margins
7. 07Total Pipeline (MW) 2,161 393 250 450 % 57 %
8. 08Secured Growth Capacity represents gross power capacity that is not currently available on site but for which the Company has executed an electric supply agreement with a utility, whereby the utility agrees to provide that power capacity at a specified future date
9. 09Secured Gross Data Center Capacity
10. 10Identified Additional Gross Data Center Capacity
11. 111 Gross margin and Operating margin are supplemental financial ratios; refer to Section 4 - Non-GAAP and Other Financial Measures and Ratios
12. 12We earned our revenues during FY 2025 from our North American operations. The United States and Canada accounted for 51% and 49% of total revenues, respectively, compared to 12% and 88% in FY 2024, respectively
13. 13We earned our revenues during FY 2024 from our North American continuing operations. Canada and the United States accounted for 88% and 12% of total revenues, respectively, in line with FY 2023
14. 14Sales tax recoveries in FY 2025 were nil, compared to $25.8 million received in FY 2024 for sales taxes we paid between February 5, 2022 and April 2024 after having received confirmation from the provincial tax authorities that Canadian sales taxes were refundable
15. 15Interest expense was $8.6 million in FY 2025, compared to $0.7 million for FY 2024 as a result of the interest expense on the Macquarie credit facility and the Convertible Notes issued during FY 2025
16. 16Interest income was $6.0 million for FY 2024, compared to $1.4 million for FY 2023. The increase was due to our higher average cash balance during FY 2024 compared to FY 2023
17. 17E. Discontinued Operations
18. 18i. Argentina’s operations as discontinued operations
19. 19ii. Paraguay’s operations as discontinued operations and assets held for sale
20. 20Refer to Note 11 - Assets Held for Sale and Discontinued Operations to the Financial Statements for more information on the results of Argentina’s and Paraguay’s operations and Note 12 - Impairment to the Financial Statements for more details on the impairment loss of our Paraguay and Argentina asset groups
21. 213. Selected Quarterly Information from Continuing Operations 1
22. 22Revenues decreased in Q4 2025 compared to the third quarter of 2025, following a general upward trend throughout 2024 and the first three quarters of 2025. The quarter-over-quarter decline reflects changes in operating and market conditions during the period
23. 23Non-GAAP financial measures from continuing operations 1
24. 24A. Reconciliation of Consolidated Net (loss) income from continuing operations to EBITDA and Adjusted EBITDA from Continuing Operations
25. 252 Sales tax recovery relating to energy and infrastructure and general and administrative expenses have been allocated to their respective periods; refer to Note 25- Additional Details to the Statement of Operations to the Financial Statements
26. 26Cash flows used in operating activities increased by $84.9 million during FY 2025 compared to FY 2024. The Company’s operating cash flows are negative as the proceeds from the Bitcoin sold from its Mining operations are classified within investing activities
27. 27Cash Flows from Financing Activities
28. 28We raised $289.5 million of net proceeds from our 2024 ATM Program as discussed below, and $8.9 million of net proceeds from the exercise of stock options and warrants
29. 29At-The-Market Equity Offering Program
30. 30At-The-Market Equity Offering Program (Continued)
31. 31During FY 2025, we issued 29,616,939 common shares in the 2024 ATM Program in exchange for gross proceeds of $75.1 million at an average share price of approximately $2.54. We received net proceeds of $72.7 million after paying commissions of $2.3 million to the sales agent
32. 32Remaining proceeds available —
33. 333. Capital Resources (Continued)
34. 34Under this program, Management is authorized to sell daily Bitcoin production, and, if warranted by market conditions and projected financing requirements, to sell up to 1,000 Bitcoin from treasury at its discretion
35. 35Total proceeds 37,263 100,471 21,561 11,796
36. 36Bitcoin 2.1 program for digital assets management
37. 37Working Capital 678,353 185,580 492,773 266 %
38. 38VI. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
39. 39Estimation of useful lives of property, plant, and equipment
40. 40Impairment of long-lived assets
41. 41Measurement of financial instruments
42. 42Quantitative and Qualitative Disclosures About Market Risk
43. 43Market value and price risk of Bitcoin
44. 44Opinions on the Financial Statements and Internal Control over Financial Reporting
45. 45Definition and Limitations of Internal Control over Financial Reporting
46. 46Revenues from sale of computational power used for hashing calculations
47. 47Net loss ( 284,544 ) ( 28,365 ) ( 55,511 )
48. 48Basis of presentation and principles of consolidation
49. 49The consolidated financial statements are presented in USD and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) including the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding financial reporting
