Bitmine Immersion Technologies, Inc. — Form 10-Q Summary
Reporting period: Three months ended November 30, 2022 (the first quarter of fiscal 2023; fiscal year ends August 31). The unaudited statements compare with the three months ended November 30, 2021. The company reports one segment: cryptocurrency mining.
Business context and operating developments
Bitmine is developing Bitcoin mining, equipment sales, and hosting operations using immersion cooling. Its planned Trinidad hosting site was completed in October 2022, but operations and further container installations were delayed after the local utility indicated electricity could cost approximately $0.09/kWh, rather than the rate contemplated in the TSTT arrangement. The company says it is pursuing hosting opportunities in the United States and Canada while the dispute remains unresolved.
During the quarter, the company sold four immersion containers to a Texas joint venture for $1.2 million, financed by a note payable in installments. It also contributed one immersion container and six transformers to the venture. The company reported owning 362 miners intended for self-mining.
Financial results and position
| Metric | Three months ended Nov. 30, 2022 | Comparable 2021 period |
|---|---|---|
| Revenue | $101,716 | $0 |
| Gross loss | $(16,759) | $0 |
| Operating expenses | $475,136 | $664,043 |
| Loss from operations | $(491,895) | $(664,043) |
| Net loss | $(470,665) | $(708,756) |
| Basic and diluted loss per share | $(0.01) | $(0.02) |
| Net cash used in operating activities | $(1,182,918) | $(69,518) |
Current-period revenue comprised $72,800 from equipment sales and $28,916 from self-mining; no hosting revenue was reported. Total cost of sales was $118,476, exceeding revenue. The filing attributes elevated mining costs partly to temporary facilities, higher electricity costs, and costs of completing the Trinidad site that were not capitalized. The company recorded $122,950 of fixed-asset impairment and $3,523 of cryptocurrency impairment. A $16,939 gain related to termination of a hosting agreement and $9,099 of interest income contributed to other income.
At November 30, 2022, cash was $180,646 (versus $392,550 at August 31, 2022); current assets were $1,051,485 and current liabilities were $775,641. Total assets were $8,206,412, total liabilities $1,197,443, and stockholders’ equity $7,008,969. Notes receivable totaled $2,221,191, including $865,839 current and $1,355,351 long-term. Fixed assets not in service were $4,380,789.
Financing included $400,000 borrowed under a new related-party line of credit with IDI, controlled by the company’s chairman and CFO. The facility permits borrowing up to $1 million, subject to lender approval, at 12% annual interest compounded monthly; amounts drawn are due December 1, 2023. Cash provided by investing activities was $571,014, reflecting fixed-asset sale proceeds partly offset by the $987,429 joint-venture investment. Cash decreased by $211,904 during the quarter.
Changes versus the prior comparable period
- Revenue began in the current period, while the comparable 2021 quarter had none; the company nevertheless recorded a gross loss.
- Net loss narrowed by $238,091, principally alongside lower professional fees and lower interest expense, but operating cash use increased substantially, in part because of equipment-sale notes receivable.
- Network hash rate rose 15.3% and Bitcoin mining difficulty rose 19.3% from August 31; Bitcoin’s reported market price fell 14.4% to $17,168.57.
- Cash declined, while notes receivable, joint-venture investment, and related-party borrowing increased.
Outlook, risks, and unusual items
Management said cash on hand, potential additional draws under the related-party credit line, equipment-sale collections, and self-mining revenue should fund operations for the next 12 months. It estimated approximately $19,500 in monthly gross profit from its 362 miners once deployed at a permanent Trinidad location, assuming Bitcoin price, difficulty, and expected electricity costs remain unchanged. This estimate is conditional, not a guarantee. Management also said expansion will require additional capital and that it is exploring financing, including equity, convertible notes, or preferred stock; no assurance of financing is given.
Key risks include the unresolved Trinidad electricity-rate dispute and facility delays; Bitcoin price volatility, rising network hash rate and mining difficulty; power availability and cost; access to capital; and uncertainty in digital-asset markets and exchanges. The filing specifically added the risk that exchange failures, fraud, or shutdowns could damage confidence, liquidity, and cryptocurrency prices. Management reported effective disclosure controls as of November 30, 2022, and no material change in internal control over financial reporting. It reported no known threatened or pending litigation and no contractual commitments as of the reporting date.
The cover indicates the company checked “No” for having filed all required reports during the preceding 12 months (or shorter required period). The filing also contains an MD&A operating-expense figure of $491,921 that conflicts with the financial statements and MD&A expense table, both of which report $475,136; the financial statements’ $475,136 reconciles to the reported operating loss.
Important facts for investors to verify
- Why the cover reports that the company had not filed all required reports during the preceding 12 months, and whether any filing obligations remain outstanding.
- Resolution and timing of the TSTT/utility rate dispute, the actual electricity price available, and when facilities can operate.
- Collections, repayment terms, and credit quality of the $2.22 million notes receivable, including the Texas venture note.
- Availability and terms of additional related-party or external financing, including potential dilution and repayment capacity.
- The conflicting $491,921 versus $475,136 operating-expense figures in MD&A and the reported financial statements.
- Whether the stated 12-month liquidity expectation and conditional mining-profit estimate remain supportable under changing Bitcoin prices, difficulty, and power costs.