Correspondence 0001558370-24-009659 from Riot Platforms, Inc. (RIOT)
Riot Platforms, Inc.
Date: July 2, 2024 · CIK: 0001167419 · Accession: 0001558370-24-009659
AI Filing Summary & Sentiment
File numbers found in text: 001-33675
Letter
Riot Platforms, Inc.
3855 Ambrosia St., Ste. 301
Castle Rock, CO 80109
+1 (303) 794-2000
www.RiotPlatforms.com
FOIA CONFIDENTIAL TREATMENT REQUESTED BY RIOT PLATFORMS, INC. PURSUANT TO 17 C.F.R. § 200.83 (“SEC RULE 83”)
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS LETTER. THIS LETTER OMITS CONFIDENTIAL INFORMATION (THE SYMBOL “[***]” HAS BEEN INSERTED IN PLACE OF THE OMITTED PORTIONS) INCLUDED IN THE UNREDACTED VERSION OF THE LETTER DELIVERED TO THE DIVISION OF CORPORATION FINANCE.
July 2, 2024
Via EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance Office of Crypto Assets
100 F Street, N.E.
Washington, D.C. 20549-3720
Attention:Lulu Cheng; David Lin; Michelle Miller; and Mark Brunhofer
Re:Riot Platforms, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2023
Filed February 23, 2024
File No. 001-33675
Ladies and Gentlemen:
On behalf of Riot Platforms, Inc. (the “Company”), we submit this letter in response to comments from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) received on May 28, 2024, relating to the Company’s 2023 Annual Report on Form 10-K (the “Form 10-K”) filed with the SEC on February 23, 2024.
For your convenience, the Staff’s comments have been repeated below in their entirety in bold, with the Company’s response to a particular comment set out immediately thereunder. The headings and numbered paragraphs in this letter correspond to the headings and numbered paragraphs in the comment letter received from the Staff on May 28, 2024. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Form 10-K.
Pursuant to 17 C.F.R. § 200.83, the Company requests confidential treatment for portions of its response to the Staff’s comment. Specifically, the Company requests that portions of its response that have been redacted from the version of this letter filed via the Commission’s EDGAR system and marked by the symbol “[***]” be maintained in confidence, not be made part of any public record and not be disclosed to any person, including in response to any request under the Freedom of Information Act, 5 U.S.C. § 552 (“FOIA”),
***FOIA CONFIDENTIAL TREATMENT REQUESTED
BY RIOT PLATFORMS, INC.***
Securities and Exchange Commission
July 2, 2024
Page 2
as such responses contain confidential information. An unredacted version of this letter is being provided to the Commission under separate cover, along with the request for confidential treatment under SEC Rule 83.
Form 10-K for the fiscal year ended December 31, 2023
Item 1. Business
Industry Trends, page 6
1.
On page 7, you disclose that, “Our Bitcoin is held in cold storage wallets by a well-known U.S.-based third-party digital asset-focused custodian. We also sell our Bitcoin using our custodian’s U.S. brokerage services.” Please revise future filings to describe in greater detail your custody procedures and related arrangements, including the following:
·
The identity of your third-party custodian;
·
The material terms of any (i) custody agreement and (ii) agreement in connection with your use of your custodian’s U.S. brokerage services to sell your Bitcoin. Additionally, file the same as exhibits in future filings. See Item 601(b)(10) of Regulation S-K;
·
The geographic location where crypto assets are held in cold wallets;
·
Whether any persons (e.g., auditors, etc.) are responsible for verifying the existence of the crypto assets held by your third-party custodian; and
·
Whether any insurance providers have inspection rights associated with the crypto assets held in storage.
Company Response:
Bullet #1: The Identity of Our Third-Party Custodian.
The Staff has requested that we disclose the identity of our third-party custodian in future filings. As disclosed on page 21 of the Form 10-K, as we continue to increase in size, we face escalated security threats from hackers, cyber-attackers and other malicious actors. We respectfully contend that publicly disclosing the identity of our custodian(s) raises significant data security concerns and increases the risk that our service provider(s) experience a security breach by which unauthorized parties may acquire access to our Bitcoin. We continually evaluate custodian options, as well as the appropriate size, number, and security of our custodians and potential future custodians, and we are free to enter into any number of custodian relationships with respect to our Bitcoin in the ordinary course of our business.