50. 50Nature of variable interest entities (VIEs)
51. 515) Recognize revenue when the company satisfies a performance obligation
52. 52If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct
53. 53Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved
54. 54i. Revenues from the sale of computational power used for hashing calculations
55. 55The amount earned is calculated based on the Company’s computing power used for hashing calculations provided to the Mining pool operators and the estimated (a) block subsidies and (b) daily average transaction fees which the Mining pool operators expect to earn, less (c) a Mining pool discount
56. 56i. Revenues from the sale of computational power used for hashing calculations (Continued)
57. 57ii. Revenue from electrical services
58. 58The Company has entered into hosting agreements under which it operates Mining-related equipment on behalf of third parties within its facilities. Revenue from hosting agreements is recognized as the Company satisfies its performance obligation of operating the hosting equipment over time
59. 59iii. Revenue from hosting services (Continued)
60. 60Cash and cash equivalents
61. 61Rights to renewable energy credits and waste tax credits
62. 62Property, Plant and Equipment, Net
63. 63Vehicles Declining balance 30 %
64. 64BVVE Straight-line 3 years
65. 65The Company’s long-lived assets (including property, plant and equipment, right-of-use assets and intangible assets with finite useful lives) are assessed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable
66. 66Impairment of financial assets
67. 67Non-hedge derivative instruments
68. 68Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
69. 69Options and RSUs are service-based awards that vest in installments. The Company recognizes stock-based compensation expense using the graded vesting attribution method over the requisite service period
70. 70Recently issued accounting pronouncements
71. 71Recently issued accounting pronouncements (Continued)
72. 72NOTE 3: BUSINESS COMBINATION
73. 73NOTE 3: BUSINESS COMBINATION (Continued)
74. 74From the acquisition date through December 31, 2025, Stronghold’s total revenue and net income (net of tax) included in the consolidated statements of operations was $ 77,748 and $ 2,196 , respectively
75. 75Net loss from continuing operations ( 216,012 ) ( 63,055 )
76. 76During the second quarter of 2025, adjustment to recognize additional accrued liabilities and rights to energy credits of $ 1,500 and $ 3,104 , respectively, were recognized with a corresponding net decrease of $ 1,602 in property, plant and equipment
77. 77Acquisition of leased property and energy agreements
78. 78NOTE 6: ACCOUNTS RECEIVABLE, NET
79. 79Balance of digital assets excluding restricted digital assets as of December 31, 1,996 174,726 934 87,298
80. 80Bitcoin option and selling contracts
81. 81Bitcoin redemption options and redemption obligations
82. 82NOTE 10: DERIVATIVE ASSETS AND LIABILITIES (Continued)
83. 83Total derivative liabilities ( 2,922 ) ( 128 )
84. 84NOTE 11: ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
85. 85Mining electrical components 3,198 1,117
86. 86Loss from discontinued operations ( 43,713 ) ( 32,317 ) ( 76,030 ) ( 11,753 ) ( 9,253 ) ( 21,006 ) ( 14,426 ) ( 1,152 ) ( 15,578 )
87. 87Discontinued operations (Continued)
88. 88Impairment on Argentina asset group in the first quarter of 2025
89. 89Impairment in Argentina asset group in the second quarter of 2025
90. 90Impairment on short-term prepaid deposits during the second quarter of 2023
91. 91ii . Paraguay’s operations as discontinued operations and assets held for sale
92. 92Sale of the Yguazu Bitcoin Data Center
93. 93Gain on disposal of subsidiary 5,225
94. 94Impairment of Paraguay asset group in the third quarter of 2025
95. 95Impairment of Paraguay asset group in the fourth quarter of 2025
96. 96NOTE 12: IMPAIRMENT FROM CONTINUING OPERATIONS
97. 97Impairment from continuing operations 28,442 3,628 5,604
98. 982025 impairment loss from continuing operations
99. 99Impairment on mineral assets during the second quarter of 2023
100. 100Impairment on electrical components during the fourth quarter of 2023
101. 101NOTE 13: PROPERTY, PLANT AND EQUIPMENT, NET
102. 102March 2025 Miner exchange
103. 103Changes in the useful life, residual value and depreciation method
104. 104Applicable to specific Miners - Changes in the useful life, residual value and depreciation method
105. 105March 2024 Miner purchase order deposits
106. 106Non-current portion of long-term debt 572,447 1,430
107. 107Conversion of the Credit Facility
108. 108Covenants and restrictions
109. 109NOTE 18: LEASES (Continued)
110. 110Financing cash flows used in finance leases 820 1,079 2,458
111. 111Finance leases 603 968 567
