BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, announced its results for the fiscal
year ended December 31, 2023 (“2023”).
2023 Financial Highlights & 2024
Preliminary Insights
- Revenue: $1.3
million in 2023 revenue, down 20% from $1.7 million in 2022. The
decrease was primarily driven by lower crypto prices in early 2022.
Revenue for the fourth quarter of 2023 increased 20%
year-over-year, benefiting from a surge in crypto market prices in
December 2023.
- Gross Margin: 73%
gross margins in 2023, down slightly from 75% in 2022.
- Net Income: $7.8
million or $0.55 per share in 2023, in stark contrast to a net loss
of $15.9 million or -$1.25 per share in 2022. This significant
improvement is attributed to financial reporting changes resulting
from the adoption of new accounting standards as described
herein.
- 2023 Cash & Crypto
Value: $26.7 million as of December 31, 2023, marking a
82% year-over-year increase.
- Current Cash & Crypto
Value: $36.5 million or approximately $2.33 as of March
19, 2024. The ongoing rally in crypto prices through early 2024 has
further elevated the value of our crypto assets.
Management Commentary
In 2023, our strategic initiatives delivered
strong results, culminating in significant momentum as we moved
into 2024. The fair market value of our cryptocurrency assets saw a
remarkable doubling over the past year, with an additional increase
of 42% to $35.7 million by March 19, 2024. This growth not only
demonstrates our adeptness at navigating the volatile
cryptocurrency market but also sets the stage for enhanced revenue
prospects in 2024, bolstering our financial strength and future
growth.
StakeSeeker: In January 2023 we
launched StakeSeeker (beta), our crypto analytics and non-custodial
staking-as-a-service platform. Our strategy aims to increase our
fee-based revenue from rewards earned on assets delegated to our
nodes. Moreover, we’re exploring the introduction of Ethereum
non-custodial staking to StakeSeeker in 2024, aiming to diversify
and scale our revenue streams further.
Builder+: In February 2024, we
introduced “Builder+”, our innovative Ethereum block builder.
Utilizing sophisticated algorithms, Builder+ optimizes block
construction for on-chain validation, designed to enhance validator
earnings and compete in a market for transaction gas fees. Builder+
represents an extension of our core Ethereum blockchain
infrastructure operations, aimed at driving scalable revenue
growth.
ChainQ: Recognizing the demand
for accessible on-chain data, we announced the development of
“ChainQ”, an AI-enhanced blockchain data and analytics platform
which we plan to launch in 2024. Through comprehensive indexing of
public blockchain data from our Blockchain Infrastructure
operations, ChainQ is intended to provide an intuitive and
easy-to-use platform for accessing on-chain information. We
continue to dedicate efforts towards the research and development
of ChainQ.
Blockchain Infrastructure:
Efficiency enhancement in our blockchain infrastructure operations
was a key focus in 2023. By bringing the full monitoring and
maintenance of our validator nodes in-house, we’ve reduced our
dependency on external service providers, thereby cutting costs and
paving the way for new value-added initiatives such as Builder+ and
ChainQ.
At BTCS, we firmly believe in the transformative
potential of blockchain technologies, and we’re dedicated to being
at the forefront of its advancement. Our belief in blockchain's
revolutionary impact is steadfast, and we are advocates for its
expanded adoption in both the public and private spheres. We are
filled with optimism for what the future holds and are eager to
spearhead innovations that bolster the value we deliver to our
shareholders.
Industry Highlights
Bitcoin and potentially Ethereum ETFs Impact on
Market DynamicsIn 2023, the crypto industry experienced a pivotal
moment with the SEC’s long-awaited approval of Bitcoin (BTC)
Exchange-Traded Funds (ETFs), marking a significant step towards
blending digital currencies with mainstream financial mechanisms.
This development, alongside the anticipation for Ethereum (ETH)
ETFs in 2024, has ignited a bullish momentum across the
cryptocurrency markets, showcasing a robust wave of optimism among
investors. These ETFs serve as crucial bridges, connecting the
traditional financial world with the crypto ecosystem, thereby
facilitating a smoother entry for conventional investors into
crypto assets.
