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Case 6:24-cv-00099-ADA Document 26 Filed 03/01/24 Page 1 of 1\n\n\n\n\n UNITED STATES DISTRICT COURT\n PHILIP J. DEVLIN WESTERN DISTRICT OF TEXAS ANNETTE FRENCH\n CLERK OF COURT 800 Franklin Avenue Room 380 CHIEF DEPUTY\n\n Waco, TX 76701\n\n March 1, 2024\n\nGreg White\n900 Washington Avenue\nSuite 800\nWaco, Texas 76701\n\nRe: Civil Case No. 6:24-cv-00099; Texas Blockchain Council et al v. Department of Energy et al\n\n\n Our records indicate that you are not admitted to practice in this Court. Western District of Texas Local Court\nRule AT-1(f)(1) states:\n\n In General: An attorney who is licensed by the highest court of a state or another federal district court,\n but who is not admitted to practice before this court, may represent a party in this court pro hac vice\n only by permission of the judge presiding. Unless excused by the judge presiding, an attorney is\n ordinarily required to apply for admission to the bar of this court.\n\n You were included as an attorney of record on a recent filing in the above-named cause. If you are\nrepresenting a party, please submit a motion requesting the Court\u2019s permission to appear in the above captioned case.\n(Pro hac vice admission is on a per-case basis. Previous pro hac admission will not apply to future cases.) If you wish\nto file an application to be admitted in the Western District of Texas, the application forms and the Local Rules for the\nWestern District of Texas are available on our website www.txwd.uscourts.gov. If you are an attorney who maintains\nhis or her office outside of the Western District of Texas, the judge may require you to designate local counsel. (Local\nRule AT-2).\n\n If you have any questions concerning this matter, please contact our office.\n Sincerely,\n\f","ocr_status":2,"date_upload":"2024-03-03T22:51:39.329523-08:00","document_number":"26","attachment_number":null,"pacer_doc_id":"181031755392","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Pro Hac Vice Letter","acms_document_guid":""}],"date_created":"2024-03-01T15:30:10.398308-08:00","date_modified":"2025-01-22T17:34:01.074542-08:00","date_filed":"2024-03-01","time_filed":"16:53:55","entry_number":26,"recap_sequence_number":"2024-03-01.003","pacer_sequence_number":103,"description":"Pro Hac Vice Letter to Chamber of Digital Commerce to attorney Greg White. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/380003544/","id":380003544,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387752610/","id":387752610,"tags":[],"absolute_url":"/docket/68276281/25/texas-blockchain-council-v-department-of-energy/","date_created":"2024-03-01T13:25:29.790978-08:00","date_modified":"2025-01-22T17:34:01.063529-08:00","sha1":"51519cbe797a92a8e1f0c49f5234b1145669c9c5","page_count":4,"file_size":175648,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.25.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.25.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387752610.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 25 Filed 03/01/24 Page 1 of 4\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\nTEXAS BLOCKCHAIN COUNCIL, a )\nnonprofit association; )\nRIOT PLATFORMS, INC., )\n )\nPlaintiffs, )\n )\nv. )\n ) Case No. 6:24-cv-99\nDEPARTMENT OF ENERGY; JENNIFER )\nM. GRANHOLM, in her official capacity as )\nSecretary of Energy; ENERGY )\nINFORMATION ADMINISTRATION; )\nJOSEPH DECAROLIS, in his official )\ncapacity as Administrator of Energy )\nInformation Administration; OFFICE OF )\nMANAGEMENT AND BUDGET; )\nSHALANDA YOUNG, in her official )\ncapacity as Director of Office of Management )\nand Budget, )\n )\nDefendants. )\n\n\n\n\n ORDER\n\n Before the Court is the Agreement of Plaintiff Texas Blockchain Council; Plaintiff Riot\n\nPlatforms, Inc. (collectively with Texas Blockchain Council, \u201cPlaintiffs\u201d); Defendant\n\nDepartment of Energy (\u201cDOE\u201d); Defendant Jennifer M. Granholm, in her official capacity as\n\nSecretary of Energy; Defendant U.S. Energy Information Administration (\u201cEIA\u201d); Defendant\n\nJoseph DeCarolis, in his official capacity as Administrator of EIA; Defendant Office of\n\nManagement and Budget (\u201cOMB\u201d); Defendant Shalanda Young, in her official capacity as\n\nDirector of OMB (collectively with the other Defendants, \u201cDefendants\u201d); and Proposed\n\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 25 Filed 03/01/24 Page 2 of 4\n\n\n\n\nIntervenor Chamber of Digital Commerce (\u201cProposed Intervenor,\u201d and collectively with the\n\nPlaintiffs and Defendants, the \u201cParties\u201d).\n\n The Agreement sets forth that EIA has discontinued (that is, formally withdrawn and\n\nceased) the emergency collection of Form EIA-862 that Plaintiffs challenge in this litigation, and\n\nthat OMB has approved the discontinuance. See Agreement, Recitals, \u00b6\u00b6 J-K. As a result of the\n\ndiscontinuance, no person or entity is subject to any obligation to respond to Form EIA-862. Id.\n\n\u00b6 L. The Agreement further sets forth that in the letter from EIA Administrator DeCarolis\n\nformally requesting approval of the discontinuance, EIA explained that it \u201chas decided that it\n\nwill not proceed through the emergency collection procedures set forth in 44 U.S.C. \u00a7 3507(j)\n\nand 5 C.F.R. \u00a7 1320.13 with respect to an information collection covering data of the type\n\ndescribed in Form EIA-862.\u201d Id. \u00b6 J (quoting Agreement, Attachment 1, Suppl. DeCarolis Decl.,\n\nEx. A). EIA explained that it \u201cwill proceed through the PRA\u2019s notice-and-comment procedures .\n\n. . to determine whether to request that OMB approve any collection of information covering\n\nsuch data.\u201d Id.\n\n In the Agreement, Defendants agree that EIA will destroy any information that it has\n\nreceived or will received in response to the emergency collection of Form EIA-862, and will\n\nsequester and keep confidential any such information until it is destroyed. Id. \u00a7 1.\n\n Defendants further agree that EIA will publish in the Federal Register a new notice of a\n\nproposed collection of information that will supersede a notice that EIA previously issued. Id.\n\n\u00a7 2; Energy Information Administration, Agency Information Collection Proposed Extension, 89\n\nFed. Reg. 9,140 (Feb. 9, 2024) (\u201cFebruary 9 Notice\u201d). Defendants further agree that EIA will\n\nprovide a 60-day public comment period for the new Federal Register notice and will also\n\nconsider any comments that have been submitted in response to the February 9 Notice as if they\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 25 Filed 03/01/24 Page 3 of 4\n\n\n\n\nhad been submitted in response to the new notice. See Agreement \u00a7\u00a7 2-3. Further, if, after\n\nevaluating the received comments, EIA decides to conduct a cryptocurrency mining survey, the\n\nDefendants agree to conduct that clearance process in accordance with the procedures set forth in\n\n44 U.S.C. \u00a7 3507 and 5 C.F.R. \u00a7 1320.10.\n\n Plaintiffs and Proposed Intervenor have withdrawn their request that the Court enter a\n\npreliminary injunction. Id. \u00a7 5. Plaintiffs and Proposed Intervenor have further agreed not to\n\nrequest any further relief, including injunctive relief or a declaratory judgment, with respect to\n\nthe emergency collection of EIA-862, which has now been discontinued\u2014that is, withdrawn and\n\nceased. See Id. \u00a7 6. This agreement is without prejudice to Plaintiffs and Proposed Intervenor\n\nseeking relief with respect to any collection of information that might be authorized in the future.\n\nId.\n\n In the Agreement, Defendant has consented to the Proposed Intervenor\u2019s Motion to\n\nIntervene as Plaintiff. Id. \u00a7 7.\n\n The Parties have also jointly requested that the Court stay and administratively close the\n\ncase. Id. \u00a7 8.\n\n The Agreement states that it is the result of compromise and nothing in the Agreement or\n\nany representations made by any Party in the course of negotiating the Agreement shall\n\nconstitute or be construed as an admission of liability or wrongdoing by any Party. Id. \u00a7 9.\n\n The Court ORDERS the following:\n\n Proposed Intervenor Chamber of Digital Commerce\u2019s Motion to Intervene as Plaintiff is\n\nGRANTED. The Chamber of Digital Commerce is hereby ALLOWED to permissively\n\nintervene in the above captioned matter as a Plaintiff.\n\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 25 Filed 03/01/24 Page 4 of 4\n\n\n\n\n In light of Plaintiffs\u2019 and Proposed Intervenor\u2019s withdrawal of their request for\n\nPreliminary Injunction, that request for Preliminary Injunction is DENIED AS MOOT.\n\n The Court STAYS this case and directs the clerk to ADMINISTRATIVELY CLOSE\n\nthis case.\n\n IT IS SO ORDERED this 1st day of March, 2024.\n\n\n\n ________________________________\n ALAN D ALBRIGHT\n UNITED STATES DISTRICT JUDGE\n\n\n\n\n 4\n\f","ocr_status":2,"date_upload":"2024-03-01T13:31:33.744831-08:00","document_number":"25","attachment_number":null,"pacer_doc_id":"181031753922","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion for Miscellaneous Relief","acms_document_guid":""}],"date_created":"2024-03-01T13:25:29.766676-08:00","date_modified":"2025-01-22T17:34:01.049358-08:00","date_filed":"2024-03-01","time_filed":"14:57:03","entry_number":25,"recap_sequence_number":"2024-03-01.002","pacer_sequence_number":92,"description":"ORDER GRANTING [16] Motion CHAMBER OF DIGITIAL COMMERCES MOTION FOR LEAVE TO INTERVENE AS PLAINTIFF. The Chamber of Digital Commerce is hereby ALLOWED to permissively intervene in the above captioned matter as a Plaintiff. In light of Plaintiffs and Proposed Intervenors withdrawal of their request for Preliminary Injunction, that request for Preliminary Injunction is DENIED AS MOOT. The Court STAYS this case and directs the clerk to ADMINISTRATIVELY CLOSE this case. Signed by Judge Alan D Albright. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379970611/","id":379970611,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387718088/","id":387718088,"tags":[],"absolute_url":"/docket/68276281/24/texas-blockchain-council-v-department-of-energy/","date_created":"2024-03-01T10:14:37.259018-08:00","date_modified":"2025-01-22T17:34:01.037770-08:00","sha1":"85f6e039349fd0554b74be9f82c2dcc68ff54e42","page_count":8,"file_size":218036,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387718088.thumb.1068_1.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 1 of 8\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\nTEXAS BLOCKCHAIN COUNCIL, a )\nnonprofit association; )\nRIOT PLATFORMS, INC., )\n )\nPlaintiffs, )\n )\nv. )\n ) Case No. 6:24-cv-99\nDEPARTMENT OF ENERGY; JENNIFER )\nM. GRANHOLM, in her official capacity as )\nSecretary of Energy; ENERGY )\nINFORMATION ADMINISTRATION; )\nJOSEPH DECAROLIS, in his official )\ncapacity as Administrator of Energy )\nInformation Administration; OFFICE OF )\nMANAGEMENT AND BUDGET; )\nSHALANDA YOUNG, in her official )\ncapacity as Director of Office of Management )\nand Budget, )\n )\nDefendants. )\n\n\n\n\n NOTICE OF AGREEMENT\n\n Plaintiff Texas Blockchain Council; Plaintiff Riot Platforms, Inc. (collectively with Texas\n\nBlockchain Council, \u201cPlaintiffs\u201d); Defendant Department of Energy (\u201cDOE\u201d); Defendant\n\nJennifer M. Granholm, in her official capacity as Secretary of Energy; Defendant U.S. Energy\n\nInformation Administration (\u201cEIA\u201d); Defendant Joseph DeCarolis, in his official capacity as\n\nAdministrator of EIA; Defendant Office of Management and Budget (\u201cOMB\u201d); and Defendant\n\nShalanda Young, in her official capacity as Director of OMB (collectively with the other\n\nDefendants, \u201cDefendants,\u201d); and Proposed Intervenor Chamber of Digital Commerce (\u201cProposed\n\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 2 of 8\n\n\n\n\nIntervenor,\u201d and collectively with the Plaintiffs and Defendants, the \u201cParties\u201d) hereby enter into\n\nthis Agreement.\n\n RECITALS\n\n A. On January 24, 2024, EIA requested that OMB approve the emergency collection\n\nof information under Form EIA-862, Cryptocurrency Mining Facilities Survey (the \u201cEIA-862\n\nEmergency Collection Request\u201d) pursuant to the emergency collection procedures of the\n\nPaperwork Reduction Act (\u201cPRA\u201d) and its implementing regulations in 44 U.S.C. \u00a7 3507(j) and\n\n5 C.F.R. \u00a7 1320.13.\n\n B. On January 26, 2024, OMB approved the emergency collection of information\n\nunder Form EIA-862, Cryptocurrency Mining Facilities Survey (the \u201cEIA-862 Emergency\n\nCollection Approval\u201d). OMB\u2019s Notice of Action setting forth the EIA-862 Emergency\n\nCollection Approval listed an expiration date of July 31, 2024.\n\n C. In or around late January or February 2024, EIA sent Form EIA-862, as approved\n\nthrough the EIA-862 Emergency Collection Approval (the \u201cEIA-862 Emergency Survey\u201d), to\n\ncertain parties engaged in cryptocurrency mining with an initial response deadline of February\n\n23, 2024, and subsequent response deadlines of the last Friday of each month.\n\n D. On February 9, 2024, EIA published a notice in the Federal Register pursuant to\n\nthe PRA\u2019s notice-and-comment procedures, see 44 U.S.C. \u00a7 3506(c), that it was proposing a\n\nthree-year collection of a Cryptocurrency Mining Facilities Survey. See Energy Information\n\nAdministration, Agency Information Collection Proposed Extension, 89 Fed. Reg. 9,140 (Feb. 9,\n\n2024) (\u201cFebruary 9 Notice\u201d). The February 9 Notice invited public comments through April 9,\n\n2024. It also described the EIA-862 Emergency Collection Request and the EIA-862 Emergency\n\nCollection Approval.\n\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 3 of 8\n\n\n\n\n E. On February 22, 2024, Plaintiffs filed their Complaint in this action. ECF No. 1.\n\nPlaintiffs\u2019 Complaint alleges, among other things, that the EIA-862 Emergency Collection\n\nRequest, the EIA-862 Emergency Collection Approval, and the collection of information through\n\nthe EIA-862 Emergency Survey violate the PRA and the Administrative Procedure Act, and do\n\nnot comply with various statutory and regulatory requirements for the emergency collection of\n\ninformation.\n\n F. Also on February 22, 2024, Plaintiffs filed a Motion for a Temporary Restraining\n\nOrder. ECF No. 5.\n\n G. On February 23, 2024, the Court entered an Order Granting Plaintiffs\u2019 Motion for\n\nTemporary Restraining Order, which ordered that \u201cDefendants are: 1. restrained from requiring\n\nPlaintiffs or their members to respond to the Survey, 2. restrained from collecting data required\n\nby the Survey, and 3. shall sequester and not share any such data that Defendants have already\n\nreceived from Survey respondents.\u201d ECF No. 13, at 5. The Temporary Restraining Order\n\nexpires on March 8, 2024, unless extended by the Court or by Defendants\u2019 consent. Id. at 6.\n\n H. The Court set a Preliminary Injunction Hearing (\u201cHearing\u201d) for February 28,\n\n2024. ECF No. 14.\n\n I. On February 26, 2024, Proposed Intervenor filed a Motion for Leave to Intervene\n\nas a Plaintiff. ECF No. 16. That Motion indicated that if allowed to intervene, Proposed\n\nIntervenor would seek the same relief sought by Plaintiffs. Id. at 2.\n\n J. On February 26, 2024, Administrator DeCarolis informed OMB in a signed letter\n\nthat EIA was \u201cimmediately . . . discontinuing (that is, formally withdrawing and ceasing) that\n\nemergency collection of Form EIA-862 and requesting that OMB approve EIA\u2019s discontinuance\n\nof the emergency authorization of the Form EIA-862 data collection.\u201d Attachment 1, Suppl.\n\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 4 of 8\n\n\n\n\nDeCarolis Decl., Ex. A (\u201cEIA-862 Emergency Collection Discontinuance Request\u201d). EIA\n\nfurther explained that it \u201chas decided that it will not proceed through the emergency collection\n\nprocedures set forth in 44 U.S.C. \u00a7 3507(j) and 5 C.F.R. \u00a7 1320.13 with respect to an information\n\ncollection covering data of the type described in Form EIA-862.\u201d Id. EIA explained that it \u201cwill\n\nproceed through the PRA\u2019s notice-and-comment procedures . . . to determine whether to request\n\nthat OMB approve any collection of information covering such data.\u201d Id.\n\n K. On February 26, 2024, OMB issued a Notice of Action granting EIA\u2019s request\n\nand approving EIA\u2019s discontinuance of the emergency authorization of the Form EIA-862 data\n\ncollection. See Attachment 2, Suppl. Mancini Decl., Ex. A (\u201cEIA-862 Emergency Collection\n\nDiscontinuance Approval\u201d).\n\n L. As a result of the EIA-862 Emergency Collection Discontinuance Request and the\n\nEIA-862 Emergency Collection Discontinuance Approval, no person or entity is subject to any\n\nobligation to respond to Form EIA-862.\n\n M. On February 27, 2024, counsel for Plaintiffs and Defendants informed the Court\n\nthat they had reached an agreement-in-principle concerning this matter and jointly requested that\n\nthe Hearing be cancelled. The Court entered an order cancelling the Hearing and ordered the\n\nparties to memorialize their agreement by filing it on the docket and attaching a proposed order\n\non or before March 1, 2024. ECF No. 17.\n\n AGREEMENT\n\nThe Parties agree as follows:\n\n 1. Defendants agree that EIA will destroy any information that it has already\n\nreceived in response to the EIA-862 Emergency Survey. If EIA receives additional information\n\nin response to the EIA-862 Emergency Survey, EIA will destroy that data. EIA will sequester\n\n\n\n\n 4\n\f Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 5 of 8\n\n\n\n\nand keep confidential any information it has received or will receive in response to the EIA-862\n\nEmergency Survey until it is destroyed.\n\n 2. Defendants agree that EIA will publish in the Federal Register a new notice of a\n\nproposed collection of information (\u201cNew Federal Register Notice\u201d) that will withdraw and\n\nreplace the February 9 Notice. Defendants agree that EIA will allow for submission of\n\ncomments for 60 days, beginning on the date of publication of the New Federal Register Notice,\n\npursuant to 44 U.S.C. \u00a7 3506(c)(2)(A). If, after evaluating the received comments pursuant to 44\n\nU.S.C. \u00a7 3506(c)(2), EIA decides to conduct a cryptocurrency mining survey, the Defendants\n\nagree to do so in accordance with the provisions set forth in 44 U.S.C. \u00a7 3507(a)-(c), (e), (g) and\n\n5 C.F.R. \u00a7 1320.10.\n\n 3. Defendants agree that in considering the comments submitted in response to the\n\nNew Federal Register Notice, EIA will also consider any comments submitted in response to the\n\nFebruary 9 Notice as if they had been submitted in response to the New Federal Register Notice.\n\n 4. Defendants will pay Plaintiffs $2,199.45 in full and complete satisfaction of any\n\nclaim by Plaintiffs or Proposed Intervenor for attorneys\u2019 fees, costs, and litigation expenses under\n\nthe Equal Access to Justice Act (\u201cEAJA\u201d) in connection with this case, through March 1, 2024.\n\nDefendants will pay the above amount by wire transfer or wire transfers to an account at a\n\nfinancial institution designated in writing by counsel for Plaintiffs, consistent with normal\n\nprocessing procedures. Plaintiffs\u2019 counsel will provide Defendants\u2019 counsel the bank routing and\n\naccount information for the account to receive such payment. Plaintiffs\u2019 counsel will confirm this\n\ninformation by phone with Defendants\u2019 counsel before transmitting such payment.\n\n 5. Plaintiffs and Proposed Intervenor hereby withdraw their request that the Court\n\nenter a preliminary injunction.\n\n\n\n\n 5\n\f Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 6 of 8\n\n\n\n\n 6. Plaintiffs and Proposed Intervenor agree not to pursue any further relief,\n\nincluding injunctive relief or a declaratory judgment, concerning the lawfulness of the EIA-862\n\nEmergency Collection Request, the EIA-862 Emergency Collection Approval, and the EIA-862\n\nEmergency Survey, which have been formally discontinued\u2014that is, withdrawn and ceased\u2014\n\nthrough the EIA-862 Emergency Collection Discontinuance Request and the EIA-862\n\nEmergency Collection Discontinuance Approval. This agreement is without prejudice to any\n\nclaims concerning the lawfulness of any collection of information that might be authorized in the\n\nfuture.\n\n 7. Defendants hereby give notice that they consent to Proposed Intervenor\u2019s Motion\n\nto Intervene as Plaintiff.\n\n 8. The Parties agree to request jointly that the Court stay and administratively close\n\nthe case. Specifically, the parties request that the Court enter the Proposed Order submitted as\n\nAttachment 3.\n\n 9. This Agreement is the result of compromise. Neither this Agreement nor any\n\nrepresentations made by any Party in the course of negotiating this Agreement shall constitute or\n\nbe construed as an admission of liability or wrongdoing by any Party, or by their officers,\n\nemployees, agents, successors, assigns, or representatives, related to any claims or defenses that\n\nhave been raised (or could have been raised) with regard to the claims asserted in this litigation.