112. 112On August 27, 2024, the Company entered into an agreement to lease a site in Sharon, Pennsylvania, United States, providing the Company immediate capacity of 12 MW of electricity and potential for up to an additional 98 MW for a total 110 MW of development capacity by 2026
113. 113( 208,413 ) ( 7,013 ) ( 40,087 )
114. 114Total income tax expense (recovery) 101 346 ( 154 )
115. 115NOTE 19: INCOME TAXES (Continued)
116. 116Income tax recovery at federal statutory tax rate ( 31,262 ) 15.0 % ( 1,052 ) 15.0 % ( 6,013 ) 15.0 %
117. 117% 346 ( 5.0 )% ( 154 ) 0.4 %
118. 118Deferred tax assets and liabilities
119. 119Deferred tax assets and liabilities (Continued)
120. 120Net deferred tax assets 3,489 18,114
121. 121Net deferred tax assets (liabilities) ( 65 ) ( 65 )
122. 122During the year ended December 31, 2025, the Company issued 29,616,939 common shares in exchange for gross proceeds of $ 75,094 at an average share price of approximately $ 2.54 . The Company received net proceeds of $ 72,747 after paying commissions of $ 2,253 to the sales agent and $ 94 in other transaction costs
123. 123On July 22, 2025, the Company announced that the TSX had approved a normal course issuer bid (“NCIB”), under which the Company may repurchase up to 49,943,031 of its common shares, representing approximately 10 % of the Company’s public float as of July 14, 2025
124. 124The weighted average contractual life of the warrants as of December 31, 2025, was 2.2 years (December 31, 2024 and 2023: 1.9 years and 1.6 years, respectively)
125. 125On March 11, 2024, 25,000 warrants relating to the acquisition of the Garlock building in Sherbrooke, Québec, Canada issued during 2022 expired. These warrants were recognized as equity instruments
126. 126Equity warrants (Continued)
127. 127Number of warrants issued 20,421,723
128. 128NOTE 21: STOCK-BASED COMPENSATION
129. 129Long-Term Incentive Plan (“2025 LTIP”)
130. 130Exercisable, December 31, 9,687,377 1.58 9,515,764 1.58 11,112,519 2.01
131. 131Expected life of Options (years) 3.0 years 3.0 years 3.0 years
132. 132Remaining weighted-average vesting period 1.8 years
133. 133Outstanding, December 31, 3,508,275 1.41
134. 134Remaining weighted-average vesting period 2.5 years
135. 135a. Measurement categories and fair value
136. 136Net fair value ( 86,721 ) 63,592
137. 137There were no transfers between Level 1, 2 or 3 of the fair value hierarchy during the years ended December 31, 2025 and 2024
138. 138Derivatives assets and liabilities
139. 139i. Bitcoin option and selling contracts (derivatives)
140. 140The purchase order agreements explained in Note 10 provide the Company with the option to redeem the Bitcoin Pledged at a market price determined when the Bitcoin was first pledged (“Agreed Bitcoin Price”)
141. 141iii. Capped call transactions (derivatives assets)
142. 142i. Refundable Hosting Deposits
143. 143The security deposits for energy consumption is related to the operational Paso Pe and in-construction Yguazu Bitcoin data centers in Paraguay. The valuation technique used was the income approach (discounted future cash flows) with an EIR of 6 % over an estimated term of 3 years
144. 144Refundable deposits (Continued)
145. 145b. Risk management policy (Continued)
146. 146Credit risk is the risk of an unexpected loss if a third party fails to meet its contractual obligations, including those related to cash and cash equivalents. The Company mitigates credit risk related to cash by holding the majority of its cash with a Canadian chartered bank
147. 147As of December 31, 2025, the Company is committed to purchase $ 129,662 of property, plant and equipment in the next 12 months. Refer to Note 27 for more details
148. 1483,966 104,343 4,361 4,155 604,355 721,180
149. 149A significant decline in the market prices of cryptocurrencies, an increase in the difficulty of cryptocurrency Mining, changes in the regulatory environment and adverse changes in other inherent risks can significantly negatively impact the Company’s operations and the carrying value of its assets
150. 150From continuing operations: 2025 2024 2023
151. 151Numerator for diluted loss per share ( 208,514 ) ( 7,359 ) ( 39,933 )
152. 152Denominator for diluted loss per share - weighted average shares outstanding 551,676,757 414,669,947 262,237,117
153. 153Diluted ( 0.38 ) ( 0.02 ) ( 0.15 )
154. 154From discontinued operations 2025 2024 2023
155. 155Numerator for diluted loss per share ( 76,030 ) ( 21,006 ) ( 15,578 )
156. 156For the year ended December 31, 2025, 2024 and 2023 potentially dilutive securities were excluded from the calculation of diluted loss per share due to their anti-dilutive effect
157. 157Property, Plant and Equipment and other non-current assets
158. 158Energy costs are net of RECs and WTCs
159. 159During the year ended December 31, 2025, infrastructure expenses included $ 9,244 of customs duties in connection with the importation of Miners in 2021 (years ended December 31, 2024 and 2023: nil )
160. 160Canadian sales tax recovery
161. 161Gain on extinguishment of long-term debt
162. 162Agreements to purchase land
163. 163Commitment for HPC Data Center Projects