For the reasons stated above, we respectfully contend that we should not be required to disclose the identity of our third-party custodian (or custodians) in future filings made with the SEC. The name of our custodian and the amount of Bitcoin custodied with such custodian, as of June 30, 2024, is set forth on Appendix “A” hereto.
***FOIA CONFIDENTIAL TREATMENT REQUESTED
BY RIOT PLATFORMS, INC.***
Securities and Exchange Commission
July 2, 2024
Page 3
Bullet #2: Material Terms of Our Custody Agreement, Agreement With Our Custodian’s U.S. Brokerage Service to Sell Our Bitcoin and Request to File These Agreements as Exhibits in Future Filings.
The Staff has also requested that we disclose the material terms of our custody agreement and agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin and to file these agreements as exhibits in future filings. We respectfully contend that neither agreement is a “material contract” under Item 601(b)(10) of Regulation S-K, for the reasons set forth herein. Under Item 601(b)(10), a “material contract” includes a “contract not made in the ordinary course of business that is material to the registrant and is to be performed in whole or in part at or after the filing of the registration statement or report.” Both agreements are made in the ordinary course of business pursuant to Item 601(b)(10)(ii), which provides, in pertinent part:
“if the contract is such as ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries, it will be deemed to have been made in the ordinary course of business and need not be filed unless it falls within one or more of the following categories, in which case it shall be filed except where immaterial in amount or significance:
* * *
(B) Any contract upon which the registrant’s business is substantially dependent, as in the case of continuing contracts to sell the major part of registrant’s products or services or to purchase the major part of registrant’s requirements of goods, services or raw materials or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which registrant’s business depends to a material extent[.]”
The Agreements Are Not Made Outside the Ordinary Course of Business.
As disclosed in the Form 10-K, we are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin blockchain. Such custody agreements and agreements to use custodian brokerage services to sell Bitcoin are customary in the Bitcoin mining industry and ordinarily accompany the kind of business we conduct.
The Company’s Business Is Not Substantially Dependent on Either Agreement.
Further, neither agreement falls into any of the enumerated categories in Item 601(b)(10)(ii)(A-D) requiring registrants to file an agreement if it is material in amount or significance. As Bitcoin is a decentralized cryptocurrency, it is not required that Bitcoin be held by a custodian, and we may choose to self-custody. Therefore, our business is not substantially dependent on our custody agreement or agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin because our business is not dependent on the services our custodian offers us under the agreements. We have made the business decision to utilize third-party custodian and brokerage services with respect to our Bitcoin, and, in the future, we may decide to discontinue this practice, or to use other, or additional, service providers. Further, our current Bitcoin custodian and brokerage services relationships are non-exclusive, and we may freely change our Bitcoin custodian and brokerage relationships (including by entering into additional, parallel relationships, or by terminating our existing relationships) at any time. Finally, the market for third-party cold storage custodians and brokerages is well-developed, and neither agreement restricts our ability to engage an alternative provider, similar to our
***FOIA CONFIDENTIAL TREATMENT REQUESTED
BY RIOT PLATFORMS, INC.***
Securities and Exchange Commission
July 2, 2024
Page 4
ability to change our depository financial institution relationships for our cash assets. We, therefore, respectfully submit to the Staff that our current third-party Bitcoin custodian and brokerage services agreements are not “material contracts” within the meaning of Item 601(b)(10) of Regulation S-K.
Also, because they are not material contracts, we should not be required to disclose the material terms of our custody agreement and agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin, or be required to file these agreements as exhibits in future filings.
Bullets #3-#4: Enhanced Disclosures in Future Filings of Our Custody Procedures and Related Arrangements.
We are not aware of our custodian experiencing excessive redemptions or withdrawals, or having suspended redemptions or withdrawals, of any customer assets (Bitcoin, crypto, or otherwise). Further, we have not experienced any loss of, or access to, our Bitcoin custodied with our custodian, we have never been unable to account for such Bitcoin assets, and we are not aware of our custodian having ever been unable to account for our Bitcoin assets or the crypto assets of its other customers. Finally, we continually monitor our Bitcoin assets held by third-party custodians, and we have unlimited audit rights with respect to such custodial accounts. Specifically, our accounting and internal audit teams perform a monthly reconciliation of our Bitcoin assets held by our custodian(s) and the records of our mining pool. The Chief Accounting Officer verifies these reconciliations quarterly, and our auditors verify the location and quantity of our Bitcoin assets annually, as part of the year-end audit process of our financial statements and internal controls over financial reporting.