\n\n 10. In the event that one Party to this Agreement believes that another Party has\n\nviolated the Agreement, the Party that believes there has been a violation may, after giving\n\nreasonable notice the other Party, move the Court to lift the stay (if a stay is then in effect) in\n\norder to move the Court for appropriate relief.\n\n\n\n\n 6\n\f Case 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 7 of 8\n\n\n\n\nDated: March 1, 2024 For Defendants:\n\n BRIAN M. BOYNTON\n Principal Deputy Assistant Attorney General\n\n JULIE STRAUS HARRIS\n Assistant Director, Federal Programs Branch\n\n /s/ Jeremy S.B. Newman\n JEREMY S.B. NEWMAN\n Trial Attorney (D.C. Bar # 1024112)\n U.S. Department of Justice, Civil Division\n Federal Programs Branch\n 1100 L St., NW\n Washington, DC 20530\n Tel: (202) 532-3114\n Fax: (202) 616-8470\n jeremy.s.newman@usdoj.gov\n\n Counsel for Defendants\n\n /s/ Kara Rollins\n Kara M. Rollins\n Russell G. Ryan*\n NEW CIVIL LIBERTIES ALLIANCE\n 1225 19th St. NW, Suite 450\n Washington, DC 20036\n Tel: (202) 869-5210\n Fax: (202) 869-5238\n kara.rollins@ncla.legal\n russ.ryan@ncla.legal\n *Pro Hac Vice Motion Forthcoming\n\n Counsel for Plaintiffs\n\n Chris Davis\n Joshua Smeltzer\n GRAY REED\n 1601 Elm St., Suite 4600\n Dallas, TX 75201\n Tel: (469) 320-6215\n Fax: (469) 320-6926\n cdavis@grayreed.com\n jsmeltzer@grayreed.com\n\n\n\n\n 7\n\fCase 6:24-cv-00099-ADA Document 24 Filed 03/01/24 Page 8 of 8\n\n\n\n\n Greg White\n 900 Washington Avenue\n Suite 800\n Waco, Texas 76701\n Tel: (254) 342-3003\n Fax: (469) 320-6926\n\n Counsel for Plaintiffs and Proposed Intervenor\n\n Mark D. Siegmund\n State Bar Number 24117055\n CHERRY JOHNSON SIEGMUND JAMES\n PLLC\n The Roosevelt Tower\n 400 Austin Avenue, 9th Floor\n Waco, Texas 76701\n Tel: (254) 732-2242\n Fax: (866) 627-3509\n msiegmund@cjsjlaw.com\n\n Counsel for Plaintiffs and Proposed Intervenor\n\n\n\n\n 8\n\f","ocr_status":2,"date_upload":"2024-03-01T10:19:20.320791-08:00","document_number":"24","attachment_number":null,"pacer_doc_id":"181031751649","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Notice (Other)","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387718302/","id":387718302,"tags":[],"absolute_url":"/docket/68276281/24/1/texas-blockchain-council-v-department-of-energy/","date_created":"2024-03-01T10:15:58.859464-08:00","date_modified":"2025-01-22T17:33:57.662924-08:00","sha1":"5b54852e1a3e14d17b11386307502afdb769d83e","page_count":4,"file_size":374855,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 6:24-cv-00099-ADA Document 24-1 Filed 03/01/24 Page 1 of 4\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\nTEXAS BLOCKCHAIN COUNCIL, et.al., )\n )\nPlaintiffs, )\n )\nv. )\n ) Case No. 6:24-cv-99\nDEPARTMENT OF ENERGY, et.al., )\n )\nDefendants. )\n )\n\n\n SUPPLEMENTAL DECLARATION BY JOSEPH DECAROLIS\nI, Joseph DeCarolis, declare as follows:\n\n 1. I am the Administrator of the U.S. Energy Information Administration (EIA) and,\n\nbased on P.L. 95-91, 42 USC 7135, am responsible for the collection, evaluation and analysis of\n\nthe data requested in the survey form EIA-862 that is subject to the above-captioned lawsuit.\n\n 2. On February 26, 2024, I submitted to the Office of Management and Budget\n\n(OMB) a discontinuance request. Exhibit A. In it, I stated that EIA is discontinuing (that is,\n\nformally withdrawing and ceasing), effective immediately, the emergency collection of Form\n\nEIA-862 and requested that OMB approve the discontinuance of the emergency authorization of\n\nthe Form EIA-862 data collection.\n\n I declare under penalty of perjury that the foregoing is true and correct.\n\nExecuted on February 27, 2024.\n\n\n ___________________________________\n Joseph DeCarolis\n Administrator\n U.S. Energy Information Administration.\n\fCase 6:24-cv-00099-ADA Document 24-1 Filed 03/01/24 Page 2 of 4\n\n\n\n\n Exhibit A\n\f CUI//PRVCY\n Case 6:24-cv-00099-ADA Document 24-1 Filed 03/01/24 Page 3 of 4\n\n\n\n\n February 26, 2024\n\nDominic J. Mancini\nDeputy Administrator\nOffice of Information and Regulatory Affairs\nOffice of Management and Budget\n\nSubject: OMB NO. 1905-0213 (Expiration Date: 07/31/2024) \u2013 Discontinuance Request\n\nDear Dr. Mancini:\n\nOn January 26, 2024, the U.S. Energy Information Administration (EIA) received\napproval from the Office of Management and Budget (OMB) to engage in the emergency\ncollection of information using survey Form EIA-862, \u201cCryptocurrrency Mining\nFacilities Report,\u201d under the emergency collection procedures set forth in the Paperwork\nReduction Act (PRA), 44 U.S.C. \u00a7 3507(j), and 5 C.F.R. \u00a7 1320.13. Effective\nimmediately, EIA is discontinuing (that is, formally withdrawing and ceasing) that\nemergency collection of Form EIA-862 and requesting that OMB approve EIA\u2019s\ndiscontinuance of the emergency authorization of the Form EIA-862 data collection.\nOn February 23, 2024, in response to litigation, EIA decided to exercise its enforcement\ndiscretion not to enforce any requirement to respond to Form EIA-862 through March 22,\n2024. That same day, a federal court entered a Temporary Restraining Order, which\nrestrained EIA from collecting data required by Form EIA-862 for a period of 14 days.\nSee Texas Blockchain Council et al. v. Dep\u2019t of Energy et al., 6:24-cv-99 (W.D. Tex.),\nECF Nos. 10-1, 13. In light of these litigation developments, EIA will not be able to\ncollect any data in response to the emergency collection of information using survey\nForm EIA-862 before the end of the winter. EIA accordingly has decided that it will not\nproceed through the emergency collection procedures set forth in 44 U.S.C. \u00a7 3507(j) and\n5 C.F.R. \u00a7 1320.13 with respect to an information collection covering data of the type\ndescribed in Form EIA-862 and instead will proceed through the PRA\u2019s notice-and-\ncomment procedures, as described further below, to determine whether to request that\nOMB approve any collection of information covering such data. Subsequent to OMB\u2019s\napproval of the discontinuance of EIA\u2019s emergency authorization of the Form EIA-862\ndata collection, EIA will alert all respondents that they are no longer under an obligation\nto submit data under the emergency collection of information using survey Form EIA-\n862.\n\n\n\n\n Exhibit A\n\n Controlled by: The U.S. Energy Information Administration EIARecords@eia.gov\n\f CUI//PRVCY\n Case 6:24-cv-00099-ADA Document 24-1 Filed 03/01/24 Page 4 of 4\n\n 2\n\n\nEIA intends to continue the process it has already begun under the PRA\u2019s notice-and-\ncomment procedures to determine whether to request that OMB approve any collection of\ndata of the type described in Form EIA-862. On February 9, 2024, EIA published a 60-\nday notice in the Federal Register seeking comments no later than April 9, 2024 on the\nproposed data collection of Form EIA-862. Energy Information Administration, Agency\nInformation Collection Proposed Extension, 89 Fed. Reg. 9,140 (Feb. 9, 2024). EIA will\nreview the comments received in response to the February 9, 2024 Federal Register\nnotice. If EIA decides to go forward with proposing an information collection covering\ndata of the type described in EIA-862, EIA will publish a notice in the Federal Register\nsetting forth the proposed information collection, pursuant to 44 U.S.C. \u00a7 3507(a)(1)(D).\nThat would trigger a public comment period of at least 30 days, after which the Director\nof OMB could make a decision whether or not to approve the information collection. See\n44 U.S.C. \u00a7 3507(b).\n\n\nSincerely,\n\n\n\n\nJoseph DeCarolis\nAdministrator\nU.S. Energy Information Administration\n\n\n\n\n Controlled by: The U.S. Energy Information Administration EIARecords@eia.gov\n\f","ocr_status":2,"date_upload":"2024-03-01T10:17:42.185680-08:00","document_number":"24","attachment_number":1,"pacer_doc_id":"181031751650","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Attachment 1 - Supplemental Declaration of Joseph DeCarolis","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387718303/","id":387718303,"tags":[],"absolute_url":"/docket/68276281/24/2/texas-blockchain-council-v-department-of-energy/","date_created":"2024-03-01T10:15:58.913457-08:00","date_modified":"2025-01-22T17:33:57.671073-08:00","sha1":"980c5053d00f5f65dabeac2643ae79946c4df3b6","page_count":4,"file_size":233958,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.2.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.2.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 6:24-cv-00099-ADA Document 24-2 Filed 03/01/24 Page 1 of 4\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\nTEXAS BLOCKCHAIN COUNCIL, et al.,\n Plaintiffs,\n v. Case No. 6:24-cv-99\nDEPARTMENT OF ENERGY, et al.,\n Defendants.\n\n\n\n\n SUPPLEMENTAL DECLARATION OF DOMINIC J. MANCINI\n\n I, Dominic J. Mancini, make the following declaration based upon my personal\n\nknowledge, upon information provided in my official capacity, and upon conclusions I\n\nreached based on that knowledge or information:\n\n1. I am the Deputy Administrator of the Office of Information and Regulatory\n\n Affairs (OIRA) at the Office of Management and Budget (OMB), which is an\n\n office in the Executive Office of the President (EOP). I have served in this\n\n position, which is the senior-most career position within OIRA, since 2013.\n\n2. On February 26, 2024, the U.S. Energy Information Administration (EIA)\n\n submitted a letter to OMB stating that EIA was immediately discontinuing its\n\n emergency collection of information using a survey titled \u201cCryptocurrency Mining\n\n Facilities Report\u201d (EIA-862), and requesting that OMB approve EIA\u2019s\n\n discontinuance of the emergency authorization. EIA\u2019s letter explained that EIA had\n\n decided that it will not proceed through the PRA\u2019s emergency collection procedures,\n\n and instead that EIA would proceed through the PRA\u2019s notice-and-comment\n\n procedures with respect to any collection of information covering such data.\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 24-2 Filed 03/01/24 Page 2 of 4\n\n\n\n\n 3. On February 26, 2024, OIRA approved EIA\u2019s request to discontinue EIA\u2019s\n\n emergency authorization of Form EIA-862, effective immediately. The notice\n\n reflecting this discontinuance is attached as Exhibit A.\n\n CONCLUSION\n\n Pursuant to 28 U.S.C. \u00a7 1746, I declare under penalty of perjury that the foregoing\n\nis true and correct. Executed in Washington, D.C., on the 27th day of February, 2024.\n\n\n\n ___________________________\n\n Dominic J. Mancini\n\n\n\n\n 2\n\fCase 6:24-cv-00099-ADA Document 24-2 Filed 03/01/24 Page 3 of 4\n\n\n\n\n Exhibit A\n\f Case 6:24-cv-00099-ADA Document 24-2 Filed 03/01/24 Page 4 of 4\n NOTICE OF OFFICE OF MANAGEMENT AND BUDGET ACTION\n Date 02/26/2024\n\nDepartment of Energy\nEnergy Information Administration\n\nFOR CERTIFYING OFFICIAL: Sandra Logan\nFOR CLEARANCE OFFICER: Kenneth Pick\n\nIn accordance with the Paperwork Reduction Act, OMB has taken action on your request received\n02/26/2024\n\nACTION REQUESTED: Discontinue\nTYPE OF REVIEW REQUESTED:\nICR REFERENCE NUMBER: 202402-1905-001\nAGENCY ICR TRACKING NUMBER:\nTITLE: Cryptocurrency Mining Facilities Survey\n\n\n\nOMB ACTION: Approved\nOMB CONTROL NUMBER: 1905-0213\n\n\n\nEXPIRATION DATE: DISCONTINUE DATE:\n02/29/2024\n\n\nCOMMENT: The approval on this collection will be discontinued on the above date provided that no other\n actions are taken on this OMB Control Number. The monthly inventory of active collections\n will report the above date as the expiration date.\n\nOMB Authorizing Official: Dominic J. Mancini\n Deputy Administrator,\n Office Of Information And Regulatory Affairs\n\f","ocr_status":2,"date_upload":"2024-03-01T10:17:11.098159-08:00","document_number":"24","attachment_number":2,"pacer_doc_id":"181031751651","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Attachment 2 - Supplemental Declaration of Dominic Mancini","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387718304/","id":387718304,"tags":[],"absolute_url":"/docket/68276281/24/3/texas-blockchain-council-v-department-of-energy/","date_created":"2024-03-01T10:15:58.944606-08:00","date_modified":"2025-01-22T17:33:57.678013-08:00","sha1":"6d8117547d629c26db8c9d931c3bc9d045a41043","page_count":4,"file_size":120978,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.3.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.24.3.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387718304.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 24-3 Filed 03/01/24 Page 1 of 4\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\nTEXAS BLOCKCHAIN COUNCIL, a )\nnonprofit association; )\nRIOT PLATFORMS, INC., )\n )\nPlaintiffs, )\n )\nv. )\n ) Case No. 6:24-cv-99\nDEPARTMENT OF ENERGY; JENNIFER )\nM. GRANHOLM, in her official capacity as )\nSecretary of Energy; ENERGY )\nINFORMATION ADMINISTRATION; )\nJOSEPH DECAROLIS, in his official )\ncapacity as Administrator of Energy )\nInformation Administration; OFFICE OF )\nMANAGEMENT AND BUDGET; )\nSHALANDA YOUNG, in her official )\ncapacity as Director of Office of Management )\nand Budget, )\n )\nDefendants. )\n\n\n\n\n [PROPOSED] ORDER\n\n Before the Court is the Agreement of Plaintiff Texas Blockchain Council; Plaintiff Riot\n\nPlatforms, Inc. (collectively with Texas Blockchain Council, \u201cPlaintiffs\u201d); Defendant\n\nDepartment of Energy (\u201cDOE\u201d); Defendant Jennifer M. Granholm, in her official capacity as\n\nSecretary of Energy; Defendant U.S. Energy Information Administration (\u201cEIA\u201d); Defendant\n\nJoseph DeCarolis, in his official capacity as Administrator of EIA; Defendant Office of\n\nManagement and Budget (\u201cOMB\u201d); Defendant Shalanda Young, in her official capacity as\n\nDirector of OMB (collectively with the other Defendants, \u201cDefendants\u201d); and Proposed\n\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 24-3 Filed 03/01/24 Page 2 of 4\n\n\n\n\nIntervenor Chamber of Digital Commerce (\u201cProposed Intervenor,\u201d and collectively with the\n\nPlaintiffs and Defendants, the \u201cParties\u201d).\n\n The Agreement sets forth that EIA has discontinued (that is, formally withdrawn and\n\nceased) the emergency collection of Form EIA-862 that Plaintiffs challenge in this litigation, and\n\nthat OMB has approved the discontinuance. See Agreement, Recitals, \u00b6\u00b6 J-K. As a result of the\n\ndiscontinuance, no person or entity is subject to any obligation to respond to Form EIA-862. Id.\n\n\u00b6 L. The Agreement further sets forth that in the letter from EIA Administrator DeCarolis\n\nformally requesting approval of the discontinuance, EIA explained that it \u201chas decided that it\n\nwill not proceed through the emergency collection procedures set forth in 44 U.S.C. \u00a7 3507(j)\n\nand 5 C.F.R. \u00a7 1320.13 with respect to an information collection covering data of the type\n\ndescribed in Form EIA-862.\u201d Id. \u00b6 J (quoting Agreement, Attachment 1, Suppl. DeCarolis Decl.,\n\nEx. A). EIA explained that it \u201cwill proceed through the PRA\u2019s notice-and-comment procedures .\n\n. . to determine whether to request that OMB approve any collection of information covering\n\nsuch data.\u201d Id.\n\n In the Agreement, Defendants agree that EIA will destroy any information that it has\n\nreceived or will received in response to the emergency collection of Form EIA-862, and will\n\nsequester and keep confidential any such information until it is destroyed. Id. \u00a7 1.\n\n Defendants further agree that EIA will publish in the Federal Register a new notice of a\n\nproposed collection of information that will supersede a notice that EIA previously issued. Id.\n\n\u00a7 2; Energy Information Administration, Agency Information Collection Proposed Extension, 89\n\nFed. Reg. 9,140 (Feb. 9, 2024) (\u201cFebruary 9 Notice\u201d). Defendants further agree that EIA will\n\nprovide a 60-day public comment period for the new Federal Register notice and will also\n\nconsider any comments that have been submitted in response to the February 9 Notice as if they\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 24-3 Filed 03/01/24 Page 3 of 4\n\n\n\n\nhad been submitted in response to the new notice. See Agreement \u00a7\u00a7 2-3. Further, if, after\n\nevaluating the received comments, EIA decides to conduct a cryptocurrency mining survey, the\n\nDefendants agree to conduct that clearance process in accordance with the procedures set forth in\n\n44 U.S.C. \u00a7 3507 and 5 C.F.R. \u00a7 1320.10.\n\n Plaintiffs and Proposed Intervenor have withdrawn their request that the Court enter a\n\npreliminary injunction. Id. \u00a7 5. Plaintiffs and Proposed Intervenor have further agreed not to\n\nrequest any further relief, including injunctive relief or a declaratory judgment, with respect to\n\nthe emergency collection of EIA-862, which has now been discontinued\u2014that is, withdrawn and\n\nceased. See Id. \u00a7 6. This agreement is without prejudice to Plaintiffs and Proposed Intervenor\n\nseeking relief with respect to any collection of information that might be authorized in the future.\n\nId.\n\n In the Agreement, Defendant has consented to the Proposed Intervenor\u2019s Motion to\n\nIntervene as Plaintiff. Id. \u00a7 7.\n\n The Parties have also jointly requested that the Court stay and administratively close the\n\ncase. Id. \u00a7 8.\n\n The Agreement states that it is the result of compromise and nothing in the Agreement or\n\nany representations made by any Party in the course of negotiating the Agreement shall\n\nconstitute or be construed as an admission of liability or wrongdoing by any Party. Id. \u00a7 9.\n\n The Court ORDERS the following:\n\n Proposed Intervenor Chamber of Digital Commerce\u2019s Motion to Intervene as Plaintiff is\n\nGRANTED. The Chamber of Digital Commerce is hereby ALLOWED to permissively\n\nintervene in the above captioned matter as a Plaintiff.\n\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 24-3 Filed 03/01/24 Page 4 of 4\n\n\n\n\n In light of Plaintiffs\u2019 and Proposed Intervenor\u2019s withdrawal of their request for\n\nPreliminary Injunction, that request for Preliminary Injunction is DENIED AS MOOT.\n\n The Court STAYS this case and directs the clerk to ADMINISTRATIVELY CLOSE\n\nthis case.\n\n IT IS SO ORDERED this __ day of ______, 2024.\n\n\n\n ________________________________\n ALAN D ALBRIGHT\n UNITED STATES DISTRICT JUDGE\n\n\n\n\n 4\n\f","ocr_status":2,"date_upload":"2024-03-01T10:16:11.863797-08:00","document_number":"24","attachment_number":3,"pacer_doc_id":"181031751652","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Proposed Order Attachment 3 - Proposed Order","acms_document_guid":""}],"date_created":"2024-03-01T10:14:37.241108-08:00","date_modified":"2025-01-22T17:34:01.014574-08:00","date_filed":"2024-03-01","time_filed":"11:44:47","entry_number":24,"recap_sequence_number":"2024-03-01.001","pacer_sequence_number":90,"description":"NOTICE of Agreement by Department of Energy, Energy Information Administration, Jennifer M. Granholm, Joseph Decarolis, Office of Management and Budget, Shalanda Young (Attachments: # (1) Exhibit Attachment 1 - Supplemental Declaration of Joseph DeCarolis, # (2) Exhibit Attachment 2 - Supplemental Declaration of Dominic Mancini, # (3) Proposed Order Attachment 3 - Proposed Order)(Newman, Jeremy)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379858568/","id":379858568,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387600386/","id":387600386,"tags":[],"absolute_url":"/docket/68276281/23/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-29T12:19:05.700296-08:00","date_modified":"2025-01-22T17:34:01.002523-08:00","sha1":"5b5fd9cff3b19ac128546d092086ce16366ad55f","page_count":4,"file_size":418670,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.23.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.23.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387600386.thumb.1068.png","thumbnail_status":1,"plain_text":"Case 6:24-cv-00099-ADA Document 23 Filed 02/29/24 Page 1 of 4\n\n\n\n\n EXHIBIT 1\n\f CUI//PRVCY\n Case 6:24-cv-00099-ADA Document 23 Filed 02/29/24 Page 2 of 4\n\n\n\n\n February 26, 2024\n\nDominic J. Mancini\nDeputy Administrator\nOffice of Information and Regulatory Affairs\nOffice of Management and Budget\n\nSubject: OMB NO. 1905-0213 (Expiration Date: 07/31/2024) \u2013 Discontinuance Request\n\nDear Dr. Mancini:\n\nOn January 26, 2024, the U.S. Energy Information Administration (EIA) received\napproval from the Office of Management and Budget (OMB) to engage in the emergency\ncollection of information using survey Form EIA-862, \u201cCryptocurrrency Mining\nFacilities Report,\u201d under the emergency collection procedures set forth in the Paperwork\nReduction Act (PRA), 44 U.S.C. \u00a7 3507(j), and 5 C.F.R. \u00a7 1320.13. Effective\nimmediately, EIA is discontinuing (that is, formally withdrawing and ceasing) that\nemergency collection of Form EIA-862 and requesting that OMB approve EIA\u2019s\ndiscontinuance of the emergency authorization of the Form EIA-862 data collection.\nOn February 23, 2024, in response to litigation, EIA decided to exercise its enforcement\ndiscretion not to enforce any requirement to respond to Form EIA-862 through March 22,\n2024. That same day, a federal court entered a Temporary Restraining Order, which\nrestrained EIA from collecting data required by Form EIA-862 for a period of 14 days.