164. 164Evaluation of Disclosure Controls and Procedures
165. 165The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in item 15 of this Annual Report on Form 10-K
166. 166Remediation of Previously Reported Material Weakness
167. 167Changes in Internal Control over Financial Reporting
168. 168Item 9B. Other Information
169. 169Directors and Executive Officers
170. 170Benjamin Gagnon, Chief Executive Officer and Director
171. 171Jonathan Mir, Chief Financial Officer
172. 172Liam Wilson, Chief Operating Officer
173. 173Rachel Silverstein, General Counsel, Global
174. 174Edith Hofmeister, Independent Director
175. 175Brian Howlett, Independent Director
176. 176Fanny Philip, Independent Director
177. 177Amy Freedman, Independent Director
178. 178Andrew J. Chang, Independent Director
179. 179Wayne Duso, Independent Director
180. 180Governance, Nomination, Safety, Sustainability and Technical Committee
181. 181Insider Trading Policies and Procedures
182. 182COMPENSATION DISCUSSION AND ANALYSIS
183. 183Bitfarms Ltd.’s executive compensation program is designed to attract, retain, and motivate the high-caliber leadership team required to execute our strategic transformation into a company converting its existing energy and data center infrastructure to HPC and AI uses
184. 1842025 Compensation Decisions
185. 185Philosophy and Objectives of Our Executive Compensation Program
186. 186What Our Compensation Programs Are Designed to Reward
187. 187Role of the Compensation Committee
188. 188Role of the Compensation Consultant
189. 189Benchmarking and Peer Group Information
190. 190Annual Incentive Plan Structure
191. 191Fiscal Year 2025 Performance Results
192. 192Long-Term Incentive Compensation
193. 193Restricted Stock Unit Awards
194. 194Severance and Change in Control
195. 195Defined Contribution Savings Plan
196. 196Other Benefits and Perquisites
197. 197Anti-Hedging and Anti-Pledging
198. 198The Compensation Committee considers the accounting implications of compensation decisions. Equity-based compensation is accounted for in accordance with FASB ASC Topic 718
199. 199On August 8, 2025, we entered into an amended and restated employment agreement with Benjamin Gagnon, for Mr. Gagnon to continue as Chief Executive Officer
200. 200The Compensation Committee considers the implications of risks associated with our compensation policies and practices. The Compensation Committee reviews the executive compensation program to ensure that compensation policies are not reasonably likely to have a material adverse effect on the Company
201. 201The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Report
202. 202(1) Amounts in the ’Salary’ column represents base salaries paid to NEOs. Any change in salary during 2025 was made retroactive to January 1, 2025
203. 20312/31/25 $ 0 $ 0 $ 0 0 0 0 285,700 87,500 $ 2.20 2.35 $ 878,770
204. 204The following narrative disclosure provides additional context regarding the material factors necessary to understand the information reported in the tables above
205. 205(3) The market value of unvested stock awards (RSUs) and unearned equity incentive plan awards (PSUs) is calculated based on the closing price of the Common Shares on Nasdaq on December 31, 2025, of $2.35. PSU amounts are reported at target performance levels
206. 206Jeffrey Lucas 572,236 $ 903,679
207. 207The Company has entered into employment agreements with certain NEOs that provide for payments upon termination of employment under various circumstances, including following a change in control of the Company
208. 208Rachel Silverstein — — $ 371,800 $ 1,066,645
209. 209Non-Employee Director Compensation
210. 210Fanny Philip $ 142,006 $ 142,591 $ 284,597
211. 211Equity Compensation Plan Information
212. 212Securities Authorized: The LTIP is a 10% rolling plan under which the aggregate number of Common Shares available for issuance at any given time shall not exceed 10% of the issued and outstanding Common Shares at the time of any grant
213. 213Securities Available for Future Issuance: As of December 31, 2025, the number of Common Shares remaining available for future issuance under the LTIP (calculated as 10% of outstanding Common Shares less outstanding awards) is set forth in the equity compensation plan information table below
214. 214(1) Consists of the Old LTIP, the LTIP and the Stronghold Omnibus Incentive Plan (the “Stronghold Plan”). No new securities are being issued under the Old LTIP and under the Stronghold Plan
215. 215Beneficial Security Ownership Table
216. 216’*’ means the shares owned by the NEO or Director represented less than 1% of the total issued and outstanding shares
217. 217Related Party Transactions
218. 218Item 14. Principal Accountant Fees and Services
219. 219Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings
220. 220Policy on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditors
221. 2214.4 Form of Rights Certificate 8-A 001-40370 July 30, 2024 4.1
222. 222104 Cover Page Interactive Data File X