Notwithstanding our contention that such contracts are not “material contracts” within the meaning of Item 601(b)(10) of Regulation S-K, in response to this comment, we will enhance our disclosures in future filings, commencing with our Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “2024 Q2 Form 10-Q”), to include information detailing our custody procedures and related arrangements and disclosure that our cold storage wallets in which our Bitcoin is held are located in the United States. We intend to provide enhanced disclosures of our custody procedures and related arrangements in future Form 10-K filings under Item 1. Business. An example of such enhanced disclosures for illustration purposes using the “Industry Trends” section of Item 1. Business in the Form 10-K is attached hereto as Appendix “B” (inserts marked with underline; deletions marked with strikethrough).
Bullets #5: Insurance Provider Inspection Rights.
Our insurance providers do not have inspection rights associated with our Bitcoin assets held in storage.
Item 1A. Risk Factors, page 15
2.
Based on your disclosure on page F-44, there appears to be a concentration of risk related to your Bitcoin Mining revenue generated from your participation in a mining pool. In future filings, please include a risk factor highlighting the risks related to this revenue concentration.
Company Response: We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding the risks related to revenue concentration due to our participation in a single mining pool in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor disclosure in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:
***FOIA CONFIDENTIAL TREATMENT REQUESTED
BY RIOT PLATFORMS, INC.***
Securities and Exchange Commission
July 2, 2024
Page 5
Our revenue generation is subject to risks applicable to our mining pool, including risks outside of our control.
We participate in a “Full-Pay-Per-Share” mining pool, which calculates Bitcoin payouts primarily based on the hash rate provided by us to the mining pool as a percentage of total network hash rate, along with other inputs. We currently derive a significant portion of our revenue from our mining pool participation, which accounted for XX% and XX% of our revenue for the six months ended June 30, 2024, and June 30, 2023, respectively. We own all of our miners and accompanying infrastructure, and the only connection between our assets and our mining pool is that the total hash rate capacity of our miners is currently allocated to our mining pool, which we are free to change at any time, in our discretion. Further, the mining pool in which we participate, like most mining pools, is decentralized and has protections in place to prevent malicious actors or technical errors from affecting the pool’s ability to operate; however, these protections are not foolproof, and we may lose access to the mining pool, perhaps permanently. Because of the monitoring systems we have in place, we would become aware within minutes if our mining pool were to suffer downtime or cease to exist altogether, and we would expect to be able to resume mining without a mining pool within minutes, or redirect our hash rate to another mining pool, within an hour of the downtime event. However, self-mining has, historically, been less successful in earning Bitcoin rewards than participating in a mining pool, and our Bitcoin Mining revenue would become more volatile and may decline–perhaps materially–as a result of the loss or unavailability of our mining pool. If such unanticipated circumstances associated with our mining pool arise, and we are unable to quickly switch to another pool, self-mine without a pool or otherwise diversify our sources of Bitcoin mining revenue, our business, results of operations, and financial condition may suffer as a result.
Risks Related to the Price of Bitcoin, page 18
3.
Please add disclosure in future filings that addresses the risks related to bitcoin and the bitcoin network, including, for example, wash-trading, the existence of bitcoin “whales” and the concentration in bitcoin ownership, front-running and manipulation.
Company Response: We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding risks related to the market for Bitcoin in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor disclosure in the 2024 Q2 Form 10-Q, in response to the Staff’s comment:
Our success depends on external factors affecting the Bitcoin industry.