The positive nature of Bitcoin ETF approvals
have uplifted the broader crypto market and spurred a wave of
innovation and investment in alternative Layer 1 and Layer 2
protocols. This domino effect is catalyzing growth throughout the
blockchain space, as the influx of traditional investment
encourages the development of new technologies and solutions. The
crypto ecosystem stands at the brink of accelerated expansion,
promising an era of heightened accessibility, innovation, and
opportunity, driven by the symbiotic relationship between
cryptocurrencies and traditional financial markets.
Ethereum’s Evolution: Network Upgrades Fuelling
Future AdoptionThe Ethereum network successfully completed major
and transformative upgrade on March 13 with the “Dencun Hardfork”.
The upgrade should improve network functionality and bolster the
efficiency of Layer-2 blockchain infrastructures, particularly by
enhancing data storage capabilities. Such improvements are expected
to facilitate a more streamlined and cost-effective environment for
handling layer-2 transaction fees, signifying a leap forward in
Ethereum’s technological evolution.
Moreover, Ethereum’s ecosystem is demonstrating
remarkable growth and security through its staking mechanism, with
a current staking ratio of 26%. This translates into 31.4 million
ETH staked out of all eligible tokens, underscoring a robust
validator market. The active participation of the community in
staking not only underscores their commitment to the network's
security and decentralization but also highlights the thriving
nature of Ethereum's validator market. This engagement is pivotal
in bolstering the network's security and fostering a more
decentralized ecosystem.
Additionally, Ethereum is experiencing a
noteworthy phase of deflation, further testament to its evolving
economic model and its implications for value creation within the
network. This deflationary trend is indicative of a maturing
ecosystem that is not only attracting investment and participation
but is also setting a precedent for sustainable growth and adoption
in the broader blockchain community. These developments
collectively signal Ethereum's continued expansion and its role in
driving innovation, adoption, and value creation in the digital
asset space.
Adoption of Accounting Standards Update
(ASU) No. 2023-08 Impact:
The early adoption of ASU No. 2023-08 brought
about a fundamental shift in how we account for our crypto assets
on our financial statements, allowing us to now recognize them at
their fair market value compared to previously recording them at
their lowest post-acquisition price. This change enables the
inclusion of unrealized gains or losses on crypto assets directly
in our financial results, offering a more accurate representation
of our operational health.
We believe that the specified changes in
financial reporting stemming from the new accounting guidance
better reflect the economic realities of the Company’s business
model and the value of the crypto assets held, enhancing the
transparency and accuracy of the financial statements.
About BTCS:BTCS Inc. is a
Nasdaq listed company operating in the blockchain technology sector
since 2014 and is one of the only U.S. publicly traded companies
with a primary focus on proof-of-stake blockchain infrastructure.
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. BTCS secures and
operates validator nodes on cutting-edge blockchain networks that
power Web 3, earning native token rewards by staking our
proof-of-stake crypto assets, with an emphasis on Ethereum. Our
innovative “StakeSeeker” platform empowers crypto holders with an
analytics-focused cryptocurrency dashboard. It also offers a
non-custodial Staking-as-a-Service solution, enabling users to earn
staking rewards, while BTCS earns a percentage of token holders’
rewards, creating the potential for scalable revenue with limited
additional costs. We’ve also introduced “Builder+”, an Ethereum
block builder. This technology leverages advanced algorithms to
maximize profit through optimized block construction. Builder+
creates opportunities for new scalable revenue streams by being
utilized by third-party nodes. For more information visit:
www.btcs.com.