\nSee Texas Blockchain Council et al. v. Dep\u2019t of Energy et al., 6:24-cv-99 (W.D. Tex.),\nECF Nos. 10-1, 13. In light of these litigation developments, EIA will not be able to\ncollect any data in response to the emergency collection of information using survey\nForm EIA-862 before the end of the winter. EIA accordingly has decided that it will not\nproceed through the emergency collection procedures set forth in 44 U.S.C. \u00a7 3507(j) and\n5 C.F.R. \u00a7 1320.13 with respect to an information collection covering data of the type\ndescribed in Form EIA-862 and instead will proceed through the PRA\u2019s notice-and-\ncomment procedures, as described further below, to determine whether to request that\nOMB approve any collection of information covering such data. Subsequent to OMB\u2019s\napproval of the discontinuance of EIA\u2019s emergency authorization of the Form EIA-862\ndata collection, EIA will alert all respondents that they are no longer under an obligation\nto submit data under the emergency collection of information using survey Form EIA-\n862.\n\n\n\n\n Controlled by: The U.S. Energy Information Administration EIARecords@eia.gov\n\f CUI//PRVCY\n Case 6:24-cv-00099-ADA Document 23 Filed 02/29/24 Page 3 of 4\n\n 2\n\n\nEIA intends to continue the process it has already begun under the PRA\u2019s notice-and-\ncomment procedures to determine whether to request that OMB approve any collection of\ndata of the type described in Form EIA-862. On February 9, 2024, EIA published a 60-\nday notice in the Federal Register seeking comments no later than April 9, 2024 on the\nproposed data collection of Form EIA-862. Energy Information Administration, Agency\nInformation Collection Proposed Extension, 89 Fed. Reg. 9,140 (Feb. 9, 2024). EIA will\nreview the comments received in response to the February 9, 2024 Federal Register\nnotice. If EIA decides to go forward with proposing an information collection covering\ndata of the type described in EIA-862, EIA will publish a notice in the Federal Register\nsetting forth the proposed information collection, pursuant to 44 U.S.C. \u00a7 3507(a)(1)(D).\nThat would trigger a public comment period of at least 30 days, after which the Director\nof OMB could make a decision whether or not to approve the information collection. See\n44 U.S.C. \u00a7 3507(b).\n\n\nSincerely,\n\n\n\n\nJoseph DeCarolis\nAdministrator\nU.S. Energy Information Administration\n\n\n\n\n Controlled by: The U.S. Energy Information Administration EIARecords@eia.gov\n\f Case 6:24-cv-00099-ADA Document 23 Filed 02/29/24 Page 4 of 4\n NOTICE OF OFFICE OF MANAGEMENT AND BUDGET ACTION\n Date 02/26/2024\n\nDepartment of Energy\nEnergy Information Administration\n\nFOR CERTIFYING OFFICIAL: Sandra Logan\nFOR CLEARANCE OFFICER: Kenneth Pick\n\nIn accordance with the Paperwork Reduction Act, OMB has taken action on your request received\n02/26/2024\n\nACTION REQUESTED: Discontinue\nTYPE OF REVIEW REQUESTED:\nICR REFERENCE NUMBER: 202402-1905-001\nAGENCY ICR TRACKING NUMBER:\nTITLE: Cryptocurrency Mining Facilities Survey\n\n\n\nOMB ACTION: Approved\nOMB CONTROL NUMBER: 1905-0213\n\n\n\nEXPIRATION DATE: DISCONTINUE DATE:\n02/29/2024\n\n\nCOMMENT: The approval on this collection will be discontinued on the above date provided that no other\n actions are taken on this OMB Control Number. The monthly inventory of active collections\n will report the above date as the expiration date.\n\nOMB Authorizing Official: Dominic J. Mancini\n Deputy Administrator,\n Office Of Information And Regulatory Affairs\n\f","ocr_status":2,"date_upload":"2024-02-29T12:41:17.470689-08:00","document_number":"23","attachment_number":null,"pacer_doc_id":"181031745406","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Supplement","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387605413/","id":387605413,"tags":[],"absolute_url":"/docket/68276281/23/1/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-29T12:40:48.827225-08:00","date_modified":"2025-01-22T17:33:57.595014-08:00","sha1":"c97a2b53c8f66bbd14513c0b393bad976eb0f8ff","page_count":3,"file_size":280418,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.23.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.23.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 23-1 Filed 02/29/24 Page 1 of 3\n\n\n EXHIBIT 2\n\f Case 6:24-cv-00099-ADA Document 23-1 Filed 02/29/24 Page 2 of 3\n\n\nFrom: Kate Huddleston\nTo: Mark Siegmund\nCc: Chris Davis; Joshua Smeltzer; kara.rollins@ncla.legal; russ.ryan@ncla.legal; Megan Wachspress; Sanjay Narayan\nSubject: [EXTERNAL] Re: Texas Blockchain Council v. DOE - position on amicus\nDate: Tuesday, February 27, 2024 2:53:51 PM\n\n\nThanks for getting back to us so quickly, Mark, and sending the order.\n\nBest,\nKate\n\nOn Tue, Feb 27, 2024 at 2:42 PM Mark Siegmund wrote:\n\n Hi Kate,\n\n\n\n The Court is not holding a PI hearing and just issued an order removing the hearing. See\n ECF No. 17. Additionally, this case is essentially resolved, as the Parties were ordered to file\n the agreement with the Court. Therefore, we believe any brief is improper. We oppose.\n\n\n\n Sincerely,\n\n Mark\n\n\n\n Mark D. Siegmund\n Partner\n\n CHERRY JOHNSON SIEGMUND JAMES, PLLC\n\n (254)732-2242\n\n www.cjsjlaw.com\n\n\n\n\n From: Kate Huddleston \n Sent: Tuesday, February 27, 2024 1:54 PM\n To: Mark Siegmund ; cdavis@grayreed.com;\n jsmeltzer@grayreed.com; kara.rollins@ncla.legal; russ.ryan@ncla.legal\n Cc: Megan Wachspress ; Sanjay Narayan\n \n Subject: Texas Blockchain Council v. DOE - position on amicus\n\f Case 6:24-cv-00099-ADA Document 23-1 Filed 02/29/24 Page 3 of 3\n\n\n\nHi all--\n\n\n\nSierra Club is planning to file an amicus brief in opposition to the issuance of a preliminary\ninjunction in Texas Blockchain Council v. DOE, 6:24-cv-00099. Could you please let us\nknow your position on this filing by 3:30 PM Central?\n\n\n\nThanks,\n\nKate Huddleston\n\n\n\n--\n\nKate Huddleston\n(she/her)\nStaff Attorney\nSierra Club Environmental Law Program\nHouston, TX\n713.714.6384\nkate.huddleston@sierraclub.org\n\f","ocr_status":1,"date_upload":"2024-02-29T12:42:04.747228-08:00","document_number":"23","attachment_number":1,"pacer_doc_id":"181031745407","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit 2","acms_document_guid":""}],"date_created":"2024-02-29T12:19:05.684146-08:00","date_modified":"2025-01-22T17:34:00.986475-08:00","date_filed":"2024-02-29","time_filed":"14:03:37","entry_number":23,"recap_sequence_number":"2024-02-29.002","pacer_sequence_number":87,"description":"SUPPLEMENT to [21] Response in Opposition to Motion, Exhibits 1 and 2 by Riot Platforms, Inc., Texas Blockchain Council. (Attachments: # (1) Exhibit 2)(Siegmund, Mark)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379837590/","id":379837590,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387579138/","id":387579138,"tags":[],"absolute_url":"/docket/68276281/22/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-29T10:09:42.688280-08:00","date_modified":"2025-01-22T17:34:00.975307-08:00","sha1":"c276098e4badcd86ba3742f8dd52dbb634ab5bf6","page_count":6,"file_size":175339,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.22.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.22.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 6:24-cv-00099-ADA Document 22 Filed 02/29/24 Page 1 of 6\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\n TEXAS BLOCKCHAIN COUNCIL, )\n a nonprofit association; )\n RIOT PLATFORMS, INC., )\n )\n Plaintiffs )\n ) Case No. 6:24-cv-99\n v. )\n )\n DEPARTMENT OF ENERGY; )\n JENNIFER M. GRANHOLM, in her )\n official capacity as Secretary of Energy; )\n ENERGY INFORMATION )\n ADMINISTRATION; JOSEPH )\n DECAROLIS, in his official capacity as )\n Administrator of Energy Information )\n Administration; OFFICE OF )\n MANAGEMENT AND BUDGET; )\n SHALANDA YOUNG, in her official )\n capacity as Director of Office of )\n Management and Budget, )\n )\n Defendants. )\n\n\n REPLY IN SUPPORT OF MOTION FOR LEAVE TO FILE AMICUS BRIEF\n\n This fast-moving, fluid case remains pending before this Court. A temporary restraining\n\norder remains in place, with accompanying legal reasoning; a motion for intervention remains\n\nlive; and this Court has made no final decision on either a preliminary injunction or the\n\nresolution of this case as a whole. This litigation has not yet been resolved, and Sierra Club\u2019s\n\namicus remains of significant aid regarding the underlying issues.\n\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 22 Filed 02/29/24 Page 2 of 6\n\n\n\n\n First, and most importantly, the issues that Sierra Club highlights in its proposed amicus\n\nprovide relevant and useful information as to the reasonable likelihood of public harm absent the\n\nEIA\u2019s emergency collection of information as to cryptocurrency mining facilities. See Dkt. 18.\n\nAs Sierra Club\u2019s proposed amicus explains, Dkt. 18-1, information about how cryptocurrency\n\nmining facilities interact with the electric grid is critical to ensuring the lights stay on and\n\ncustomers\u2019 costs do not rise due to abuse of current market rules by cryptocurrency companies.\n\nFor federal and state regulators, grid operators, utilities, and the public, greater insight into (1)\n\nthe magnitude of demand cryptocurrency facilities place on the grid and (2) the ways in which\n\nfacilities respond to market rules in conditions of high stress on the grid is especially critical for\n\nresponsible long-term resource planning and response to emergencies in which reliability is at\n\nrisk. The deaths of hundreds of Texans when the lights went out during Winter Storm Uri show\n\njust how important accurate information and adequate resource planning is, and underscore the\n\nurgency of obtaining this information before the next winter.\n\n Contrary to Plaintiffs\u2019 assertion, Dkt. 21 at 2, this issue is critical not only to the question\n\nof where the public interest lies but also to the likelihood of success on the merits. This Court\n\nconcluded in its temporary restraining order that \u201cPlaintiffs are likely to succeed in showing that\u201d\n\nDefendants had failed to \u201cjustify[]\u201d \u201can emergency request\u201d under the Paperwork Reduction Act,\n\nstating that \u201c[s]uch emergency requests are only appropriate upon an agency head\u2019s\n\ndetermination that public harm is reasonably likely to result if normal clearance procedures are\n\nfollowed.\u201d Dkt. 13 at 4 (citing 5 C.F.R. \u00a7 1320.13(a)). As Sierra Club explained in its proposed\n\namicus, the brief \u201cprovides further information about the[] public harms that are reasonably\n\nlikely to occur if information collection is delayed. See 5 C.F.R. 1320.13.\u201d The question of\n\nwhether the reasonable likelihood of public harm standard was satisfied for purposes of the\n\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 22 Filed 02/29/24 Page 3 of 6\n\n\n\n\nPaperwork Reduction Act\u2019s implementing regulations is, as Plaintiffs themselves have\n\nrecognized, a merits question. Dkt. 5 at 5 (\u201cII. Plaintiffs Are Substantially Likely to Succeed on\n\nthe Merits . . . A. Defendants Failed to Show that Public Harm Was Reasonably Likely to Occur\n\nUnless the Survey Was Authorized\u201d).\n\n Second, Plaintiffs\u2019 assertion that Sierra Club was aware of a \u201cdiscontinu[ance]\u201d by the\n\nEIA of the emergency collection of Form EIA-862 on the evening of February 26 is both\n\nirrelevant and inaccurate. See Dkt. 21 at 1. Sierra Club was, and is, aware that this Court issued\n\nan order granting Plaintiffs\u2019 motion for temporary restraining order on February 23, 2024. Dkt.\n\n13. That temporary restraining order \u201cmaintains the pre-enforcement status quo of Defendants\u2019\n\nSurvey, EIA-862, until such time a preliminary injunction hearing can be held.\u201d Id. at 5. In the\n\ntemporary restraining order, the Court recognized that the EIA administrator had stated, \u201cIn\n\norder to facilitate the Court\u2019s ability to hear from all parties in advance of issuing a decision on\n\nPlaintiffs\u2019 request for emergency relief, EIA has determined to exercise its discretion not to\n\nenforce any requirement to file the survey form EIA-862 through March 22, 2024.\u201d Id. at 2\n\n(quoting Dkt. 10 at 1-2). The Court concluded, \u201cA credible threat of enforcement, albeit delayed,\n\nstill exists.\u201d Id. at 3. In other words, the EIA Administrator had represented the agency would\n\ntemporarily suspend enforcement due to this litigation and the Court issued a temporary\n\nrestraining order after that representation. Defendants were, and are, bound by that temporary\n\nrestraining order. Any discontinuance of collection of the information pursuant to the Court\u2019s\n\ntemporary restraining order is simply Defendants following this Court\u2019s order, as required.\n\n It is difficult, however, for Sierra Club to determine why Plaintiffs believe any additional\n\n\u201cdiscontinuance\u201d affects the case\u2019s procedural posture, since there is no evidence in the record as\n\nto a discontinuance by EIA on the evening of February 26. Although Plaintiffs\u2019 Response cites\n\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 22 Filed 02/29/24 Page 4 of 6\n\n\n\n\n\u201cExhibit 1\u201d as evidence that on February 26 \u201cEIA had discontinued the emergency collection of\n\nForm EIA-862,\u201d the Response does not have an Exhibit 1 attached. See Dkt. 21. The docket in\n\nthis litigation provides two entries on February 26, a pro hac vice motion and a motion for leave\n\nto intervene\u2014neither of which are representations by EIA regarding discontinuance of the\n\nemergency collection of Form EIA-862. In any event, Sierra Club\u2019s counsel is not currently\n\naware of any permanent discontinuance by the EIA of emergency collection of Form EIA-862,\n\nor discontinuance unrelated to either the March 25 timeline that EIA previously set forth in this\n\nlitigation or the temporary restraining order currently in effect.\n\n Third, the existence of \u201can agreement-in-principle\u201d does not resolve the case. Indeed,\n\nDefendants\u2019 counsel have already once represented to the Court that \u201cthe parties were prepared\n\nto agree to an order that memorialized\u201d a declaration by the EIA Administrator agreeing to\n\npostpone collection and sequester any data already received until March 25, 2024, but when no\n\nsuch agreement was reached, the Court found Defendants\u2019 declaration insufficient and issued the\n\nstill-operative temporary restraining order. Dkt. 13 at 2. This has been a fast-moving and fluid\n\ncase. One business day after the temporary restraining order issued and the day before Sierra\n\nClub filed its motion for leave to file an amicus brief, the Chamber of Digital Commerce moved\n\nfor leave to intervene as plaintiff. Dkt. 16. That motion, which Plaintiffs did not oppose, Dkt. 16\n\nat 2, remains pending as well. In light of this history and the potential for further rapid changes in\n\nthe litigation, Sierra Club believes it is essential to ensure the Court has the benefit of further\n\nperspective on the need for emergency collection of this information.\n\n Local Civil Rule CV-7(g), is not a reason for this Court to deny leave to file. This Court\n\nhas broad discretion regarding leave to file amicus briefs, and Local Civil Rule CV-7(g) does not\n\nalter that discretion. See Lefebure v. D\u2019Aquilla, 15 F.4th 670, 673-74 (5th Cir. 2021). Local Civil\n\n\n\n\n 4\n\f Case 6:24-cv-00099-ADA Document 22 Filed 02/29/24 Page 5 of 6\n\n\n\n\nRule CV-7(g) states that the court \u201cmay deny a nondispositive motion\u201d absent the movant\n\n\u201ccertif[ying] the specific reason that no agreement could be made.\u201d Id. (emphasis added). Any\n\nconcern that the Court might have on this point is cured by Plaintiffs\u2019 response outlining in depth\n\ntheir opposition to the motion. See Dkt. 21. Given that the Court is aware of Plaintiffs\u2019 rationale,\n\nthe lack of certification should not be the basis for opposition. The key question is whether the\n\namicus will aid this Court in the resolution of this litigation\u2014and, in light of the existing\n\ntemporary restraining order and the current lack of full resolution of this case, it does so.\n\n\n\nDated: February 29, 2024 Respectfully submitted,\n\n /s/ Casey Roberts\n Megan Wachspress Casey Roberts\n Sanjay Narayan Sierra Club\n Sierra Club 1536 Wynkoop Street, Ste 200\n 2101 Webster St, Ste 1300 Denver, CO 80202\n Oakland, CA 94612 (303) 454-3355\n (415) 977-5635 casey.roberts@sierraclub.org\n megan.wachspress@sierraclub.org\n sanjay.narayan@sierraclub.org Kathryn Huddleston\n Sierra Club\n 6406 N I-35, Ste 1805\n Austin, TX 78752\n kate.huddleston@sierraclub.org\n\n\n\n\n 5\n\f Case 6:24-cv-00099-ADA Document 22 Filed 02/29/24 Page 6 of 6\n\n\n\n\n CERTIFICATE OF SERVICE\n\n I hereby certify that I served a copy of the foregoing motion via the Court\u2019s ECF filing\nsystem.\n\nDated: February 29, 2024 /s/ Casey Roberts\n Casey Roberts\n\n\n\n\n 6\n\f","ocr_status":2,"date_upload":"2024-02-29T10:17:25.197949-08:00","document_number":"22","attachment_number":null,"pacer_doc_id":"181031744486","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Reply to Response to Motion","acms_document_guid":""}],"date_created":"2024-02-29T10:09:42.674081-08:00","date_modified":"2025-01-22T17:34:00.959436-08:00","date_filed":"2024-02-29","time_filed":"11:46:18","entry_number":22,"recap_sequence_number":"2024-02-29.001","pacer_sequence_number":84,"description":"REPLY to Response to Motion, filed by Sierra Club, re [18] MOTION for Leave to File Amicus Brief by Casey Roberts. filed by Amicus Sierra Club (Roberts, Casey)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379762551/","id":379762551,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387499454/","id":387499454,"tags":[],"absolute_url":"/docket/68276281/21/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-28T15:20:44.442552-08:00","date_modified":"2025-01-22T17:34:00.941559-08:00","sha1":"51f9ae7e650eb1e0c18d86951ed3165e2cad1cfc","page_count":4,"file_size":142155,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.21.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.21.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387499454.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 21 Filed 02/28/24 Page 1 of 4\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n TEXAS BLOCKCHAIN COUNCIL, a nonprofit\n association; RIOT PLATFORMS, INC.,\n\n Plaintiffs,\n\n v.\n Civil Action No. 6:24-cv-00099-\n OFFICE OF MANAGEMENT AND BUDGET; ADA\n SHALANDA YOUNG, in her official capacity as\n Director of Office of Management and Budget;\n DEPARTMENT OF ENERGY; JENNIFER M.\n GRANHOLM, in her official capacity as Secretary\n of Energy; ENERGY INFORMATION\n ADMINISTRATION; JOSEPH DECAROLIS, in\n his official capacity as Administrator of Energy\n Information Administration,\n\n Defendants.\n\n\n\n PLAINTIFFS\u2019 OPPOSITION TO NON-PARTY SIERRA CLUB\u2019S MOTION FOR\n LEAVE TO FILE AMICUS BRIEF AND MOTION TO STRIKE\n\n Plaintiffs Texas Blockchain Council (\u201cTBC\u201d) and Riot Platforms, Inc. (\u201cRiot\u201d) though\n\ntheir undersigned counsel, file this Opposition to Non-Party Sierra Club\u2019s Motion for Leave to File\n\nAmicus Brief (the \u201cMotion\u201d) and move to strike Sierra Club\u2019s frivolous and moot filings.\n\n The Court should deny Sierra Club\u2019s Motion. As Sierra Club knew when it filed the\n\nMotion, the EIA had discontinued the emergency collection of Form EIA-862 the evening before.\n\nSee Ex. 1. Sierra Club had also been informed by Plaintiffs\u2019 counsel shortly before filing its Motion\n\nthat: (1) the parties had reached an agreement resolving any remaining issues; (2) the Court had\n\nissued an order cancelling the preliminary injunction hearing at the request of the parties; and (3)\n\nthe Court had ordered that the parties file their agreement with the Court. Plaintiffs\u2019 Counsel also\n\n\n\n 1\n4860-0054-6217.1\n\f Case 6:24-cv-00099-ADA Document 21 Filed 02/28/24 Page 2 of 4\n\n\n\n\nattached the Order and Sierra Club counsel confirmed its receipt. Ex. 2 (email exchange between\n\nKate Huddleston and Mark Siegmund).\n\n Nonetheless, roughly five hours later, Sierra Club filed its Motion anyway. In it, Sierra\n\nClub stated only that \u201cCounsel for Plaintiff oppose\u201d the Motion\u2014and failed to \u201ccertif[y] the\n\nspecific reason that no agreement could be made.\u201d ECF No. 18 at 1. In doing so, Sierra Club failed\n\nto comply with Local Civil Rule CV-7(G). The Motion should be denied for that reason alone.\n\nNotwithstanding that failure, the Motion should be denied as moot. Although Plaintiffs believe\n\nthat Sierra Club\u2019s filing\u2014and the manner in which it was made\u2014further underscores the\n\npretextual and politically-motivated nature of the \u201cemergency\u201d survey, its filing was mooted by\n\nthe survey\u2019s withdrawal. And as Sierra Club knew, the parties had reached an agreement in\n\nprinciple on remaining terms hours earlier\u2014further mooting the Motion. It nonetheless filed the\n\nmotion\u2014based on the purported need to weigh in on \u201cthe reasonable likelihood of public harm\n\nabsent the [EIA\u2019s] emergency collection of information regarding cryptocurrency mining\n\nfacilities.\u201d ECF No. 18 at 1. Yet this rationale could not possibly be legitimate when the survey\n\nhad already been discontinued and an agreement of the parties reached. Moreover, the amicus brief\n\nfails to comply with Rule 29(a)(3)(b) because it will not aid the Court in disposition of the case,\n\nas the issue is now moot and pending final resolution between the parties.