The Bitcoin industry has historically been subject to various risks relating to Bitcoin, as an asset, which have affected-at times adversely-the market price of Bitcoin. The ownership of Bitcoin has, historically, been concentrated in a relatively small number of persons or entities that, collectively, hold a significant number of Bitcoin (referred to as “whales” in the Bitcoin industry). While the ownership of Bitcoin has diversified significantly in recent years, whales continue to exist whose market activity (e.g., sales of large numbers of Bitcoin) could have an adverse e
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CORRESP 1 filename1.htm Riot Platforms, Inc. 3855 Ambrosia St., Ste. 301 Castle Rock, CO 80109 +1 (303) 794-2000 www.RiotPlatforms.com FOIA CONFIDENTIAL TREATMENT REQUESTED BY RIOT PLATFORMS, INC. PURSUANT TO 17 C.F.R. § 200.83 (“SEC RULE 83”) CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS LETTER. THIS LETTER OMITS CONFIDENTIAL INFORMATION (THE SYMBOL “[***]” HAS BEEN INSERTED IN PLACE OF THE OMITTED PORTIONS) INCLUDED IN THE UNREDACTED VERSION OF THE LETTER DELIVERED TO THE DIVISION OF CORPORATION FINANCE. July 2, 2024 Via EDGAR United States Securities and Exchange Commission Division of Corporation Finance Office of Crypto Assets 100 F Street, N.E. Washington, D.C. 20549-3720 Attention:Lulu Cheng; David Lin; Michelle Miller; and Mark Brunhofer Re:Riot Platforms, Inc. Form 10-K for the Fiscal Year Ended December 31, 2023 Filed February 23, 2024 File No. 001-33675 Ladies and Gentlemen: On behalf of Riot Platforms, Inc. (the “Company”), we submit this letter in response to comments from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) received on May 28, 2024, relating to the Company’s 2023 Annual Report on Form 10-K (the “Form 10-K”) filed with the SEC on February 23, 2024. For your convenience, the Staff’s comments have been repeated below in their entirety in bold, with the Company’s response to a particular comment set out immediately thereunder. The headings and numbered paragraphs in this letter correspond to the headings and numbered paragraphs in the comment letter received from the Staff on May 28, 2024. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Form 10-K. Pursuant to 17 C.F.R. § 200.83, the Company requests confidential treatment for portions of its response to the Staff’s comment. Specifically, the Company requests that portions of its response that have been redacted from the version of this letter filed via the Commission’s EDGAR system and marked by the symbol “[***]” be maintained in confidence, not be made part of any public record and not be disclosed to any person, including in response to any request under the Freedom of Information Act, 5 U.S.C. § 552 (“FOIA”), ***FOIA CONFIDENTIAL TREATMENT REQUESTED BY RIOT PLATFORMS, INC.*** Securities and Exchange Commission July 2, 2024 Page 2 as such responses contain confidential information. An unredacted version of this letter is being provided to the Commission under separate cover, along with the request for confidential treatment under SEC Rule 83. Form 10-K for the fiscal year ended December 31, 2023 Item 1. Business Industry Trends, page 6 1. On page 7, you disclose that, “Our Bitcoin is held in cold storage wallets by a well-known U.S.-based third-party digital asset-focused custodian. We also sell our Bitcoin using our custodian’s U.S. brokerage services.” Please revise future filings to describe in greater detail your custody procedures and related arrangements, including the following: · The identity of your third-party custodian; · The material terms of any (i) custody agreement and (ii) agreement in connection with your use of your custodian’s U.S. brokerage services to sell your Bitcoin. Additionally, file the same as exhibits in future filings. See Item 601(b)(10) of Regulation S-K; · The geographic location where crypto assets are held in cold wallets; · Whether any persons (e.g., auditors, etc.) are responsible for verifying the existence of the crypto assets held by your third-party custodian; and · Whether any insurance providers have inspection rights associated with the crypto assets held in storage. Company Response: Bullet #1: The Identity of Our Third-Party Custodian. The Staff has requested that we disclose the identity of our third-party custodian in future filings. As disclosed on page 21 of the Form 10-K, as we continue to increase in size, we face escalated security threats from hackers, cyber-attackers and other malicious actors. We respectfully contend that publicly disclosing the identity of our custodian(s) raises significant data security concerns and increases the risk that our service provider(s) experience a security breach by which unauthorized parties may acquire access to our Bitcoin. We continually evaluate custodian options, as well as the appropriate size, number, and security of our custodians and potential future custodians, and we are free to enter into any number of custodian relationships with respect to our Bitcoin in the ordinary course of our business. For the reasons stated above, we respectfully contend that we should not be required to disclose the identity of our third-party custodian (or custodians) in future filings made with the SEC. The name of our custodian and the amount of Bitcoin custodied with such custodian, as of June 30, 2024, is set forth on Appendix “A” hereto. ***FOIA CONFIDENTIAL TREATMENT REQUESTED BY RIOT PLATFORMS, INC.