Forward-Looking
Statements:Certain statements in this press release,
constitute “forward-looking statements” within the meaning of the
federal securities laws including statements regarding enhanced
revenue prospects in 2024, bolstering our financial strength and
future growth, aiming to diversify and sale our revenue streams
further and driving scalable revenue growth, optimism for driving
shareholder value, expectations for the technological evolution of
Ethereum and its value creation. Words such as “may,” “might,”
“will,” “should,” “believe,” “expect,” “anticipate,” “estimate,”
“continue,” “predict,” “forecast,” “project,” “plan,” “intend” or
similar expressions, or statements regarding intent, belief, or
current expectations, are forward-looking statements. While the
Company believes these forward-looking statements are reasonable,
undue reliance should not be placed on any such forward-looking
statements, which are based on information available to us on the
date of this release. These forward-looking statements are based
upon assumptions and are subject to various risks and
uncertainties, including without limitation regulatory issues,
unexpected issues with Builder+, unexpected issues with our product
offering, and the reluctance of validators to try or utilize our
Builder+ product, as well as risks set forth in the Company’s
filings with the Securities and Exchange Commission including its
Form 10-K for the year ended December 31, 2023 which was filed on
March 21 , 2024. Thus, actual results could be materially
different. The Company expressly disclaims any obligation to update
or alter statements, whether as a result of new information, future
events or otherwise, except as required by law.
Investor Relations:ir@btcs.com
Financials
The tables below are derived from the Company’s
financial statements included in its Form 10-K filed on March 21,
2024, with the Securities and Exchange Commission. Please refer to
the Form 10-K for complete financial statements and further
information regarding the Company’s results of operations and
financial condition relating to the fiscal quarter and fiscal year
ended December 31, 2023 and 2022. The Company’s Form 10-K also
includes a discussion of risk factors applicable to the Company and
its business.
BTCS Inc.Balance
Sheets
|
|
December 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,458,327 |
|
|
$ |
2,146,783 |
|
Stablecoins |
|
|
21,044 |
|
|
|
- |
|
Crypto assets |
|
|
302,783 |
|
|
|
982 |
|
Staked crypto assets |
|
|
24,900,146 |
|
|
|
1,826,307 |
|
Prepaid expenses |
|
|
62,461 |
|
|
|
123,727 |
|
Receivable for capital shares
sold |
|
|
291,440 |
|
|
|
- |
|
Total current assets |
|
|
27,036,201 |
|
|
|
4,097,799 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Investments, at value (Cost
$100,000) |
|
|
100,000 |
|
|
|
100,000 |
|
Property and equipment,
net |
|
|
10,490 |
|
|
|
11,152 |
|
Staked crypto assets - long
term |
|
|
- |
|
|
|
5,708,624 |
|
Total other assets |
|
|
110,490 |
|
|
|
5,819,776 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
27,146,691 |
|
|
$ |
9,917,575 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
55,058 |
|
|
$ |
76,727 |
|
Accrued compensation |
|
|
712,092 |
|
|
|
295,935 |
|
Warrant liabilities |
|
|
213,750 |
|
|
|
213,750 |
|
Total current liabilities |
|
|
980,900 |
|
|
|
586,412 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock: 20,000,000
shares authorized at $0.001 par value: |
|
|
- |
|
|
|
- |
|
Series V preferred stock:
14,567,829 and 0 shares issued and outstanding at December 31, 2023
and 2022, respectively |
|
|
2,563,938 |
|
|
|
- |
|
Common stock, 975,000,000
shares authorized at $0.001 par value, 15,320,281 and 13,107,149
shares issued and outstanding at December 31, 2023 and 2022,
respectively |
|
|
15,322 |
|
|
|
13,108 |
|
Additional paid in
capital |
|
|
162,263,634 |
|
|
|
160,800,263 |
|
Accumulated deficit |
|
|
(138,677,103 |
) |
|
|
(151,482,208 |
) |
Total stockholders'
equity |
|
|
26,165,791 |
|
|
|
9,331,163 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