\n\n Fatal procedural defects aside, the Motion is also of no aid to the Court. Sierra Club makes\n\nno effort to address why Plaintiffs are unlikely to prevail on the merits, why they are not being\n\nharmed, or how the harm is not immediate and irreparable. It chooses to address only the public\n\ninterest \u2013 and even then says nothing about how public harm is imminent absent the \u201cemergency\u201d\n\nsurvey. The failure to offer any comment on the Court\u2019s prior ruling, and the agreement of the\n\nparties actually involved, demonstrates this is this is a not a filing designed to aid the Court \u2013 but\n\n\n\n\n4860-0054-6217.1\n\f Case 6:24-cv-00099-ADA Document 21 Filed 02/28/24 Page 3 of 4\n\n\n\n\n a filing designed to aid the Sierra Club. As the Fifth Circuit has noted in summarily rejecting other\n\n \u201cspurious\u201d filings like this one, there is \u201c[n]o need to refute these arguments with somber reasoning\n\n and copious citation of precedent; to do so might suggest that these arguments have some colorable\n\n merit.\u201d Crain v. C.I.R., 737 F.2d 1417, 1417 (5th Cir. 1984).\n\n For these reasons, the Court should: (1) deny the Motion; and (2) strike Sierra Club\u2019s\n\n amicus brief and exhibits from the record because these filings are improper, not relevant, and\n\n violate Rule 29.\n\n\n\n Respectfully submitted,\n\n /s/ Mark D. Siegmund\nKara M. Rollins Chris Davis Mark D. Siegmund\nRussell G. Ryan* Joshua Smeltzer State Bar Number 24117055\nNEW CIVIL LIBERTIES GRAY REED CHERRY JOHNSON\nALLIANCE 1601 Elm St., Suite 4600 SIEGMUND JAMES PLLC\n1225 19th St. NW, Suite 450 Dallas, TX 75201 The Roosevelt Tower\nWashington, DC 20036 Tel: (469) 320-6215 400 Austin Avenue, 9th Floor\nTel: (202) 869-5210 Fax: (469) 320-6926 Waco, Texas 76701\nFax: (202) 869-5238 cdavis@grayreed.com Tel: (254) 732-2242\nkara.rollins@ncla.legal jsmeltzer@grayreed.com Fax: (866) 627-3509\nruss.ryan@ncla.legal msiegmund@cjsjlaw.com\n*Pro Hac Vice Motions Greg White\nForthcoming 900 Washington Avenue\n Suite 800\n Waco, Texas 76701\n Tel: (254) 342-3003\n Fax: (469) 320-6926\n\n Counsel for Plaintiffs\n\n\n\n\n 4860-0054-6217.1\n\f Case 6:24-cv-00099-ADA Document 21 Filed 02/28/24 Page 4 of 4\n\n\n\n\n CERTIFICATE OF SERVICE\n I certify that on February 28, 2024, a true and correct copy of the foregoing document was\n\ntransmitted using the CM/ECF system, which automatically sends notice and a copy of the filing\n\nto all counsel of record.\n\n /s/ Mark D. Siegmund\n Mark D. Siegmund\n\n\n\n\n4860-0054-6217.1\n\f","ocr_status":2,"date_upload":"2024-02-28T15:24:43.926868-08:00","document_number":"21","attachment_number":null,"pacer_doc_id":"181031736244","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Response in Opposition to Motion","acms_document_guid":""}],"date_created":"2024-02-28T15:20:44.428255-08:00","date_modified":"2025-01-22T17:34:00.910239-08:00","date_filed":"2024-02-28","time_filed":"16:29:03","entry_number":21,"recap_sequence_number":"2024-02-28.003","pacer_sequence_number":81,"description":"Response in Opposition to Motion, filed by Riot Platforms, Inc., Texas Blockchain Council, re [18] MOTION for Leave to File Amicus Brief by Casey Roberts. filed by Amicus Sierra Club Plaintiffs' Opposition to Non-Party Sierra Club's Motion for Leave to File Amicus Brief and Motion to Strike (Siegmund, Mark)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379728920/","id":379728920,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387464046/","id":387464046,"tags":[],"absolute_url":"/docket/68276281/20/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-28T12:09:09.720876-08:00","date_modified":"2025-01-22T17:34:00.896119-08:00","sha1":"260a8a3a4b5a00d7752622a0f1fb35e1d149f324","page_count":2,"file_size":117785,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.20.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.20.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387464046.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 20 Filed 02/28/24 Page 1 of 2\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\n TEXAS BLOCKCHAIN COUNCIL, )\n a nonprofit association; )\n RIOT PLATFORMS, INC., )\n )\n Plaintiffs )\n ) Case No. 6:24-cv-99\n v. )\n )\n DEPARTMENT OF ENERGY; )\n JENNIFER M. GRANHOLM, in her )\n official capacity as Secretary of Energy; )\n ENERGY INFORMATION )\n ADMINISTRATION; JOSEPH )\n DECAROLIS, in his official capacity as )\n Administrator of Energy Information )\n Administration; OFFICE OF )\n MANAGEMENT AND BUDGET; )\n SHALANDA YOUNG, in her official )\n capacity as Director of Office of )\n Management and Budget, )\n )\n Defendants. )\n\n [PROPOSED] ORDER GRANTING MOTION FOR LEAVE TO FILE AMICUS BRIEF\n\n This matter comes before the Court on motion for leave for the Sierra Club to file an\n\namicus curiae brief in support of neither party. Having reviewed all arguments before the Court\n\nand the proposed brief, the Court exercises its discretion to GRANT the motion. The amicus\n\nbrief is deemed filed.\n\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 20 Filed 02/28/24 Page 2 of 2\n\n\n\n\nIT IS SO ORDERED.\n\n\n\nDated: ________________ _____________________________\n\n The Honorable Alan Albright\n\n\n\n\n 2\n\f","ocr_status":2,"date_upload":"2024-02-28T12:11:12.047805-08:00","document_number":"20","attachment_number":null,"pacer_doc_id":"181031733262","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Attachment","acms_document_guid":""}],"date_created":"2024-02-28T12:09:09.707143-08:00","date_modified":"2025-01-22T17:34:00.882018-08:00","date_filed":"2024-02-28","time_filed":"13:56:40","entry_number":20,"recap_sequence_number":"2024-02-28.002","pacer_sequence_number":78,"description":"ATTACHMENT Proposed Order to [18] MOTION for Leave to File Amicus Brief by Casey Roberts. by Sierra Club. (Roberts, Casey)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379693417/","id":379693417,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/427936986/","id":427936986,"tags":[],"absolute_url":"","date_created":"2025-01-22T17:34:00.753926-08:00","date_modified":"2025-01-22T17:34:00.762924-08:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Deficiency Notice","acms_document_guid":""}],"date_created":"2024-02-28T08:44:29.207035-08:00","date_modified":"2025-01-22T17:34:00.713829-08:00","date_filed":"2024-02-27","time_filed":null,"entry_number":null,"recap_sequence_number":"2024-02-27.001","pacer_sequence_number":null,"description":"DEFICIENCY NOTICE: re 18 MOTION for Leave to File Amicus Brief by Casey Roberts. Pursuant to the local court rules, a proposed order shall be filed with all nondispositive motions. Please file an Order using the attachment event and link to Motion. The motion has been left pending on the assumption that the deficiency will be fixed. Thank you. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379683652/","id":379683652,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387414918/","id":387414918,"tags":[],"absolute_url":"/docket/68276281/19/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-28T07:58:53.283866-08:00","date_modified":"2025-01-22T17:34:00.865972-08:00","sha1":"59e2c93f410007cbcd3feadf40d61a9a9ad3e7f2","page_count":1,"file_size":76479,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.19.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.19.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 6:24-cv-00099-ADA Document 19 Filed 02/28/24 Page 1 of 1\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n TEXAS BLOCKCHAIN COUNCIL ET AL\n\n v. Case No.: 6:24-cv-00099-ADA\n\n DEPARTMENT OF ENERGY ET AL\n\n ORDER\n\n BE IT REMEMBERED on this day, there was presented to the Court the Motion for Admission\n\nPro Hac Vice filed by Kara McKenna Rollins (\u201cApplicant\u201d), counsel for Texas Blockchain Council,\n\nand the Court, having reviewed the motion, enters the following order:\n\n IT IS ORDERED that the Motion for Admission Pro Hac Vice is GRANTED, and Applicant\n\nmay appear on behalf of Texas Blockchain Council in the above case.\n\n IT IS FURTHER ORDERED that Applicant, if he/she has not already done so, shall immediately\n\ntender the amount of $100.00, made payable to: Clerk, U.S. District Court, in compliance with Local\n\nCourt Rule AT-1(f)(2).\n\n IT IS FURTHER ORDERED that if the corresponding Motion for Admission Pro Hac Vice was\n\ne-filed, the attorney who filed the Motion on behalf of the Applicant is directed to notify the Applicant\n\nof this order.\n\n IT IS FINALLY ORDERED that Applicant, pursuant to the Administrative Policies and\n\nProcedures for Electronic Filing in Civil and Criminal cases in the Western District of Texas, shall\n\nregister, via your individual PACER account, as a pro hac vice user within 10 days of the date of this\n\nOrder, if he/she has not previously done so on a prior case in this District.\n\n SIGNED this the 28th day of February, 2024.\n\n\n\n\n ALAN D ALBRIGHT\n UNITED STATES DISTRICT JUDGE\n\f","ocr_status":2,"date_upload":"2024-02-28T08:58:35.774793-08:00","document_number":"19","attachment_number":null,"pacer_doc_id":"181031730421","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion to Appear Pro Hac Vice","acms_document_guid":""}],"date_created":"2024-02-28T07:58:53.272305-08:00","date_modified":"2025-01-22T17:34:00.851889-08:00","date_filed":"2024-02-28","time_filed":"09:12:04","entry_number":19,"recap_sequence_number":"2024-02-28.001","pacer_sequence_number":74,"description":"ORDER GRANTING [15] Motion to Appear Pro Hac Vice for Attorney Kara Mckenna Rollins for Riot Platforms, Inc. and Texas Blockchain Council. Pursuant to our Administrative Policies and Procedures for Electronic Filing, the attorney hereby granted to practice pro hac vice in this case must register for electronic filing with our court within 10 days of this order. Registration is managed by the PACER Service Center. Signed by Judge Alan D Albright. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379673149/","id":379673149,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387404041/","id":387404041,"tags":[],"absolute_url":"","date_created":"2024-02-28T06:52:39.463760-08:00","date_modified":"2024-02-28T06:52:39.467348-08:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Deficiency Notice","acms_document_guid":""}],"date_created":"2024-02-28T06:52:39.456034-08:00","date_modified":"2024-02-28T06:52:39.456047-08:00","date_filed":"2024-02-28","time_filed":"08:29:40","entry_number":null,"recap_sequence_number":"2024-02-28.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379650081/","id":379650081,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387376380/","id":387376380,"tags":[],"absolute_url":"/docket/68276281/18/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T18:25:32.388993-08:00","date_modified":"2025-01-22T17:34:00.840725-08:00","sha1":"5b72cda03e6a73bf1a2c3a8326e26a9bb694431e","page_count":5,"file_size":194882,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 6:24-cv-00099-ADA Document 18 Filed 02/27/24 Page 1 of 5\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\n TEXAS BLOCKCHAIN COUNCIL, )\n a nonprofit association; )\n RIOT PLATFORMS, INC., )\n )\n Plaintiffs )\n ) Case No. 6:24-cv-99\n v. )\n )\n DEPARTMENT OF ENERGY; )\n JENNIFER M. GRANHOLM, in her )\n official capacity as Secretary of Energy; )\n ENERGY INFORMATION )\n ADMINISTRATION; JOSEPH )\n DECAROLIS, in his official capacity as )\n Administrator of Energy Information )\n Administration; OFFICE OF )\n MANAGEMENT AND BUDGET; )\n SHALANDA YOUNG, in her official )\n capacity as Director of Office of )\n Management and Budget, )\n )\n Defendants. )\n\n MOTION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF\n NEITHER PARTY\n\n Pursuant to Fed. R. Civ. P. 7, Sierra Club respectfully moves for leave to file the attached\n\nbrief as amicus curiae. Counsel for Plaintiff oppose and counsel for Respondent do not consent\n\nto the filing. Sierra Club\u2019s participation as amicus curiae will provide relevant and useful\n\ninformation to the Court regarding the reasonable likelihood of public harm absent the Energy\n\nInformation Administration\u2019s (\u201cEIA\u201d) emergency collection of information regarding\n\ncryptocurrency mining facilities, particularly in the absence of any briefing or other filings\n\naddressing the need for this information.\n\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 18 Filed 02/27/24 Page 2 of 5\n\n\n\n\nI. Interests of Amicus Curiae\n\n Sierra Club is a nonprofit, grassroots environmental organization with over 680,000\n\nmembers and with more than 60 chapters throughout the country. Sierra Club\u2019s Lone Star\n\nChapter consists of more than 22,000 members. Sierra Club seeks to advance clean, affordable,\n\nand reliable electricity service and, in this capacity, particularly seeks to optimize demand\n\nresponse programs that reduce the need for generation resources and stabilize the grid by\n\nincentivizing customers to reduce demand.\n\n Sierra Club\u2019s members who are residential utility customers have economic and\n\nenvironmental interests in ensuring that electric grid operators provide for the least-cost means of\n\nmeeting customer energy and reliability needs while also avoiding unnecessary pollution. As a\n\nresult, Sierra Club\u2019s members likewise have a particular interest in optimal demand response\n\nprograms, which decrease prices and increase reliability for customers. Similarly, Sierra Club\u2019s\n\nmembers also have a significant interest in the accuracy and precision of aggregate demand (or\n\n\u201cload\u201d) forecasts\u2014predictions that grid operators and utility companies use for long-term\n\nplanning to ensure an adequate supply of electricity for customers and to determine how much\n\ncapacity needs to be added to the grid, whether through the addition of new electricity generators\n\nand/or through the addition of demand response programs.\n\nII. Desirability and Relevance of the Proposed Brief\n\n Sierra Club\u2019s proposed amicus brief is \u201cdesirable,\u201d and the matters it addresses are\n\n\u201crelevant to the disposition of the case.\u201d Cf. Fed. R. App. P. 29(a)(3)(B), (b)(3). A key issue in\n\nthis case, and the basis for this Court\u2019s temporary restraining order, is whether an emergency\n\nexists to justify the EIA\u2019s use of emergency procedures under the Paperwork Reduction Act to\n\ncollect information regarding the effects of cryptocurrency mining on the nation\u2019s energy\n\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 18 Filed 02/27/24 Page 3 of 5\n\n\n\n\nsystem. Dkt. 13 (Order) at 4; see also Dkt. 1-2 (Compl. Exh. 1) at 2. Additionally, at the\n\npreliminary injunction stage, this Court must weigh potential \u201cinjury if the injunction is denied\u201d\n\nagainst \u201cany harm that will result if the injunction is granted\u201d and determine whether an\n\ninjunction is in \u2018the public interest.\u201d Speaks v. Kruse, 445 F.3d 396, 399-400 (5th Cir. 2006).\n\nSierra Club\u2019s proposed brief will provide additional information that will aid in this Court\u2019s\n\nconsideration of these issues.\n\n Specifically, Sierra Club\u2019s proposed brief provides information regarding the needs of\n\ngrid operators to ensure reliability and affordability\u2014that customers\u2019 lights stay on and that their\n\nbills are low. Crucially, grid operators must be able to engage in long-term resource planning and\n\nmust be able to respond to rapidly evolving stress on the grid through flexible demand response\n\nprograms. The proposed brief describes the unique characteristics of cryptocurrency mining\n\nfacilities that, in the absence of sufficient information, can inhibit grid operators and utilities\n\nfrom accurately making long-term plans and responding to extreme events.\n\n Sierra Club has significant expertise both in utility resource planning generally and in\n\ndemand response programs specifically. Sierra Club regularly advocates for more robust demand\n\nresponse programs with characteristics that will enable rapid, flexible reduction of demand on\n\nthe electric grid. The Club has engaged deeply for more than a decade with Texas\u2019s primary\n\nelectric grid operator, the Electric Reliability Council of Texas (ERCOT), and is an official\n\nvoting member of ERCOT. In that capacity, Sierra Club regularly analyzes threats to the\n\nreliability of the grid and works to ensure affordable electricity for customers. Beyond Texas, the\n\nClub regularly engages with these issues in states throughout the country. The proposed brief,\n\nrooted in this experience, will provide further information as to the urgency of better\n\nunderstanding the impacts of cryptocurrency mining facilities on the grid.\n\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 18 Filed 02/27/24 Page 4 of 5\n\n\n\n\n Courts within this district, including this Court, have regularly permitted the participation\n\nof interested amici curiae. E.g., Book People, Inc. v. Wong, 1:2023-cv-00858, 2023 WL 6060045\n\n(W.D. Tex.); McGee v. Armstrong, No.W- 22-CA-380, 2023 WL 5170128 (W.D. Tex.); Gill v.\n\nCrockett, PE:20-CV-00011, 2021 WL 11669830 (W.D. Tex.): McDonald v. Sorrels, No. 1:19-\n\nCV-219, 2020 WL 3261061 (W.D. Tex.); American Stewards of Liberty v. Dep\u2019t of the Interior,\n\nNo. 1:15-CV-1174, 370 F. Supp. 3d 711 (W.D. Tex.); Fisher v. Univ. of Tex. at Austin, No. A-\n\n08-CA-263, 645 F. Supp. 2d 587 (W.D. Tex.); Save Our Springs Alliance v. Norton, No. A-04-\n\nCA-314, 361 F. Supp. 2d 643 (W.D. Tex.). In light of Sierra Club\u2019s interests at stake in this case\n\nand the potential for the proposed amicus brief to aid the Court in its decision-making, Sierra\n\nClub respectfully requests leave to file the proposed brief.\n\nDated: February 27, 2024 Respectfully submitted,\n\n /s/ Casey Roberts\n Megan Wachspress Casey Roberts\n Sanjay Narayan Sierra Club\n Sierra Club 1536 Wynkoop Street, Ste 200\n 2101 Webster St, Ste 1300 Denver, CO 80202\n Oakland, CA 94612 (303) 454-3355\n (415) 977-5635 casey.roberts@sierraclub.org\n megan.wachspress@sierraclub.org\n (415) 977-5769 Kathryn Huddleston\n sanjay.narayan@sierraclub.org Sierra Club\n 6406 N I-35, Ste 1805\n Austin, TX 78752\n kate.huddleston@sierraclub.org\n\n\n\n\n 4\n\f Case 6:24-cv-00099-ADA Document 18 Filed 02/27/24 Page 5 of 5\n\n\n\n\n CERTIFICATE OF SERVICE\n\n I hereby certify that I served a copy of the foregoing motion and associated exhibits via\nthe Court\u2019s ECF filing system.\n\nDated: February 27, 2024 /s/ Casey Roberts\n Casey Roberts\n\n\n\n\n 5\n\f","ocr_status":2,"date_upload":"2024-02-27T20:07:14.604278-08:00","document_number":"18","attachment_number":null,"pacer_doc_id":"181031729614","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Motion for Leave to File Amicus Brief","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387380080/","id":387380080,"tags":[],"absolute_url":"/docket/68276281/18/1/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T20:07:00.377255-08:00","date_modified":"2025-01-22T17:33:57.198692-08:00","sha1":"acb05171b85f796d77e5c8697aadcccc4cb0945d","page_count":20,"file_size":297010,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.1_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.1.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387380080.thumb.1068.png","thumbnail_status":1,"plain_text":"Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 1 of 20\n\n\n\n\n Exhibit 1\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 2 of 20\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\n TEXAS BLOCKCHAIN COUNCIL, )\n a nonprofit association; )\n RIOT PLATFORMS, INC., )\n )\n Plaintiffs )\n ) Case No. 6:24-cv-99\n v. )\n )\n DEPARTMENT OF ENERGY; )\n JENNIFER M. GRANHOLM, in her )\n official capacity as Secretary of Energy; )\n ENERGY INFORMATION )\n ADMINISTRATION; JOSEPH )\n DECAROLIS, in his official capacity as )\n Administrator of Energy Information )\n Administration; OFFICE OF )\n MANAGEMENT AND BUDGET; )\n SHALANDA YOUNG, in her official )\n capacity as Director of Office of )\n Management and Budget, )\n )\n Defendants. )\n\n AMICUS BRIEF OF SIERRA CLUB\n\n Energy markets are complicated, and what customers don\u2019t know can hurt them.\n\nDelaying Energy Information Administration (EIA)\u2019s access to the information requested\n\nthrough Form 862 for months risks not just grid operators\u2019 ability to ensure electric reliability to\n\nresidences and businesses, but prevents grid operators and federal and state regulators from\n\nhaving the information necessary to prevent the abuse of current market rules by cryptocurrency\n\nmining companies to charge individual ratepayers, collectively, tens of millions of dollars to\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 3 of 20\n\n\n\n\nprevent grid outages. The Texas grid, in particular, is susceptible to both these outcomes.\n\nUtilities, grid operators, and state and federal regulators urgently require the basic and accurate\n\nup-to-date information in EIA\u2019s survey to determine whether current electrical capacity is\n\nsufficient and to design and price demand response programs to prevent rolling blackouts and\n\nprice spikes at times of extreme stress on the grid. An outcome in this proceeding that prevents\n\nEIA from collecting data for months will materially increase the risk of rolling blackouts in\n\nextreme weather events or\u2013as in Texas during Winter Storm Uri\u2013cost customers tens of millions\n\nof dollars in payments to cryptocurrency miners to keep their lights on. This amicus brief\n\nprovides further information about these public harms that are reasonably likely to occur if\n\ninformation collection is delayed. See 5 C.F.R. 1320.13.