*** Securities and Exchange Commission July 2, 2024 Page 3 Bullet #2: Material Terms of Our Custody Agreement, Agreement With Our Custodian’s U.S. Brokerage Service to Sell Our Bitcoin and Request to File These Agreements as Exhibits in Future Filings. The Staff has also requested that we disclose the material terms of our custody agreement and agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin and to file these agreements as exhibits in future filings. We respectfully contend that neither agreement is a “material contract” under Item 601(b)(10) of Regulation S-K, for the reasons set forth herein. Under Item 601(b)(10), a “material contract” includes a “contract not made in the ordinary course of business that is material to the registrant and is to be performed in whole or in part at or after the filing of the registration statement or report.” Both agreements are made in the ordinary course of business pursuant to Item 601(b)(10)(ii), which provides, in pertinent part: “if the contract is such as ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries, it will be deemed to have been made in the ordinary course of business and need not be filed unless it falls within one or more of the following categories, in which case it shall be filed except where immaterial in amount or significance: * * * (B) Any contract upon which the registrant’s business is substantially dependent, as in the case of continuing contracts to sell the major part of registrant’s products or services or to purchase the major part of registrant’s requirements of goods, services or raw materials or any franchise or license or other agreement to use a patent, formula, trade secret, process or trade name upon which registrant’s business depends to a material extent[.]” The Agreements Are Not Made Outside the Ordinary Course of Business. As disclosed in the Form 10-K, we are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin blockchain. Such custody agreements and agreements to use custodian brokerage services to sell Bitcoin are customary in the Bitcoin mining industry and ordinarily accompany the kind of business we conduct. The Company’s Business Is Not Substantially Dependent on Either Agreement. Further, neither agreement falls into any of the enumerated categories in Item 601(b)(10)(ii)(A-D) requiring registrants to file an agreement if it is material in amount or significance. As Bitcoin is a decentralized cryptocurrency, it is not required that Bitcoin be held by a custodian, and we may choose to self-custody. Therefore, our business is not substantially dependent on our custody agreement or agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin because our business is not dependent on the services our custodian offers us under the agreements. We have made the business decision to utilize third-party custodian and brokerage services with respect to our Bitcoin, and, in the future, we may decide to discontinue this practice, or to use other, or additional, service providers. Further, our current Bitcoin custodian and brokerage services relationships are non-exclusive, and we may freely change our Bitcoin custodian and brokerage relationships (including by entering into additional, parallel relationships, or by terminating our existing relationships) at any time. Finally, the market for third-party cold storage custodians and brokerages is well-developed, and neither agreement restricts our ability to engage an alternative provider, similar to our ***FOIA CONFIDENTIAL TREATMENT REQUESTED BY RIOT PLATFORMS, INC.*** Securities and Exchange Commission July 2, 2024 Page 4 ability to change our depository financial institution relationships for our cash assets. We, therefore, respectfully submit to the Staff that our current third-party Bitcoin custodian and brokerage services agreements are not “material contracts” within the meaning of Item 601(b)(10) of Regulation S-K. Also, because they are not material contracts, we should not be required to disclose the material terms of our custody agreement and agreement for our use of our custodian’s U.S. brokerage services to sell our Bitcoin, or be required to file these agreements as exhibits in future filings. Bullets #3-#4: Enhanced Disclosures in Future Filings of Our Custody Procedures and Related Arrangements. We are not aware of our custodian experiencing excessive redemptions or withdrawals, or having suspended redemptions or withdrawals, of any customer assets (Bitcoin, crypto, or otherwise). Further, we have not experienced any loss of, or access to, our Bitcoin custodied with our custodian, we have never been unable to account for such Bitcoin assets, and we are not aware of our custodian having ever been unable to account for our Bitcoin assets or the crypto assets of its other customers. Finally, we continually monitor our Bitcoin assets held by third-party custodians, and we have unlimited audit rights with respect to such custodial accounts. Specifically, our accounting and internal audit teams perform a monthly reconciliation of our Bitcoin assets held by our custodian(s) and the records of our mining pool. The Chief Accounting Officer verifies these reconciliations quarterly, and