27,146,691 |
|
|
$ |
9,917,575 |
|
BTCS Inc.Statements of
Operations
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Validator revenue (net of fees) |
|
$ |
1,339,628 |
|
|
$ |
1,692,454 |
|
Total revenues |
|
|
1,339,628 |
|
|
|
1,692,454 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Validator expenses |
|
|
359,778 |
|
|
|
426,440 |
|
Gross profit |
|
|
979,850 |
|
|
|
1,266,014 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
1,863,916 |
|
|
$ |
1,916,193 |
|
Research and development |
|
|
687,288 |
|
|
|
611,758 |
|
Compensation and related expenses |
|
|
2,129,144 |
|
|
|
3,313,638 |
|
Marketing |
|
|
12,153 |
|
|
|
78,171 |
|
Impairment loss on crypto assets |
|
|
- |
|
|
|
13,348,874 |
|
Realized (gains) losses on crypto asset transactions |
|
|
604,269 |
|
|
|
(506,757 |
) |
Total operating expenses |
|
|
5,296,770 |
|
|
|
18,761,877 |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Change in unrealized appreciation (depreciation) on crypto
assets |
|
|
12,135,648 |
|
|
|
- |
|
Change in fair value of warrant liabilities |
|
|
- |
|
|
|
1,638,750 |
|
Distributions to warrant holders |
|
|
- |
|
|
|
(35,625 |
) |
Total other income (expenses) |
|
|
12,135,648 |
|
|
|
1,603,125 |
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
7,818,728 |
|
|
$ |
(15,892,738 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common stockholders, basic and
diluted |
|
$ |
0.55 |
|
|
$ |
(1.25 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding, basic and
diluted |
|
|
14,092,233 |
|
|
|
12,732,914 |
|
BTCS Inc.Statements of
Cash Flows
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Net Cash flows used
from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,818,728 |
|
|
$ |
(15,892,738 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
5,033 |
|
|
|
4,039 |
|
Stock-based compensation |
|
|
1,341,729 |
|
|
|
2,625,270 |
|
Validator revenue |
|
|
(1,339,628 |
) |
|
|
(1,692,454 |
) |
Blockchain network fees (non-cash) |
|
|
- |
|
|
|
1,321 |
|
Change in fair value of warrant liabilities |
|
|
- |
|
|
|
(1,638,750 |
) |
Sale of non-productive crypto assets |
|
|
- |
|
|
|
2,547,325 |
|
Realized gain on crypto assets transactions |
|
|
604,269 |
|
|
|
(506,757 |
) |
Change in unrealized (appreciation) depreciation on crypto
assets |
|
|
(12,135,648 |
) |
|
|
- |
|
Impairment loss on crypto assets |
|
|
- |
|
|
|
13,348,874 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Stablecoins |
|
|
(21,044 |
) |
|
|
- |
|
Prepaid expenses and other current assets |
|
|
61,266 |
|
|
|
200,824 |
|
Receivable for capital shares sold |
|
|
(291,440 |
) |
|
|
- |
|
Accounts payable and accrued expenses |
|
|
(21,669 |
) |
|
|
(62,332 |
) |
Accrued compensation |
|
|
416,157 |
|
|
|
288,601 |
|
Net cash used in operating
activities |
|
|
(3,562,247 |
) |
|
|
(776,777 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchase of productive crypto assets for validating |
|
|
(1,804,482 |
) |
|
|
(9,453,024 |
) |
Sale of productive crypto assets |
|
|
1,994,851 |
|
|
|
585,595 |
|
Purchase of investments |
|
|
- |
|
|
|
(100,000 |
) |
Purchase of property and equipment |
|
|
(5,276 |
) |
|
|
(5,408 |
) |
Sale of property and equipment |
|
|
904 |
|
|
|
- |
|
Net cash provided by (used in)
investing activities |
|
|
185,997 |
|
|
|
(8,972,837 |
) |
|
|
|
|
|
|
|
|
|
Cash flow from
financing activities: |
|
|
|
|
|
|
|
|
Dividend distributions |
|
|
- |
|
|
|
(630,801 |
) |
Net proceeds from issuance common stock/ At-the-market
offering |
|
|
2,687,794 |
|
|
|
11,126,331 |
|
Net cash provided by financing
activities |
|
|
2,687,794 |
|
|
|
10,495,530 |
|
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in
cash |
|
|
(688,456 |
) |
|
|
745,916 |
|
Cash, beginning of period |
|
|
2,146,783 |
|
|
|
1,400,867 |
|
Cash, end of period |
|
$ |
1,458,327 |
|
|
$ |
2,146,783 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash financing and investing
activities: |
|
|
|
|
|
|
|
|
Series V Preferred Stock Distribution |
|
$ |
2,559,533 |
|
|
$ |
- |
|
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