\n\n INTRODUCTION\n\n Residential customers throughout the country rely every day on power grid operators and\n\nutilities to keep the lights on at affordable prices. Doing so requires meticulous planning and\n\ncareful management, to ensure that electricity supply and demand are constantly in balance. In\n\nTexas, the massive blackouts in February 2021 during Winter Storm Uri provide an especially\n\nstark example of the power grid\u2019s importance. At least 246 people\u2013and possibly up to 700 or\n\nmore\u2013died in the storm, many because they froze to death or perished due to carbon monoxide\n\npoisoning in a desperate effort to keep warm. Those who were able to keep the lights on paid\n\nbillions for that electricity due to price spikes, and some customers will be paying off the power\n\ngrid\u2019s failures that week for decades to come.\n\n To prevent these dire outcomes, grid operators and utilities throughout the United States\n\nneed accurate information for long-term resource planning\u2013to know how much electricity\n\ndemand they must meet in future, and to begin planning now to build generation and/or\n\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 4 of 20\n\n\n\n\nincentivize reduced demand. To avoid both blackouts and billions of dollars in unnecessary\n\nelectrical bills, grid operators must be able to respond rapidly to emergencies like Uri by\n\nimplementing flexible demand response programs that successfully incentivize customers to\n\nreduce demand.\n\n After cryptocurrency mining was banned in China in mid-2021, many of the facilities\n\nrelocated to the United States, joining a rapidly expanding industry. A single cryptocurrency\n\nfacility can have an electrical load equal to that of a medium-sized town. Identifying these\n\nfacilities, determining whether their usage is likely to expand, and developing demand response\n\nprograms and pricing to take advantage of the flexibility of cryptocurrency loads are all critically\n\nnecessary for grid operators to identify weaknesses in the grid, ensure sufficient generation\n\nresources, and maintain reliability for all electricity customers. Those processes can take months\n\nor years, and delays or mistakes can produce blackouts\u2013often during heat waves or cold snaps\n\nwhen the public needs power the most.\n\n Even where unforeseen changes in demand do not produce blackouts, they force the\n\npublic to pay dearly to keep the lights on. Cryptocurrency companies, including Riot Platforms,\n\nhave reported strategically switching between mining Bitcoin and re-selling electricity, activity\n\nthat distorts demand response programs and can cost tens of millions of dollars during periods of\n\nextreme stress like Winter Storm Uri. Without insight into companies\u2019 practices, grid operators\n\nmay misjudge how much electricity is needed, with the potential for price spikes\u2013and even\n\nblackouts. In fact, Texas\u2019 primary grid operator has warned that cryptocurrency facilities\u2019\n\n\u201cinconsistent response\u201d to requests to curtail load \u201ccould drive the system into emergency\n\nconditions,\u201d and that the grid operator \u201chas limited visibility into [the facilities\u2019] sensitivity to\n\nprice and other forecasts.\u201d\n\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 5 of 20\n\n\n\n\n Accurate insight into cryptocurrency facilities\u2019 expected contribution to demand, both on\n\na day-to-day basis and in circumstances with exceptionally high demand, is urgently needed.\n\nCryptocurrency facilities are now significant actors in the power grid\u2013but it\u2019s unclear exactly\n\nhow large their impact is and how they will act in crucial moments. Because electrical reliability\n\ncan be a matter of life or death, and because distorted demand can so heavily impact residential\n\nand small business customers\u2019 finances, it\u2019s essential that grid operators, utilities, federal and\n\nstate regulators, and the public rapidly gain a better understanding of cryptocurrency facilities\u2019\n\nimpacts on the system. This is particularly true before next winter brings further extreme cold\n\nweather, with the potential for catastrophic results if a storm like Uri triggers another grid failure.\n\n EIA Form 862 is a minimally burdensome means of obtaining information for developing\n\nthis understanding. The Form\u2019s eight substantive questions should be readily answerable from\n\nthe face of the respondent\u2019s monthly energy bills, knowledge of the number and processing\n\npower of on-site computers, and information routinely reported in SEC filings and other\n\ninvestor-facing materials.\n\nI. Utility resource planning based on accurate information about load and demand\n response is critical to ensuring affordable and reliable electricity for customers.\n\n Residential electrical customers both need and expect reliable access to electricity at an\n\naffordable cost. Most fundamentally, grid operators\u2013including, most relevant to the Plaintiffs\n\nhere, the Electric Reliability Council of Texas (\u201cERCOT\u201d)\u2013utilities, and state regulators must\n\nensure there is sufficient electrical generation on the grid to meet total demand (or load). To do\n\nso, these entities engage in extensive multi-year planning processes to ensure that there are\n\nsufficient generation resources to meet customer demand. Grid operators such as ERCOT also\n\nuse various pricing mechanisms to induce the construction of increased generation, when\n\nnecessary, and more immediate decreases in demand or increases in supply when extreme\n\n\n 4\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 6 of 20\n\n\n\n\nweather or unplanned plant outages occur, driving load unexpectedly higher or taking resources\n\noff the grid unexpectedly. Knowing where demand occurs is also important; the quantity of\n\ngeneration doesn\u2019t matter if it cannot reach the places it is needed due to limited transmission\n\ncapacity. Grid operators use congestion pricing to incentivize generators and distribution utilities\n\nto match supply with demand across geography as well as time.\n\n The consequences of failure of these planning and response mechanisms can be grave. In\n\nFebruary 2021 in Texas, for example, hundreds of people died when the power grid failed to\n\nhold up during Winter Storm Uri, which both increased demand and caused numerous power\n\nplant outages. Ex. A (Reed Decl.) \u00b6\u00b6 13-15. Many Texans were also financially harmed by the\n\nhuge spike in wholesale electricity pricing to the systemwide cap. Id. \u00b6 15. One of Texas\u2019s\n\nlargest rural electric cooperatives was forced into bankruptcy, and the securitization of electric\n\ncosts from the storm means that some Texas customers will be paying off the costs of that week\n\nfor decades to come. Id. \u00b6\u00b6 15-16.\n\n Because the stakes are so high, and because demand can peak in a matter of days due to\n\nextreme weather conditions, access to accurate information about electricity demand and supply\n\nis crucial to utilities, state regulators, and grid operators. As described below, the rapid growth of\n\ncryptocurrency mining operations over the past two years has rendered much existing\n\ninformation obsolete and created considerable uncertainty as to what electricity needs will be\n\neven six months into the future. It is especially crucial that this information be available before\n\nthe next cycle of severe winter weather, with the potential to tax grids\u2013as seen in Texas during\n\nWinter Storm Uri. Waiting months to collect this data risks delaying access to this information\n\nfor grid operators, utilities, and the public until it is too late to prevent energy price spikes or\n\n\n\n\n 5\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 7 of 20\n\n\n\n\nblackouts this winter. See Dkt. 1-2 at 3 (EIA description of data collection and publication\n\ntimeline).\n\n A. Cryptocurrency facilities drastically increase demand on the power grid because\n of the nature of cryptocurrency mining.\n\n Cryptocurrency mining uses huge amounts of electricity\u2013often the equivalent of the\n\nentire capacity of a medium-sized town\u2013because of the unique nature of cryptocurrency work.\n\nProof-of-work cryptocurrency miners earn money by repeatedly calculating a \u201chash\u201d using a\n\nprocessor designed for that purpose until it finds a mathematical solution, at which point it is\n\nrewarded with a Bitcoin or unit of another currency. See Morici v. Hashfast Techs. LLC, No.\n\n5:14-CV-00087-EJD, 2015 WL 906005, at *2 (N.D. Cal. Feb. 27, 2015). Because solutions are\n\nfound at random, \u201ca miner\u2019s chances of discovering a Bitcoin relative to another miner is based\n\non the miner\u2019s hash rate relative to the total hash rate of all Bitcoin miners on the network.\u201d Id.\n\n(internal quotation omitted). This means miners are incentivized to operate as many computers,\n\nperforming as many calculations as possible and consuming electricity as they do so. Moreover,\n\nthe underlying Bitcoin framework increases in difficulty as more Bitcoin are discovered,\n\nmeaning more computing power\u2013and more electricity\u2013will be required over time.\n\n The result is that a single cryptocurrency facility can require up to 1 gigawatt (GW) (or\n\n1,000 megawatts (MW)) of electricity, roughly twice the load of Lubbock. The Texas facilities\n\nof Riot Platforms (\u201cRiot\u201d), one of the plaintiffs in this litigation, are illustrative. Riot has two\n\nlarge-scale cryptocurrency mining facilities in Texas: one in Rockdale, its \u201cRockdale Facility,\u201d\n\nand one in Navarro County, its \u201cCorsicana Facility.\u201d Ex. D (Riot Platforms, Inc. Form 10-K for\n\nthe fiscal year ended December 31, 2023) at 4. 1 Riot describes its Rockdale Facility as \u201cbelieved\n\n\n1\n Riot Platforms, Inc.\u2019s Form 10-K for the fiscal year ending December 31, 2023 was filed February 23,\n2024 with the U.S. Securities and Exchange Commission. It is available for download online. See U.S.\nSecs. & Exchange Comm\u2019n, EDGAR: Company Search Results: Riot Platforms, Inc.,\n\n\n 6\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 8 of 20\n\n\n\n\nto be the largest single Bitcoin mining facility in North America . . . by capacity\u201d and is\n\nconsidering further expansion. Id. Rockdale currently has at least 700 MW of load capacity\u2013i.e.,\n\nthe capacity to draw that much electricity from the grid\u2013and is contemplating further expansion\n\non an unknown scale. Id. at 16. Riot intends to begin operating 400 MW of its new Corsicana\n\nFacility in the first quarter of 2024. Id. at 7. The Texas Public Utilities Commission recently\n\nfound that the cost to construct a combined-cycle gas plant with a nameplate capacity of 1.2 GW\n\n\u2013 i.e., enough electricity to serve Rockdale and the first phase of Corsicana\u2013is $1.58 billion. See\n\nApplication of Entergy Texas, Inc. to Amend Its Certificate of Convenience & Necessity to\n\nConstruct Orange Cnty. Advanced Power Station, No. XXX-XX-XXXX, 2023 WL 316554, at *1\n\n(Jan. 12, 2023).\n\n Riot has also told investors it intends to increase the size of the facility to 1 gigawatt over\n\nan unspecified time period. Ex. D at 4, 7. As Riot has explained to investors, \u201cOur operations\n\nhave required significant amounts of electrical power, and, as we continue to expand our mining\n\nfleet, operate our Rockdale Facility, and begin to operate our Corsicana Facility, we anticipate\n\nour demand for electrical power will continue to grow.\u201d Id. at 23.\n\n The construction of a cryptocurrency mine thus greatly increases load on the electric grid\n\n(or, in other words, demand) over a short time period. Cryptocurrency mining is both\n\nunprecedented and unique in the scale and speed at which it increases demand on the electrical\n\ngrid. See Ex. C (Fisher Decl.) \u00b6\u00b6 6, 8. The burden that cryptocurrency mining creates\u2013the\n\naddition to the grid of demand that requires the equivalent of a mid-sized city\u2019s worth of power,\n\nvirtually overnight\u2013is unique, and poses significant challenges to ensuring affordable and reliable\n\nelectricity.\n\n\nhttps://www.sec.gov/edgar/browse/?CIK=0001167419. This Court may take judicial notice of Riot\u2019s 10-\nK. Fed. R. Evid. 201(b); Basic Cap. Mgmt., Inc. v. Dynex Cap., Inc., 976 F.3d 585, 589 (5th Cir. 2020).\n\n\n 7\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 9 of 20\n\n\n\n\n B. By greatly increasing load, cryptocurrency mines increase demand, and with\n that increased demand, energy prices for all customers, not just cryptocurrency\n mines.\n\n In electricity markets like ERCOT, when demand is high and supply is steady, prices\n\nincrease. For example, ERCOT market conditions reflect this basic point. In August 2023, with\n\ngreatly increased demand, average wholesale day-ahead prices were almost three times what\n\nthey were a year earlier: in August 2023, more than $300 per MWh, and in August 2022, roughly\n\n$100 per MWh. Ex. A (Reed Decl.) \u00b6 21. Real-time prices also greatly increased with increased\n\ndemand, at over $200 per MWh in August 2023 as compared to roughly $90 per MWh in August\n\n2022. Id. And prices greatly increase with peak demand spikes because more expensive\n\ngenerators must be brought online to meet the need. When ERCOT issued an emergency energy\n\nadvisory on September 6, 2023, real-time power prices spiked to roughly $5,000\u2013ERCOT\u2019s\n\nmaximum. Id. at \u00b6 23. This price increase is felt by all customers, not just cryptocurrency miners.\n\n C. Because cryptocurrency facilities increase demand so drastically, planners need\n accurate information to determine whether and when to add additional supply\u2013\n to prevent blackouts and price spikes.\n\n Because a single cryptocurrency mining facility can increase demand by an amount\n\nroughly equal to the output of a large wind farm or gas plant, Ex. C (Fisher Decl.) \u00b6 4,\n\nunderstanding the number, location, and energy usage of cryptocurrency facilities is crucial to\n\nutilities\u2019 and grid operators\u2019 resource planning. Because, as Plaintiffs point out, cryptocurrency\n\nmining can be shut down at short notice to reduce load if necessary, it is also critical to\n\nunderstanding the availability of load curtailment (the ability to reduce high demand at short\n\nnotice to ensure adequate supply) within a grid or load service area to avoid overbuilding\n\ngeneration to accommodate loads that, like cryptocurrency mines, can be curtailed as needed\n\n\n\n\n 8\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 10 of 20\n\n\n\n\nand, conversely, to ensure that utilities can and do curtail their usage when necessary to sustain\n\nthe grid.\n\n There is evidence that cryptocurrency facilities are increasing demand\u2013and strain on the\n\nelectrical grid\u2013but the exact nature of that strain is uncertain. The peak demand for electricity on\n\nthe ERCOT grid was almost 12 GW (or 12,000 MW) higher in 2023 than it was in 2021. Ex. A\n\n(Reed Decl.) \u00b6 17. It had previously taken 15 years for demand to grow by 12 GW. Id. In other\n\nwords, electrical usage on the hottest day of the summer in Texas grew by as much from 2021 to\n\n2023 as it did from 2005 to 2021. An unknown but significant source of this growth is\n\ncryptocurrency mining. ERCOT has determined that energy users with the same use profile as\n\ncryptocurrency facilities (i.e., large demand but the ability to ramp down at short notice) made up\n\n2,523 MW of ERCOT\u2019s total demand in 2022 and 4,479 MW in 2023\u2013i.e., such loads nearly\n\ndoubled in a single year. Ex. A (Reed Decl.) \u00b6 25. Between January 2022 and August 2023,\n\nERCOT reported approving 22 new interconnections with a total load of approximately 2,700\n\nMW (or five times the load of the city of Lubbock) to enter the grid within two years or less,\n\n\u201cbypassing the established reliability process,\u201d that is, the lengthy studies typically undertaken to\n\nensure adding a load of that magnitude will not cause congestion or voltage issues on the grid.\n\nEx. B (ERCOT, Large Loads\u2013Impact on Grid Reliability and Overview of Revision Request\n\nPackage, August 16, 2023, or \u201cERCOT PowerPoint\u201d) at 6.\n\n If, as Plaintiffs allege, cryptocurrency mining operations are a flexible load that ERCOT\n\nand other grid operators can switch off during periods of peak demand, see Dkt. 1 at 48-49, grid\n\noperators cannot take this flexibility into account to reduce load forecasts without accurate\n\ninformation about the size and location of these flexible loads. Without accurate information,\n\ngrid operators may unnecessarily increase energy prices to induce plant operators to run their\n\n\n\n\n 9\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 11 of 20\n\n\n\n\nplants more or delay repairs, or even build or induce the building of new excess generation\n\nresources\u2013which may, in turn, be unnecessary in light of cryptocurrency facilities\u2019 ability to\n\ncurtail their demand. See Ex. C (Fisher Decl.) \u00b6\u00b6 7-8. All customers, not just cryptocurrency\n\nminers, will pay these costs in new construction and/or higher energy prices.\n\n D. ERCOT\u2019s warnings about how large cryptocurrency loads can threaten grid\n reliability without adequate planning demonstrate the need for further\n information.\n\n Texas provides an example of the dangers posed by lack of information about\n\ncryptocurrency facilities and the strain they may place on the electric grid. Although the total\n\nmagnitude of the cryptocurrency load is apparent in the rapid growth of electrical demand in\n\nTexas and elsewhere, the location and usage of these facilities are not always well understood by\n\nthe grid operators and utilities tasked with ensuring the lights remain on. ERCOT, specifically,\n\nhas identified the need for additional information to understand the capabilities and demand of\n\neach site. ERCOT has characterized load forecasting for large loads as a reliability risk,\n\nexplaining that it has \u201climited visibility into the location and consumption of all larger Loads.\u201d\n\nEx. A (Reed Decl.) \u00b6 27; Ex. B (ERCOT PowerPoint) at 7. ERCOT has warned that, as a result,\n\nit \u201cis seeing greater load forecast error on extreme or unusual operating days when an accurate\n\nforecast is most critical.\u201d Id. This lack of information hampers ability to predict the timing and\n\namount of load peaks and thus to provide guidance to generators about when to schedule\n\nmaintenance or needed outages, or to call upon particularly expensive resources to enter the grid.\n\nAccording to ERCOT, the lack of visibility as to how cryptocurrency mines are using the grid\n\n\u201chas been evident during summer operations when high prices and 4CP [a measure of peak load]\n\nresponse make industrial load usage difficult to forecast for upcoming days. Increased visibility\n\n\n\n\n 10\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 12 of 20\n\n\n\n\ninto industrial load consumption would have also been useful during both Winter Storm Uri and\n\nElliot, when larger Load usage was a critical forecasting input.\u201d Id.\n\n The \u201cflexibility\u201d touted by Plaintiffs can also destabilize the grid, particularly in the\n\nabsence of information as to how cryptocurrency facilities are interacting with the grid. ERCOT\n\nhas determined that large loads\u2019 rapid changes in consumption are a \u201creliability risk,\u201d explaining\n\nthat \u201cLarge Loads can change their MW consumption rapidly enough to exhaust available\n\nRegulation service,\u201d and that this \u201cwas not an issue prior to the connection of the 2700 MW of\n\nLarge Loads.\u201d Ex. A (Reed Decl.) \u00b6 29; Ex. B (ERCOT PowerPoint) at 9. When large loads\n\nsuddenly disconnect, they can cause voltage fluctuations, including one near Odessa in\n\nDecember 2022 where it took more than 10 minutes to restore the grid to normal operation. Ex.\n\nB (ERCOT PowerPoint) at 8. Moreover, these large loads do not always respond adequately to\n\nperiods of resource scarcity. ERCOT reported that \u201c[e]xperience shows inconsistent response\n\nfrom Large Load sites that should be expected to reduce consumption\u201d and that ERCOT \u201cneeds\n\nthe capability to coordinate Large Load response before curtailment of firm Load\u201d--that is,\n\nrolling blackouts\u2013is required. Id. at 10. To effectively make use of cryptocurrency loads\u2019\n\nflexibility, and to avoid their rapid ramping from becoming a threat to grid stability, ERCOT\n\ndetermined it needed to collect \u201cadditional information\u2026to improve its load forecasts and\n\noperational processes.\u201d Id. at 11.