our auditors verify the location and quantity of our Bitcoin assets annually, as part of the year-end audit process of our financial statements and internal controls over financial reporting. Notwithstanding our contention that such contracts are not “material contracts” within the meaning of Item 601(b)(10) of Regulation S-K, in response to this comment, we will enhance our disclosures in future filings, commencing with our Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “2024 Q2 Form 10-Q”), to include information detailing our custody procedures and related arrangements and disclosure that our cold storage wallets in which our Bitcoin is held are located in the United States. We intend to provide enhanced disclosures of our custody procedures and related arrangements in future Form 10-K filings under Item 1. Business. An example of such enhanced disclosures for illustration purposes using the “Industry Trends” section of Item 1. Business in the Form 10-K is attached hereto as Appendix “B” (inserts marked with underline; deletions marked with strikethrough). Bullets #5: Insurance Provider Inspection Rights. Our insurance providers do not have inspection rights associated with our Bitcoin assets held in storage. Item 1A. Risk Factors, page 15 2. Based on your disclosure on page F-44, there appears to be a concentration of risk related to your Bitcoin Mining revenue generated from your participation in a mining pool. In future filings, please include a risk factor highlighting the risks related to this revenue concentration. Company Response: We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding the risks related to revenue concentration due to our participation in a single mining pool in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor disclosure in the 2024 Q2 Form 10-Q, in response to the Staff’s comment: ***FOIA CONFIDENTIAL TREATMENT REQUESTED BY RIOT PLATFORMS, INC.*** Securities and Exchange Commission July 2, 2024 Page 5 Our revenue generation is subject to risks applicable to our mining pool, including risks outside of our control. We participate in a “Full-Pay-Per-Share” mining pool, which calculates Bitcoin payouts primarily based on the hash rate provided by us to the mining pool as a percentage of total network hash rate, along with other inputs. We currently derive a significant portion of our revenue from our mining pool participation, which accounted for XX% and XX% of our revenue for the six months ended June 30, 2024, and June 30, 2023, respectively. We own all of our miners and accompanying infrastructure, and the only connection between our assets and our mining pool is that the total hash rate capacity of our miners is currently allocated to our mining pool, which we are free to change at any time, in our discretion. Further, the mining pool in which we participate, like most mining pools, is decentralized and has protections in place to prevent malicious actors or technical errors from affecting the pool’s ability to operate; however, these protections are not foolproof, and we may lose access to the mining pool, perhaps permanently. Because of the monitoring systems we have in place, we would become aware within minutes if our mining pool were to suffer downtime or cease to exist altogether, and we would expect to be able to resume mining without a mining pool within minutes, or redirect our hash rate to another mining pool, within an hour of the downtime event. However, self-mining has, historically, been less successful in earning Bitcoin rewards than participating in a mining pool, and our Bitcoin Mining revenue would become more volatile and may decline–perhaps materially–as a result of the loss or unavailability of our mining pool. If such unanticipated circumstances associated with our mining pool arise, and we are unable to quickly switch to another pool, self-mine without a pool or otherwise diversify our sources of Bitcoin mining revenue, our business, results of operations, and financial condition may suffer as a result. Risks Related to the Price of Bitcoin, page 18 3. Please add disclosure in future filings that addresses the risks related to bitcoin and the bitcoin network, including, for example, wash-trading, the existence of bitcoin “whales” and the concentration in bitcoin ownership, front-running and manipulation. Company Response: We respectfully acknowledge the Staff’s comment and confirm that we will enhance our disclosures regarding risks related to the market for Bitcoin in future filings, commencing with the 2024 Q2 Form 10-Q. We intend to include the following additional risk factor disclosure in the 2024 Q2 Form 10-Q, in response to the Staff’s comment: Our success depends on external factors affecting the Bitcoin industry. The Bitcoin industry has historically been subject to various risks relating to Bitcoin, as an asset, which have affected-at times adversely-the market price of Bitcoin. The ownership of Bitcoin has, historically, been concentrated in a relatively small number of persons or entities that, collectively, hold a significant number of Bitcoin (referred to as “whales” in the Bitcoin industry). While the ownership of Bitcoin has diversified significantly in recent years, whales continue to exist whose market activity (e.g., sales of large numbers of Bitcoin) could have an adverse e