\n\n Although ERCOT has seen the most intense load growth due to cryptocurrency mines, it\n\nis not unique. Other grid operators will face similar risks and require similar information to plan\n\nemergency operation protocols, design programs to require load shedding during extreme periods\n\nin lieu of relying on voluntary compliance, and identify needed transmission or other physical\n\ninfrastructure to avoid blackouts during extreme weather conditions or other periods of peak\n\n\n\n\n 11\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 13 of 20\n\n\n\n\nload. Elsewhere, grid reliability is managed by investor-owned utilities, regional transmission\n\norganizations (where they exist), the Federal Energy Regulatory Commission (FERC), and state\n\npublic utility regulators; these entities need consistent, comprehensive information about large\n\ncryptocurrency loads to collaborate and coordinate, and to ensure visibility into major sources of\n\ndemand on the grid and an understanding of how those sources will respond to economic\n\nincentives so that they can adapt their prices and policies accordingly.\n\nII. Cryptocurrency companies engage in hedging activity that undermines the purpose of\n demand response programs and significantly increases customer bills.\n\n To reduce the need for the construction of new generation and to address uncertainty\n\naround peak demand, utilities and grid operators design and implement demand response\n\nprograms. Rather than build more resources, these programs pay large-scale users of electricity\n\n(or aggregators of residential or smaller commercial users) to reduce usage at periods of peak\n\ndemand. For example, ERCOT \u201coffers Demand Response programs that permit customers to\n\nvoluntarily participate in Demand Response Services and Emergency Response Services by\n\nreducing or modifying their use of electricity. Participants earn money by committing to\n\nreducing their energy usage by a certain capacity during a quarterly period and then temporarily\n\nreducing their electricity use during times of peak demand.\u201d Viridity Energy Sols., Inc. v. Lone\n\nStar Demand Response, LLC, No. 4:21-CV-419-SDJ, 2022 WL 4004785, at *1 (E.D. Tex. July\n\n12, 2022).\n\n Demand response is thus a resource for ERCOT and other grid operators throughout the\n\ncountry to deal with periods of insufficient generation to meet demand. Demand response\n\nprograms have both short-term and long-term benefits. In the short term, having the ability to\n\nshut off certain customers who have agreed to be shut off in advance helps to avoid blackouts\n\naffecting critical resources or ordinary individuals in emergency conditions. In the longer term,\n\n\n 12\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 14 of 20\n\n\n\n\nbecause grid operators and utilities require or are required to construct sufficient generation to\n\nmeet periods of peak load, securing a promise from certain large-scale customers to cut power\n\nduring extreme periods allows utilities and grid operators to build less generation, because less is\n\nrequired during peaks. These programs help reduce retail prices and enhance grid reliability; as\n\nFERC has found, \u201cenabling demand-side resources, as well as supply-side resources, improves\n\nthe economic operation of electric power markets by aligning prices more closely with the value\n\ncustomers place on electric power.\u201d Wholesale Competition in Regions with Organized Elec.\n\nMarkets, 125 FERC \u00b6 61,071, 61,401 (2008) (FERC Order 719 at \u00b6 16).\n\n To maximally enhance reliability, balance supply and demand, and minimize customer\n\ncost of new generation, demand response programs, including interruptible retail rate tariffs,\n\nmust incorporate accurate price signals. The more information utilities have about the size,\n\nlocation, and price-sensitivity of large electrical loads on their system, the better able they are to\n\ndetermine the appropriate price to pay for the right to shut off electricity to customers during\n\npeak periods. See Ex. C (Fisher Decl.) \u00b6\u00b6 8, 43.\n\n A. During periods of especially high energy prices, cryptocurrency facilities become\n energy resellers.\n\n In the absence of accurate information about the location, usage, and ramping ability of\n\ncryptocurrency mining operations, some mining companies have used demand response\n\nprograms to engage in electricity price hedging, at significant cost to customers. For example,\n\nunder the current ERCOT tariff, according to Riot SEC filings, Riot may participate in these\n\nprograms \u201cby offering their electrical loads into the ERCOT markets, or indirectly by reducing\n\ntheir energy usage in response to increasing power demand in the ERCOT marketplace.\u201d Ex. E\n\n(Riot Platforms, Inc. 10-Q for quarter ending September 30, 2023) at 9-10. As a result, \u201c[f]or\n\n\n\n\n 13\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 15 of 20\n\n\n\n\neach respective Demand Response Services Program, the Company receives a cash payment\n\nbased on hourly rates for power, and the amount of electrical load into which it bids.\u201d Id. at 10.\n\n According to its November 2023 10-Q filing, Riot procures 345 MW in long-term, fixed-\n\nprice power. 2 Riot receives income from ERCOT demand response programs in two ways: (1)\n\nreselling this electricity to other users during peak period and (2) agreeing to curtail its usage\n\nduring peak periods if requested, whether or not it is actually required to do so. Id. at 10. Again\n\naccording to Riot\u2019s own SEC filing, during 2022, Riot received $27.3 million in credits against\n\nfuture power costs; during 2023 it received $71.2 million. Ex.4 at 36-37. This translates into\n\nclose to $100 million in free electricity for Riot. Thanks to these \u201cstrategic curtail[ments],\u201d Riot\n\nreported that \u201c[f]or the three months ended September 30, 2023, the net costs\u201d of mining Bitcoin\n\n\u201cwere negative due to power curtailment credits exceeding costs of revenue.\u201d Ex. E at 26. In\n\nother words, according to its November 10-Q filing, Riot was paid to use electricity during the\n\nthird quarter of September 2023.\n\n Although it does not classify the demand response programs and corresponding\n\nsettlements as trading activities or proceeds, Riot has effectively become an electricity trader\n\nakin to Enron: purchasing long-term power contracts for the equivalent of a small gas power\n\nplant (345 MW), then deciding whether to use the corresponding electricity to generate Bitcoin\n\nor resell depending on the relative price of the cryptocurrency or energy. Nor is this hedging\n\nactivity incidental to its mining operations. Riot has stated, \u201cWe believe our ability to offer\n\npower back to the grid at market-driven spot prices, thereby reducing our operating costs, is\n\n\n2\n Notably, to the extent Riot (or any other cryptocurrency miner) obtains electricity at spot prices, the\nminers have an economic incentive to cease mining at points when electricity prices are high enough that\nthey will pay more to generate a Bitcoin than the Bitcoin is currently worth. Thus, it is important for\nutilities and grid operators to understand how much of a mining operation\u2019s electricity is secured through\nfixed-price contracts to anticipate economic behavior and thus the need for additional demand response\nincentives to take advantage of cryptocurrency\u2019s putative flexibility as a load.\n\n\n 14\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 16 of 20\n\n\n\n\nintegral to our overall strategy . . . .\u201d Ex. D at 39. Further, \u201cThe Company\u2019s power strategy\n\ncombines participation in Demand Response Services Programs and sales of power during times\n\nof peak demand, to attempt to manage operating costs most efficiently.\u201d Id. at F-28.\n\n Without access to basic information about mining facilities\u2019 electrical capabilities and\n\nprice sensitivity of its mining activities, regulators lack the ability to prevent facilities from using\n\nthis hedging to engage in price manipulation in, for example, transmission-constrained electricity\n\nmarkets. Because cryptocurrency facilities, as exemplified by Riot, will switch between mining\n\nand energy resale based on the relative price of electricity and Bitcoin, it is crucial that grid\n\noperators and utilities understand how much revenue a mining operation can generate through\n\nthe use of electricity for mining. This understanding will enable grid operators to anticipate this\n\nswitching behavior and appropriately price programs, such as ERCOT\u2019s demand response\n\nprogram, that compensate miners for this flexibility. The information requested in EIA Form 862\n\nwill enable grid operators and regulators to understand what this breakeven point is and respond\n\naccordingly to prevent energy price manipulation, maximize reliability, and minimize customer\n\ncost. See Ex. C (Fisher Decl.) \u00b6 46.\n\n B. The cost of these demand response payments from ERCOT is borne by all\n electricity customers in the state.\n\n Both the costs of demand response programs and the cost of energy price spikes due to\n\nmismatched load forecasts and generation supply are ultimately paid by ordinary utility\n\ncustomers. When Riot receives a credit for curtailing its electricity during periods of peak\n\ndemand, that means it does not pay for generation it consumes in the future. The cost of\n\ngenerating that electricity is borne by the remaining electrical customers. If large loads do not\n\nparticipate in demand response, or are inconsistent or unpredictable in doing so (as ERCOT\n\nsuggests has historically been the case), Ex. B (ERCOT PowerPoint) at 10, the total load on the\n\n\n 15\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 17 of 20\n\n\n\n\ngrid increases, more generation is required, and customers pay to build that generation. As then-\n\nKentucky Attorney General Daniel Cameron pointed out in opposing a reduced rate for a\n\ncryptocurrency mine in that state, to effectively use demand response to reduce peak load and\n\nthus the need for new capacity utilities must accurately anticipate when peak load will occur and\n\ndirect miners to curtail their usage during that window. Mistakes can be costly\u2013in the order of\n\ntens of millions of dollars in new generation buildout cost. 3\n\n Another ERCOT strategy for ensuring sufficient capacity during periods of peak demand\n\nis raising the System Wide Offer Cap in hopes of inducing generators for whom it would\n\notherwise be uneconomic to operate to come online. During Winter Storm Uri, ERCOT kept the\n\ncap at the then-maximum of $9,000/MWh for several days. Ex. A (Reed Decl.) \u00b6 15. As a result,\n\ndistribution utilities were left with enormous wholesale bills and debt, which they are now in the\n\nprocess of paying off through retail surcharges. Id. \u00b6 20. Customers of the Pedernales Electric\n\nCooperative, for example, will pay $160 million in storm-related debt as a result of Winter Storm\n\nUri. Id. When cryptocurrency loads drive demand and thus prices higher, distribution utilities\u2013\n\nthe entities responsible for delivering electricity to homes and businesses\u2013pay more for\n\nelectricity and pass on those added costs to customers.\n\nIII. Without the basic information in EIA Form 862, customers may face blackouts or\n foot the bill for tens of millions of dollars in demand response charges.\n\n As Winter Storm Uri illustrates, even a single period of extreme weather can result in\n\nhundreds of deaths and hundreds of millions of dollars in additional energy costs if the grid is\n\nunprepared to meet a surge in demand with a combination of planned curtailment and generation\n\n\n3\n Post-Hearing Brief of the Attorney General and Kentucky Industrial Utility Customers, Matter of\nElectronic Tariff Filing of Kentucky Power Company for Approval of a Special Contract with Ebon\nInternational, LLC, Case No. 2022-0387 (Filed August 8, 2023) at 17-18, available at\nhttps://psc.ky.gov/pscecf/2022-00387/mkurtz%40bkllawfirm.com/08082023035800/KIUC-\nAG_Ebon_Brief_%28PUBLIC%29.pdf.\n\n\n 16\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 18 of 20\n\n\n\n\ncapacity. To prevent these public harms, utilities and grid operators must proactively develop\n\ncontingency plans as well as identify any need for additional physical infrastructure.\n\nCryptocurrency mining facilities, because of their energy needs, have a disproportionate impact\n\non the electricity grid on a per-facility basis. As ERCOT has explained, \u201cLarge Load behavior\n\ncan magnify the severity of grid events, increasing the negative impact to reliability.\u201d Ex. A\n\n(Reed Decl.) \u00b6 28; Ex. B (ERCOT PowerPoint) at 8. Alarmingly, ERCOT has identified the\n\nunpredictability of large loads (again, a category that includes cryptocurrency facilities) as a\n\n\u201creliability risk,\u201d explaining that \u201cLarge Loads have exhibited inconsistent behavior during\n\nResource scarcity events.\u201d Ex. A (Reed Decl.) \u00b6 26; Ex. B (ERCOT PowerPoint) at 10. This is a\n\nthreat to both keeping the lights on and keeping costs low for customers: \u201cIf ERCOT plans for\n\nexpected Large Load response and the Load does not respond, it could drive the system into\n\nemergency conditions. If ERCOT plans for no response, it will increase customer costs\n\nunnecessarily when the Load does respond.\u201d Id.\n\n Because of the magnitude of cryptocurrency facilities\u2019 impact and their current\n\nunpredictability, without the basic information provided by EIA Form 862 there is a serious risk\n\nthat grid operators, including ERCOT, will make forecasting mistakes that result in load and\n\ncapacity mismatch or pay tens of millions of dollars to cryptocurrency operators to avoid\n\nblackouts.\n\n With this information, grid operators and utilities are able to adapt to the new load in a\n\nway that protects current electricity customers. These adaptations do not preclude the operation\n\nof cryptocurrency facilities, but ensure that miners use their flexibility for the benefit of all\n\ncustomers. For example, the Idaho Public Utilities Commission approved a Speculative High-\n\nDensity Load tariff in June 2022 that requires customers with flexible loads over 20 MW to\n\n\n\n\n 17\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 19 of 20\n\n\n\n\nnegotiate an interruptible rate. 4 The Arkansas Public Service Commission approved a similar\n\nrate structure designed to ensure such large loads were interruptible in a manner that conformed\n\nwith the way in which the relevant grid operator (called MISO) measured peak load. Fisher Decl.\n\n\u00b6\u00b6 18-19.\n\n The information provided by EIA Form 862 is crucial for all actors in the grid system,\n\nstate and federal, to have access to the same\u2013and comparable\u2013sets of information. Federal and\n\nstate regulators and utilities quickly need to identify large loads that pose a challenge to grid\n\nreliability and determine the impact those loads have and are likely to have in the future. They\n\nneed this information to determine how to best balance the need for interruptible service to avoid\n\nboth blackouts and costly new construction (where possible), on the one hand, with, on the other,\n\ndisincentivizing behavior that benefits miners at the expense of customers who depend on\n\nelectricity for their homes and businesses and who are not large enough to drive prices. In\n\nparticular, understanding facilities\u2019 hashrate and per-unit energy consumption is critical for\n\nforecasting the \u201cbreakeven price at which a cryptomining operation will curtail.\u201d This\n\ninformation is essential for forecasting whether emergency measures are likely to be necessary\n\nand how to appropriately price the demand response services cryptominers claim to provide. See\n\nEx. C (Fisher Decl. \u00b6 43). Moreover, understanding not only the specifics of a single locality but\n\ntrends and commonalities across the country is urgently necessary to understand how best to\n\nkeep the lights on for customers, at a low cost, before another season of severe winter weather\n\nwith a much greater cryptocurrency load on the grid.\n\n\n\n4\n See Order on Reconsideration, In the Matter of the Application of Idaho Power Company for Authority\nto Establish a New Schedule to Serve Speculative, High-Density Load Customers, Case No. IPC-E-21-37,\nOrder No. 35550 (Idaho Pub. Util. Com\u2019n. Oct. 5, 2022), available at\nhttps://puc.idaho.gov/Fileroom/PublicFiles/ELEC/IPC/IPCE2137/OrdNotc/20221005Reconsideration_Or\nder_No_35550.pdf.\n\n\n 18\n\f Case 6:24-cv-00099-ADA Document 18-1 Filed 02/27/24 Page 20 of 20\n\n\n\n\n CONCLUSION\n\n Given the significant and growing impact of cryptocurrency mining on the United States\n\nelectrical grid, the rapidity with which new loads can come online, and the lack of information\n\nnecessary to effectively manage those new loads, public harms are reasonably likely to occur if\n\nEIA is unable to obtain the requested information in time to plan for, and develop responses to,\n\nemergency conditions on the grid\u2013such as extreme weather conditions and other unexpected\n\nevents. Sierra Club urges the Court to consider these public harms in resolving this case.\n\n\nDated: February 27, 2024 Respectfully submitted,\n\n /s/ Casey Roberts\n Megan Wachspress Casey Roberts\n Sanjay Narayan Sierra Club\n Sierra Club 1536 Wynkoop Street, Ste 200\n 2101 Webster St, Ste 1300 Denver, CO 80202\n Oakland, CA 94612 (303) 454-3355\n (415) 977-5635 casey.roberts@sierraclub.org\n megan.wachspress@sierraclub.org\n (415) 977-5769 Kathryn Huddleston\n sanjay.narayan@sierraclub.org Sierra Club\n 6406 N I-35, Ste 1805\n Austin, TX 78752\n kate.huddleston@sierraclub.org\n\n\n\n\n 19\n\f","ocr_status":2,"date_upload":"2024-02-28T08:47:48.262619-08:00","document_number":"18","attachment_number":1,"pacer_doc_id":"181031729615","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Amicus Brief of Sierra Club","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387380081/","id":387380081,"tags":[],"absolute_url":"/docket/68276281/18/2/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T20:07:00.426001-08:00","date_modified":"2025-01-22T17:33:57.218250-08:00","sha1":"b55ca741160ea5695d0d7994b9c62d771078c6da","page_count":12,"file_size":489471,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.2_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.2.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 1 of 12\n\n\n\n\n Exhibit A\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 2 of 12\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\n TEXAS BLOCKCHAIN COUNCIL, )\n a nonprofit association; )\n RIOT PLATFORMS, INC., )\n )\n Plaintiffs )\n ) Case No. 6:24-cv-99\n v. )\n )\n DEPARTMENT OF ENERGY; )\n JENNIFER M. GRANHOLM, in her )\n official capacity as Secretary of Energy; )\n ENERGY INFORMATION )\n ADMINISTRATION; JOSEPH )\n DECAROLIS, in his official capacity as )\n Administrator of Energy Information )\n Administration; OFFICE OF )\n MANAGEMENT AND BUDGET; )\n SHALANDA YOUNG, in her official )\n capacity as Director of Office of )\n Management and Budget, )\n )\n Defendants. )\n\n\n VERIFIED AFFIDAVIT OF DR. CYRUS REED\n\n\nI, Cyrus Reed, make the following declaration based upon my personal knowledge and expertise.\n\nI declare under penalty of perjury that the following is true and correct.\n\nI. My Background and Experience Engaging With ERCOT\n\n 1. My name is Cyrus Reed. I am a resident of Austin, Texas. I have a Ph. D. in\n\ngeography from the University of Texas at Austin.\n\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 3 of 12\n\n\n\n\n 2. For more than 16 years, I have worked for the Sierra Club, specifically for the\n\nLone Star Chapter, which is the Texas chapter of the Sierra Club. While I have held several\n\npositions, my current position is Legislative and Conservation Director of the Lone Star Chapter.\n\n 3. As part of my work responsibilities, I am the main point of contact for the Sierra\n\nClub at the Texas legislature, Public Utility Commission of Texas (PUCT), the State Energy\n\nConservation Office (SECO) and Electric Reliability Council of Texas (ERCOT).\n\n 4. In my role at Sierra Club, I regularly analyze potential threats to reliability and\n\naffordability for the electric grid. In recent years, the chapter has advocated for the important role\n\nthat demand response and energy efficiency can play in supporting a reliable grid. Thus, I\n\nregularly attend the Demand Side Working Group at ERCOT, the Energy Efficiency\n\nImplementation Project meetings at the PUCT, frequently meet with private and public utilities\n\nabout their load management and energy efficiency programs and was even responsible in 2022\n\nfor crafting a rulemaking petition designed to increase residential and commercial energy\n\nefficiency and demand response programs at the PUCT and ERCOT.\n\n 5. For roughly 10 years, I have regularly attended ERCOT meetings; analyzed\n\nERCOT reports, including those related to ancillary services; participated in the Demand Side\n\nWorking Group; considered reports related to demand response; participated in utility energy\n\nefficiency cost recovery fee proceedings; and worked with legislative offices on proposals to\n\nexpand energy efficiency and demand response programs. For example, we supported a protocol\n\nrevision request that allowed more responsive reserves to be supplied through demand response\n\nprograms, and also advocated for the expansion of emergency reserve services that are open to\n\nweather-sensitive (mainly residential) demand response. Both proposals were adopted through\n\nthe ERCOT process and approved by the PUCT.\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 4 of 12\n\n\n\n\n 6. ERCOT is the independent system operator for much of Texas or, in other words,\n\nthe independent entity that operates much of the state\u2019s electric grid. It provides a competitive\n\nmarket for electricity. The Sierra Club is an official voting member of ERCOT, and I have\n\nserved as a representative of the Sierra Club at ERCOT for over seven years. Specifically, I serve\n\non the Reliability and Operations Subcommittee as the representative for small commercial\n\nelectricity consumers.\n\n 7. As a representative for small commercial electricity consumers, I am aware\n\nespecially of the need to balance the reliability of the grid with the costs to consumers, and also\n\nwork to assure that all technologies, including demand response, distributed generation, batteries,\n\nrenewable resources and fossil-fuel generation can compete to provide reliability and ancillary\n\nservices.\n\n 8. I have voting privileges as well on the Protocol Revision Subcommittee. The\n\nProtocol Revision Subcommittee (PRS), which is accountable to the Technical Advisory\n\nCommittee (TAC), is responsible for reviewing and recommending action on formally submitted\n\nNodal Protocol Revision Requests (NPRRs) and System Change Requests (SCRs).\n\nII. ERCOT Market Structure\n\n 9. In ERCOT, the wholesale cost of electricity is determined through an approved\n\ncompetitive bid process and is not under the direct control of the PUCT.Under the wholesale bid\n\nprocess, electricity market prices fluctuate as a function of both commodity prices (i.e. gas and\n\ncoal prices) and demand. The cheapest generators that bid into the market are brought online\n\nfirst, followed by increasingly expensive to operate generators. In economic terms, the sequence\n\nof which generators are brought online describes a supply curve, from the least expensive to the\n\nmost expensive marginal supply options. The demand at any given moment intersects that supply\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 5 of 12\n\n\n\n\ncurve at the settlement price, or the wholesale cost of electricity. When demand is lower, the\n\nwholesale cost of electricity is lower. When demand increases, the cost of energy increases. As\n\nadditional customers demand service, the wholesale price of electricity, and the cost of serving\n\nall customers, rises. This is, in effect, the outcome of pushing up higher (or to the right) on the\n\nsupply curve. Cryptocurrency mining operations are a substantial new demand, and therefore\n\ncreate higher wholesale costs.\n\n 10. The wholesale cost of electricity impacts consumers, including residential\n\nconsumers. Most residential consumers are on a fixed price contract, meaning they pay a certain\n\namount per kilowatt. While this fixed price structure protects them initially from scarcity pricing\n\nevents, even those on a fixed price contract will eventually pay for increased electricity costs.\n\nThis is true because retail electric providers, municipally-owned utilities and electric\n\ncooperatives are likely to raise rates or increase the price of contracts in the future, or because the\n\nexisting contract includes \u201cextra\u201d fees or costs. As an example, for Austin Energy customers in\n\nthe Austin area, bills include a Power Supply Adjustment (PSA). This additional fee is a dollar-\n\nfor-dollar recovery that includes the cost of fuel for Austin Energy\u2019s power plants, the cost of\n\nelectricity purchased from the grid, and any net change experienced as Austin Energy sells\n\npower to the grid.1\n\n 11. Electricity prices in ERCOT are particularly vulnerable to volatility because\n\nroughly half of all electricity in ERCOT is provided by gas. As a result, the price of gas is a\n\nmajor factor in ERCOT wholesale and, ultimately, retail electricity prices.2\n\n\n1\n In 2022, the City Council chose to spread the cost of a proposed PSA increase over three years, but did\nallow Austin Energy to adjust the PSA on a monthly basis as needed.\nhttps://austinenergy.com/about/news/news-releases/2022/city-council-adopts-austin-energy-pass-through-\nrates-effective-nov-1.\n2\n Mark Watson, \u201cHarsh Weather, costly natural gas boost Texas Power Prices,\u201d S & P Global Commodity\nInisghts, January 10, 2023, available at https://www.spglobal.com/commodityinsights/en/market-\n\n 4\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 6 of 12\n\n\n\n\nIII. Winter Storm Uri\n\n 12. Recent events like ERCOT\u2019s severe failures during Winter Storm Uri in February\n\n2021 have revealed how quickly prices in times of high demand and more limited electricity,\n\nespecially more limited gas supply, can quickly rise for consumers.\n\n 13. Winter Storm Uri was a major event that severely impacted the ERCOT grid,\n\nleading to major blackouts throughout Texas and ultimately to hundreds of deaths. A severe\n\nwinter storm and accompanying cold weather caused both power plant failures and increased\n\ndemand, as Texas residents needed heat. As a result, ERCOT\u2019s supply and demand system\n\nfailed: demand greatly exceeded supply, leading to severe electricity shortages and causing the\n\nERCOT grid to teeter on the brink of full collapse.\n\n 14. During Winter Storm Uri, the Texas power grid\u2019s failures meant that millions of\n\nTexans were without power for several days. Hundreds of Texans died due to lack of power\n\nduring the severe weather, including from freezing to death in their own homes and carbon\n\nmonoxide poisoning in desperate attempts to get warm. While the \u201cofficial\u201d death toll is above\n\n200 deaths, other independent analysis has concluded that close to 1,000 Texans died either\n\ndirectly or from complications resulting from the storm, including from loss of power.\n\n 15. Also during Winter Storm Uri, wholesale electricity prices increased hugely. With\n\nelectricity scarce, the PUCT allowed the market pricing to go to the System Wide Offer Cap,\n\nwhich at the time was $9,000 per megawatt-hour (MWh). A decision to keep the cap at $9,000\n\nfor multiple hours led to billions of dollars of impact to the system. As a result, many retail\n\nelectric providers, municipally-owned utilities and electric cooperatives, as well as some\n\ngenerators which had promised to provide energy and could not were left with huge bills owed to\n\n\ninsights/latest-news/natural-gas/011023-us-power-tracker-harsh-weather-costly-natural-gas-boost-texas-\npower-prices.\n 5\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 7 of 12\n\n\n\n\nthe market, while other entities actually earned revenues. Natural gas prices also rose\n\ndramatically, impacting consumers large and small, while some gas suppliers literally made\n\nhundreds of millions of dollars. After Uri, many of the electric and natural gas costs were\n\nsecuritized through legislative action, meaning that some Texas consumers will be paying these\n\ncosts for decades.3\n\n 16. Under adverse conditions, such as Winter Storm Uri, wholesale market prices can\n\nincrease dramatically, up to several hundred times the normal cost of electricity. These cost\n\nspikes impact customers and utilities alike. After Winter Storm Uri, for example, Brazos Electric\n\nCooperative, one of the largest rural electric providers in Texas, was forced into bankruptcy after\n\nit faced massive charges for wholesale energy costs. Because Brazos Electric Cooperative is the\n\nwholesale provider to 16 member cooperatives, the impact to ratepayers is still being worked out\n\nthrough the courts. The largest electric cooperative \u2014 Pedernales Electric Cooperative \u2014 is\n\ncharging consumers a temporary Winter Storm Uri surcharge to pay off its approximately $160\n\nmillion of storm-related debt. For the average PEC residential member, the surcharge amounts to\n\nan increase of approximately $8.75 per month, based on an average 1,250 kilowatt hour of use.\n\nThis amount appeared as a line item on members\u2019 monthly bills during the 24 month period\n\nbeginning October 1, 2021. Since everyone\u2019s monthly electricity use is different, the surcharge\n\nwill vary from member to member. Similarly, numerous residential and small businesses faced\n\nextraordinarily high operating costs from record-high wholesale electricity costs.4\n\n\n\n\n3\n Sierra Club, The Failure of Fossil Fuels: Learning from Winter Storm Uri, February 2022. Available at\nhttps://www.sierraclub.org/sites/default/files/The%20Failure%20of%20Fossil%20Fuels%20-\n%20Winter%20Storm%20Uri%20Report%20-%20Feb%202022.pdf.\n4\n Sierra Club, The Failure of Fossil Fuels: Learning from Winter Storm Uri, February 2022 at 11.\nAvailable at https://www.sierraclub.org/sites/default/files/The%20Failure%20of%20Fossil%20Fuels%20-\n%20Winter%20Storm%20Uri%20Report%20-%20Feb%202022.pdf.\n 6\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 8 of 12\n\n\n\n\nIV. Increased Demand and Increased Prices in ERCOT\n\n 17. Electric peak demand in ERCOT has risen over the last several years. The peak\n\ndemand for electricity on the ERCOT grid was almost 12 gigawatts (or 12,000 megawatts)\n\nhigher in 2023 than it was in 2021. It had previously taken 15 years for demand to grow by 12\n\nGW. In other words, electrical usage on the hottest day of the summer in Texas grew by as much\n\nfrom 2021 to 2023 as it did from 2005 to 2021.5\n\n 18. Between 2018 and 2022, the state\u2019s population grew by 5%, and in ERCOT, peak\n\nload grew by 9%. In the hot summer of 2023, ERCOT set a series of new records, including a\n\nnew peak demand record of 85,435 MW on August 10, 2023. This peak demand was roughly\n\n5,000 MW higher, or about 7% more, than the record just a year before. Similarly, December 23,\n\n2022 set a new winter peak demand record of 74,525 MW. On January 16, 2024, during Winter\n\nStorm Heather, a new winter peak was set of 78,138 MW.6\n\n 19. The pace of load growth in ERCOT has dramatically accelerated over the past\n\nfew years. In 2023, the peak demand was 85,508 MW. Only two years earlier, in 2021, peak\n\ndemand was 73,687 MW. Prior to 2021, it had taken 15 years for peak demand to increase by\n\n12,000 MW\u2013from a peak of 60,274 MW in 2005.7\n\n\n\n\n5\n As an example, the peak August demand record in 2023 was set on August 10th, 2023 when some\n85,508 MWs were used, topping the previous record of 78,505 MWs on August 2nd, 2022, while the\nmaximum September 2023 peak use was 84,343 MWs, more than 12,000 MWs higher than the previous\nhigh set in September of 2021 (72,370 MWs set 09/01/2021). Information on peak demand records can be\nfound here: https://www.ercot.com/static-assets/data/news/Content/a-peak-demand/2023/all-time-\nrecords.htm.\n6\n ERCOT, Monthly Report Issued 2024, https://www.ercot.com/files/docs/2024/01/31/ERCOT-Monthly-\nJanuary-2024.pdf\n7\n ERCOT, Yearly Peak Demand, available at https://www.ercot.com/static-assets/data/news/Content/a-\npeak-demand/records-yearly-archive.htm.\n 7\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 9 of 12\n\n\n\n\n 20. On September 6, 2023, ERCOT declared an emergency event because reserves\n\nfell below 1,750 MW. Among other resources, ERCOT deployed non-controllable load resources\n\n(NCLRs) providing Responsive Reserve Service and ERCOT Contingency Reserve Service.8\n\n 21. As expected, ERCOT costs increase during periods of high demand. Costs are\n\nmuch higher during these times. As an example, according to data provided by ERCOT in a\n\nrecent ERCOT monthly report, both real-time and day-ahead settlement prices in August 2023\n\nthat were much higher than a year before. As an example, average wholesale day-ahead prices in\n\nAugust 2023 were above $300 per MWh, while in August 2022 when demand was much lower,\n\nprices averaged less than half\u2014about $100 per MWh. While the differences between August\n\n2022 and August 2023 were less pronounced, real time prices in August 2023 were over $200\n\nper MWh, while real time prices in August 2022 averaged about $90 per MWh.9\n\n 22. Similarly, ERCOT procured more than $80 million in August of 2023 as peak\n\ndemands grew during that month. Just a few months later when demand was much lower,\n\nancillary services cost less than $17 million, again showing how high demand periods lead to\n\nhigher costs to ERCOT consumers.10\n\n 23. Prices on individual days were even more pronounced. On September 6, 2023,\n\nwhen ERCOT issued an emergency alert, real-time power prices briefly hovered around the\n\n(now) $5,000 maximum price in most of ERCOT's Texas hubs. This is in stark contrast to\n\n\n\n8\n ERCOT, 2023 Annual Demand Response Report, January 2024, at 6, https://www.ercot.com/mp/data-\nproducts/data-product-details?id=NP3-110.\n9\n ERCOT, ERCOT Monthly Operational Overview (August 2023) Revised 11.17.23,\nhttps://www.ercot.com/files/docs/2023/11/17/REVISED-ERCOT-Monthly-Operational-Overview-\nAugust-2023.pdf; ERCOT, ERCOT Monthly Operational Overview (August 2022),\nhttps://www.ercot.com/files/docs/2022/09/19/ERCOT%20Monthly%20Operational%20Overview%20Au\ngust%202022.pdf.\n10\n ERCOT Monthly, Issued January 2024,https://www.ercot.com/files/docs/2024/01/31/ERCOT-\nMonthly-January-2024.pdf.\n 8\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 10 of 12\n\n\n\n\naverage wholesale real-time prices in September of 2023, which averaged slightly more than\n\n$100 dollars over the month.11\n\n 24. Frequent peak demands in recent years indicate the potential for continued high\n\nprices and reliability concerns.\n\n 25. ERCOT has determined that 2,523 MW of large flexible load (a category that\n\nincludes cryptocurrency facilities) operated in ERCOT in 2022, and that that figure rose to 4,479\n\nMW total\u2013an addition of 1,956 MW\u2013in 2023.12 Further, ERCOT projects the addition of 13,935\n\nMW more of large flexible load by the end of 2024 and that the ERCOT grid by the end of 2027\n\nwill have a total 39,271 MW of large flexible load.13\n\n 26. Through my work and engagement with ERCOT, I am aware of the concerns that\n\ncryptocurrency facilities raise for ERCOT planning. In August 2023, ERCOT identified large\n\nloads (again, a category including cryptocurrency facilities) as a \u201c[r]eliability risk,\u201d stating,\n\n\u201cLarge Loads have exhibited inconsistent behavior during Resource scarcity events.\u201d14 ERCOT\n\nexplained, \u201cIf ERCOT plans for expected Large Load response and the Load does not respond, it\n\ncould drive the system into emergency conditions. If ERCOT plans for no response, it will\n\nincrease consumer costs unnecessarily when the Load does respond.\u201d15\n\n\n\n\n11\n ERCOT Monthly, Issued January 2024, https://www.ercot.com/files/docs/2024/01/31/ERCOT-\nMonthly-January-2024.pdf\n12\n ERCOT presentation, Large Load Interconnection Status (January 25, 2024) at 3,\nhttps://www.ercot.com/files/docs/2024/02/06/LLI-Queue-Status-Update-2024-1-25.pdf.\n13\n ERCOT presentation, Large Load Interconnection Status (January 25, 2024),\nhttps://www.ercot.com/files/docs/2024/02/06/LLI-Queue-Status-Update-2024-1-25.pdf.\n14\n ERCOT, NPRR1191 and Related Revision Requests Workshop, Overview of Large Load Revision\nRequests for 8.16.23 Workshop (August 16, 2023) at 10, available at\nhttps://www.ercot.com/calendar/08162023-NPRR1191-and-Related-Revision. This presentation is\nattached to my declaration as an exhibit.\n15\n Id.\n 9\n\f Case 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 11 of 12\n\n\n\n\n 27. At the same time, ERCOT further explained that load forecasting issues for such\n\nlarge loads pose a reliability risk, stating, \u201cERCOT cannot readily identify larger load facilities\n\nand has limited visibility into their sensitivity to price and other forecasts.\u201d16 ERCOT explained,\n\n\u201cERCOT is seeing greater load forecast error on extreme or unusual operating days when an\n\naccurate forecast is most critical.\u201d17 ERCOT specifically noted, \u201cERCOT has limited visibility\n\ninto the location and consumption of all larger loads. . . . Increased visibility into industrial load\n\nconsumption would have also been useful during both Winter Storm Uri and Elliot, when larger\n\nLoad usage was a critical forecasting input.\u201d18\n\n 28. Further, ERCOT stated in August 2023 that \u201c[l]arge Load behavior can magnify\n\nthe severity of grid events, increasing the negative impact to reliability.\u201d19 ERCOT observed,\n\n\u201cERCOT has experienced multiple events in the last year where a significant amount of Large\n\nLoad unexpectedly disconnected from the grid.\u201d20\n\n 29. In August 2023, ERCOT further identified large loads\u2019 rapid changes in\n\nconsumption as a grid \u201creliability risk.\u201d21 ERCOT explained, \u201cLarge Loads can change their\n\nMW consumption rapidly enough to exhaust available Regulation service. . . . ERCOT\n\neventually will need to buy what may become an infeasible quantity of Regulation service to\n\nmaintain frequency stability. This could add significant costs to ratepayers.\u201d22\n\n 30. Simply put, in a state with a peak demand of roughly 80,000 MWs in our main\n\ngrid in 2022, large flexible load\u2013including bitcoin and cryptocurrency mining\u2013is reported to have\n\n\n\n16\n Id. at 7.\n17\n Id.\n18\n Id.\n19\n Id. at 8.\n20\n Id.\n21\n Id. at 9.\n22\n Id.\n 10\n\fCase 6:24-cv-00099-ADA Document 18-2 Filed 02/27/24 Page 12 of 12\n\f","ocr_status":2,"date_upload":"2024-02-28T08:47:48.733919-08:00","document_number":"18","attachment_number":2,"pacer_doc_id":"181031729616","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Exhibit A to Amicus Brief (Reed Declaration)","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387380082/","id":387380082,"tags":[],"absolute_url":"/docket/68276281/18/3/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T20:07:00.454303-08:00","date_modified":"2025-01-22T17:33:57.232490-08:00","sha1":"d6d452d7d2f5ba299af60e768e4394b7febc4136","page_count":13,"file_size":244733,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.3_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.3.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 1 of 13\n\n\n\n\n Exhibit B\n\fCase 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 2 of 13\n\n\n\n\n Large Loads \u2013 Impact on Grid Reliability\n and Overview of Revision Request Package\n\n\n\n\n NPRR1191 and Related Revision Requests Workshop\n\n August 16, 2023\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 3 of 13\n\n Workshop Agenda\n\n 1. Welcome and Antitrust Admonition\n 2. Large Loads \u2013 Impact on Reliability\n 3. Overview of the Large Load Revision Request Package\n 4. Next Steps\n\n\n\n\nPUBLIC 2\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 4 of 13\n\n\n Antitrust Admonition\n To avoid raising concerns about antitrust liability, participants in ERCOT\n activities should refrain from proposing any action or measure that would\n exceed ERCOT\u2019s authority under federal or state law. For additional information,\n stakeholders should consult the Statement of Position on Antitrust Issues for\n Members of ERCOT Committees, Subcommittees, and Working Groups, which\n is posted on the ERCOT website.1\n\n\n\n Disclaimer\n All presentations and materials submitted by Market Participants or any other\n Entity to ERCOT staff for this meeting are received and posted with the\n acknowledgement that the information will be considered public in accordance\n with the ERCOT Websites Content Management Operating Procedure.\n\n 1The document is available at http://www.ercot.com/about/governance/index.html.\n\n\n\nPUBLIC 3\n\fCase 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 5 of 13\n\n\n\n\n Large Loads \u2013 Impact on Grid Reliability\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 6 of 13\n\n Improvements for the Reliable Integration of Large Loads\n ERCOT, like many grids around the world, is seeing an unprecedented amount\n of larger Loads interconnecting. To serve these Loads reliably requires changes\n to traditional processes. ERCOT has proposed a set of changes to integrate\n these new Loads and enhance the overall reliability of the grid.\n\n These changes include:\n \u2022 A faster, more efficient interconnection process to meet the needs of these\n new Loads.\n \u2022 Load forecasting improvements to capture the unique demand characteristics\n of larger Loads.\n \u2022 Voltage ride-through standards to maintain grid resiliency during events.\n \u2022 Ramp rate limits to mitigate negative impacts on Ancillary Service availability.\n \u2022 A new Load category to reduce the need for Emergency Operations.\n\n\nPUBLIC 5\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 7 of 13\n\n Faster Load Interconnection Process\n\n Reliability New types of Large Loads want to interconnect in less than 2\n Risk years.\n\n\n Traditional planning processes do not review this timeframe and\n Impact cannot prepare the grid to serve this new Load reliably.\n\n\n Proposed Implement a Large Load Interconnection study process to make\n Solution it possible to interconnect new load reliably in less than 2 years.\n\n Since January 2022, more than 2,700 MW (~5x city of Lubbock) of Load approved in the interim process representing 22 projects have\n been approved to energize in 2 years or less bypassing the established reliability process. Another 16,199 MW of proposed Load (55\n projects) have requested energization dates on or before Dec 31, 2024.\n\n\nPUBLIC 6\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 8 of 13\n\n Load Forecasting Enhancement\n\n Reliability ERCOT cannot readily identify larger load facilities and has\n Risk limited visibility into their sensitivity to price and other factors.\n\n\n ERCOT is seeing greater load forecast error on extreme or\n Impact unusual operating days when an accurate forecast is most\n critical.\n\n Implement 4CP and price responsive demand forecasts and\n Proposed\n require Loads 25 MW or greater to provide additional information\n Solution to ERCOT.\n ERCOT has limited visibility into the location and consumption of all larger Loads. This has been evident during summer operations when\n high prices and 4CP response make industrial load usage difficult to forecast for upcoming days. Increased visibility into industrial load\n consumption would have also been useful during both Winter Storm Uri and Elliot, when larger Load usage was a critical forecasting input.\n\n\nPUBLIC 7\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 9 of 13\n\n Voltage Ride-Through Standards\n ERCOT has experienced multiple events in the last year where a\n Reliability\n significant amount of Large Load unexpectedly disconnected\n Risk from the grid.\n\n\n Large Load behavior can magnify the severity of grid events,\n Impact increasing the negative impact to reliability.\n\n\n Proposed Establish a voltage ride-through standard that applies to all\n Solution Loads 75 MW or greater.\n\n Multiple events have demonstrated new Large Loads are not always capable of remaining stable during voltage fluctuations. The most\n severe event occurred near Odessa at 3:50 AM on 12/7/22 when more than 1,600 MW of Load (including data centers, oil/gas load, and\n other industrial loads) unexpectedly disconnected from the grid due to a low-voltage fluctuation. System frequency increased to 60.235 Hz\n and did not return to normal for over 10 minutes. Large Loads can make a low-voltage event become a frequency control event.\n\nPUBLIC See slide 12 for more events 8\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 10 of 13\n\n Frequency Control Improvements\n\n Reliability Large Loads can change their MW consumption rapidly enough\n Risk to exhaust available Regulation service.\n\n\n ERCOT eventually will need to buy what may become an\n Impact infeasible quantity of Regulation service to maintain frequency\n stability. This could add significant costs to ratepayers.\n\n Create a path so as many Large Loads as possible can\n Proposed\n participate as Controllable Load Resources (CLRs). Establish\n Solution ramp-rate standards for Large Loads that are not CLRs.\n Since January 2023, 49 SCED intervals have exceeded available Regulation due to rapid changes in Large Load consumption. The loss\n of available Regulation temporarily limits ERCOT\u2019s ability to control frequency. This was not an issue prior to the connection of the 2700\n MW of Large Loads. Ramp rate limits on Large Loads not controlled by SCED will help mitigate depletion of Regulation by Large Loads.\n\n\nPUBLIC 9\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 11 of 13\n\n Reducing Emergency Operations\n\n Reliability Large Loads have exhibited inconsistent behavior during Resource scarcity\n Risk events.\n\n\n If ERCOT plans for expected Large Load response and the Load does not\n respond, it could drive the system into emergency conditions. If ERCOT plans\n Impact for no response, it will increase consumer costs unnecessarily when the Load\n does respond.\n\n\n Proposed Create a new Registered Curtailable Load category that ERCOT may curtail\n Solution before shedding firm load.\n\n In the last two years, ERCOT has acquired some information regarding Large Load behavior during periods of Resource scarcity.\n Experience shows inconsistent response from Large Load sites that should be expected to reduce consumption. ERCOT needs the\n capability to coordinate Large Load response before curtailment of firm Load is required. For example, if Large Loads had not voluntarily\n curtailed on June 20, 2023 ERCOT would have been forced into Emergency Operations.\n\n\nPUBLIC 10\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 12 of 13\n\n Path Forward\n \u2022 Large Loads with demand flexibility have the potential to be an important tool\n for maintaining grid reliability.\n\n \u2022 For this flexibility to enhance rather than detract from grid reliability, it must be\n coordinated with generator dispatch. Participation of Large Load as CLRs,\n where applicable, is a necessary step in meeting this need.\n\n \u2022 Additional information collected from all larger Loads will enable ERCOT to\n improve its load forecasts and operational processes.\n\n \u2022 ERCOT is committed to working with all stakeholders in a transparent manner\n to utilize the flexibility offered by some Large Loads to ensure the reliability of\n the grid for all customers.\n\n\nPUBLIC 11\n\f Case 6:24-cv-00099-ADA Document 18-3 Filed 02/27/24 Page 13 of 13\n\n List of recent Voltage Ride-Through events\n\n\n\n\nPUBLIC Click to return to Slide 8 12\n\f","ocr_status":2,"date_upload":"2024-02-28T08:47:49.204465-08:00","document_number":"18","attachment_number":3,"pacer_doc_id":"181031729617","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Exhibit B to Amicus Brief (ERCOT PowerPoint)","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387380083/","id":387380083,"tags":[],"absolute_url":"/docket/68276281/18/4/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T20:07:00.481790-08:00","date_modified":"2025-01-22T17:33:57.242741-08:00","sha1":"34576732498d8ade627e96e282bc4bc1bf604456","page_count":19,"file_size":359303,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.4_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.4.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 1 of 19\n\n\n\n\n Exhibit C\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 2 of 19\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\n TEXAS BLOCKCHAIN COUNCIL, )\n a nonprofit association; )\n RIOT PLATFORMS, INC., )\n )\n Plaintiffs )\n ) Case No. 6:24-cv-99\n v. )\n )\n DEPARTMENT OF ENERGY; )\n JENNIFER M. GRANHOLM, in her )\n official capacity as Secretary of Energy; )\n ENERGY INFORMATION )\n ADMINISTRATION; JOSEPH )\n DECAROLIS, in his official capacity as )\n Administrator of Energy Information )\n Administration; OFFICE OF )\n MANAGEMENT AND BUDGET; )\n SHALANDA YOUNG, in her official )\n capacity as Director of Office of )\n Management and Budget, )\n )\n Defendants. )\n\n\n VERIFIED AFFIDAVIT OF DR. JEREMY FISHER\n\n\nI, Jeremy Fisher, hereby affirm as follows:\n\n 1. My name is Jeremy Fisher. I am employed by Sierra Club with a title of Principal\n\nAdvisor, Climate and Energy. My business address is 2101 Webster Street, Suite 1300, Oakland,\n\nCalifornia 94612.\n\n 2. I have been employed as an energy systems expert for seventeen years, focused\n\non the regulation, planning, and operation of electric utilities in nearly every state in the United\n\n 1\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 3 of 19\n\n\n\n\nStates. From 2007 through 2017, I worked as a consultant at Synapse Energy Economics, where\n\nI served federal regulators such as the U.S. Environmental Protection Agency (\u201cEPA\u201d), state\n\nutility regulators including the commissions of Michigan and Puerto Rico, consumer advocates,\n\nand other public interest organizations. I have substantial experience assessing the emissions\n\nimpacts of load management. In 2014, EPA released a model I developed called the \u201cAvoided\n\nEmissions and Generation Tool\u201d or AVERT, which is used by state agencies to assess the\n\nemissions and health implications of demand and supply-side decisions.\n\n 3. At Sierra Club, I have continued to engage in electric utility regulatory matters,\n\nincluding in rate, fuel, and planning dockets in numerous states. In the course of my work, I have\n\nserved as an expert witness in over thirty state public utility commission dockets across\n\nseventeen states. I have experience operating and reviewing the use of utility electric system\n\nmodels. I hold a doctorate in geological sciences from Brown University.\n\n 4. Of relevance to this docket, I am the co-author of a 2022 study1 in which my team\n\nperformed the first deep-dive on the energy consumption of proof of work cryptocurrencies\n\n(such as Bitcoin) mining operations in the United States. Our study examined numerous public\n\nrecords, including filings before the Securities and Exchange Commission (\u201cSEC\u201d), investor\n\npresentations, regulatory filings before state planning and utility commissions, and local media\n\naccounts to attempt to determine the magnitude and impacts of cryptocurrency mining load on\n\nelectrical reliability and residential electricity rates in the United States since the large-scale\n\nrelocation of mining activities from China beginning in 2021. The estimates we found assessed\n\nthat in the 12 months preceding July 2022, Bitcoin mining consumed as much as all of the\n\n\n1\n DeRoche, M., Fisher, J., Thorpe, N., and Wachspress, M., The Energy Bomb: How Proof-of-\nWork Cryptocurrency Mining Worsens the Climate Crisis and Harms Communities Now (Sept.\n2022). Earthjustice and Sierra Club. Available online at https://earthjustice.org/wp-\ncontent/uploads/energy_bomb_bitcoin_white_paper_101322.pdf\n 2\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 4 of 19\n\n\n\n\nelectricity consumed in Maine, New Hampshire, Vermont, and Rhode Island put together, and\n\nwas poised to consume more than that consumed by the state of Florida by 2026. A single\n\nmining facility, such as the Riot Platforms facility in Rockdale, can have energy usage equal to\n\nthe output of the largest wind farms in the world, or a large gas-fired power plant.\n\n 5. Although there is wide agreement among electricity sector experts that\n\ncryptocurrency mining operations use immense quantities of electricity, our study also found that\n\nthere is a significant knowledge gap as to how these mines operate and how they affect utilities\u2019\n\nload estimates, transmission needs, and resource planning. The lack of transparency and\n\nconsistent reporting hampers utility, grid operator, and regulators\u2019 ability to plan for new\n\nrequirements, ensure grid stability and reliability, and protect other consumers from increased\n\ncosts. The rapid pace of development and interconnection requests for these new facilities forces\n\nutilities and regulators to continuously play catch up, using sparse information. The Cambridge\n\nBitcoin Electricity Consumption Index (\u201cCBECI\u201d) estimates that Bitcoin\u2019s demand for electricity\n\ndoubled between January 2023 and January 2024 alone.2 Energy Information Administration\n\n(EIA) Form 862 is an appropriately timely and constrained mechanism to collect data necessary\n\nfor utilities, regulators, and planners to ensure continued reliability as these large-scale loads\n\nenter the grid.\n\n 6. Cryptocurrency mining operations pose clearly documented and unique risks to\n\nthe public, including residential customers. A June 2023 research paper from the National\n\nBureau of Economic Research estimated that cryptocurrency mining operations in upstate New\n\nYork increased residential bills by 6.6%, or $88 per year, by requiring more expensive\n\n\n\n\n2\n Cambridge Bitcoin Electricity Consumption Index. Accessed February 27, 2024. Available\nonline at https://ccaf.io/cbnsi/cbeci\n 3\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 5 of 19\n\n\n\n\ngenerators to operate more often.3 As a result, the rapid and projected growth of this industry\n\nrenders the timely collection of information critical. The influx of novel concentrated large loads\n\nresults in concerns for energy cost, capacity cost, and system reliability. The unprecedented pace\n\nof growth for cryptocurrency mining operations renders these issues of pressing national\n\nimportance.\n\n 7. Specifically, with respect to reliability, grid operators and utilities must plan\n\nresponsibly for growth in demand and moments of stress on the grid. Utilities and grid operators\n\nrely on accurate representations of load growth and new customer demands to ensure that\n\ninfrastructure is in place to serve that demand. Vertically-integrated utilities, i.e. those that own\n\ngeneration, transmission, and distribution infrastructure, are required to build, at customer\n\nexpense, sufficient infrastructure to serve anticipated new requirements. However, building new\n\ncapacity to serve an explosive new need without transparency on existing or likely consumption\n\ncan strain utilities and their customers.\n\n 8. Unlike other electricity customers, cryptocurrency mining is uniquely exposed to\n\nexogenous market price fluctuations, and uniquely transient. When cryptocurrency prices are\n\nhigh, mining operations can expand quickly, and modularly. In an annual filing, Riot explains\n\nthat \u201cas the proliferation of Bitcoin continues and the market price for Bitcoin increases, we\n\nexpect additional miner operators to enter the market in response to an increased demand for\n\nBitcoin which we anticipate to follow increased Bitcoin prices.\u201d4 And as cryptocurrency prices\n\nfluctuated in 2022 and 2023, mining firms moved modular rigs to garner more favorable\n\n\n3\n Benetton, M., Compiani, G. and Morse, A., 2023. When cryptomining comes to town: High\nelectricity-use spillovers to the local economy (No. w31312). National Bureau of Economic\nResearch. Available online at\nhttps://www.nber.org/system/files/working_papers/w31312/w31312.pdf\n4\n Riot. February 23, 2024. SEC Form 10-K. Available online at\nhttps://s3.amazonaws.com/sec.irpass.cc/2865/0001558370-24-001550.pdf. At 4.\n 4\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 6 of 19\n\n\n\n\npricing.5 No other industry has the ability to scale both up and down as quickly, and move\n\nlocations as rapidly.\n\n 9. These characteristics render it imperative for both utilities and regulators to\n\nunderstand the scale of growth, the risk of movement, and the breakeven cost of energy for the\n\nmining operations. These factors have profound implications for utility exposure and system\n\nreliability.\n\n 10. Fitch Ratings identifies that cryptocurrency mining operations pose a risk to\n\nutilities, explaining that the potentially transient nature of cryptocurrency mining operations\n\ncreates a novel risk to existing customers. Fitch explains that to accommodate new mining load,\n\n\u201cutilities may need to invest in new generation facilities, sign new long-term power purchase\n\nagreements or procure power via real-time market purchases in order to serve additional crypto\n\nmining load. The first two of these three options pose the greatest risk to the utility should the\n\ncrypto mining operation shut down, as utilities could be left with stranded assets and costs that\n\nthen must be recovered, typically by customers in the form of rate hikes, although the utility may\n\nutilize reserves to recover costs if there is little rate flexibility.\u201d6\n\n 11. The North American Electric Reliability Corporation (\u201cNERC\u201d) identifies the\n\nrapid growth of cryptocurrency mining operations as an area of significant concern for reliability,\n\n\n\n5\n Jenkinson, Gareth. July 3, 2023. Hut 8 relocates 6,400 rigs, sees growth in AI and high-\nperformance computing. https://cointelegraph.com/news/hut8-relocates-6-400-rigs-sees-growth-\nin-ai-high-performance-computing. See also Gkritsi, Eliza. April 5, 2022. Marathon Digital to\nMove Mining Rigs From Coal-Powered Montana Site.\nhttps://www.coindesk.com/business/2022/04/05/marathon-to-relocate-mining-rigs-away-from-\ncoal-powered-montana-site/. See also Wright, Turner. August 2, 2022. Crypto miner Digihost\nplans to move rigs from New York to Alabama. https://cointelegraph.com/news/crypto-miner-\ndigihost-plans-to-move-rigs-from-new-york-to-alabama\n6\n Fitch Ratings. January 24, 2022. \u201cCrypto Mining Poses Challenges to Public Power Utilities\u201d\nhttps://www.fitchratings.com/research/us-public-finance/crypto-mining-poses-challenges-to-\npublic-power-utilities-24-01-2022\n 5\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 7 of 19\n\n\n\n\nstating that \u201can emerging load forecasting issue is large loads associated with interruptible\n\ncomputer operations\u2014principally crypto miners. Developing a forecast of these large flexible\n\nloads is a challenge due to different metering/telemetry configurations; specifically, whether they\n\nare standalone or co-located (i.e., behind the meter) at generation sites.\u201d7 NERC went on to\n\ndiscuss that cryptocurrency mining operations in Texas\u2019s grid \u201care requesting accelerated\n\ninterconnection of their loads to the grid,\u201d and that \u201csuch loads could reach up to 25,000 MW by\n\n2026 based on current interconnection plans.\u201d8 Notably, the Texas grid operator, ERCOT, now\n\nidentifies more than 39,000 MW of potential demand for cryptocurrency by 2027,9 nearly half\n\nagain as high as Texas\u2019s record demand of 85,500 MW in August 2023.10\n\n 12. To adapt to these sudden increases in electrical load due to cryptocurrency mining\n\noperations, utilities and grid operators have attempted to restructure their tariffs. However, more\n\nand better information is required to ensure that these changes protect existing captive ratepayers\n\nfrom increased costs.\n\n 13. For example, in November 2021, Idaho Power filed an application for a new tariff\n\n(i.e. rates) with the Idaho Public Utilities Commission stating that it \u201chas received prospective\n\ncustomer interest of approximately 1,950 megawatts (\u201cMW\u201d) in the last few months, and it is\n\nlikely that if even a fraction of that customer interest ultimately interconnected to Idaho Power\u2019s\n\nsystem, the additional load would exceed the Company\u2019s ability to serve total system load during\n\n\n\n7\n NERC. Long Term Reliability Assessment. December 2022. Available online at\nhttps://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf\n. At 83.\n8\n Ibid. At 85.\n9\n ERCOT. January 25, 2024. Large Load Interconnection Status. Available online at\nhttps://www.ercot.com/files/docs/2024/02/06/LLI-Queue-Status-Update-2024-1-25.pdf\n10\n ERCOT. Last updated January 16, 2024. ERCOT Yearly Peak Demand Records. Available\nonline at https://www.ercot.com/static-assets/data/news/Content/a-peak-demand/all-time-\nrecords.htm\n 6\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 8 of 19\n\n\n\n\nthe summer season without additional investment in capacity resources.\u201d11 In 2021, Idaho Power\n\nexperienced a peak capacity of 3,751 MW12, and expressed concern that the \u201cspeculative, power\n\nintensive\u201d nature of cryptocurrency mining would result in the Company needing to \u201cacquire\n\nnew resources that may ultimately become stranded when the economics of cryptocurrencies\n\nchange.\u201d13\n\n 14. To address this risk, Idaho Power proposed a new tariff for \u201cSpeculative High-\n\nDensity Load\u201d customers, defined as those with a demand of 20 MW or more and \u201cwho have the\n\nability to relocate quickly in response to short-term economic signals.\u201d Under the tariff,\n\napproved June 2022, customers falling into this category are required to enter into individualized\n\nnegotiations for service with the utility, which enables the utility to protect other customers.\n\n 15. In another example, in July 2022, Entergy Arkansas applied for permission from\n\nthe Arkansas Public Service Commission to adopt a new \u201cLarge Power High-Load Density\u201d rate\n\nstructure to respond to numerous requests for interconnection from cryptomining facilities.14 An\n\nEntergy Arkansas officer testifying on behalf of the company\u2019s request described crypto miners\n\nas able to \u201crelocate easily and quickly if economic conditions change\u201d and having actually done\n\nso \u201cfrequently and without notice.\u201d He also testified that miners \u201care able to stop their operations\n\nwith minimal notice and restart quickly without the adverse impacts that many customers\n\nexperience if their power is interrupted even temporarily.\u201d\n\n\n\n11\n Idaho Public Utilities Commission. Case No. IPC-E-21-37. \u201cApplication of Idaho Power\nCompany for AUthority to Establish a New Schedule to Serve Speculative High-Density Load\nCustomers.\u201d November 4, 2021.\n12\n Ibid. Paragraph 12.\n13\n Ibid. Paragraph 17\n14\n Arkansas Public Service Commission. Docket No. 22-032-TF. In the Matter of the\nApplication\nof Entergy Arkansas, LLC for a Proposed Tariff Regarding Large Power High-Load Density\n(\u201cCrypto Mining\u201d). July 28, 2022. Direct Testimony of Caleb Bales.\n 7\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 9 of 19\n\n\n\n\n 16. This ability of cryptocurrency miners to interrupt their operations without second-\n\norder consequences such as shutting down a production line or losing a refrigerator full of food\n\nmeans that unlike most electricity customers, payments for voluntarily interrupting service under\n\ndemand response or similar programs operate as a windfall rather than compensation for lost\n\neconomic productivity.\n\n 17. As described by a different witness for Entergy Arkansas in the same proceeding,\n\nbecause cryptocurrency mining facilities are more likely to relocate or cease operations than\n\nmost large-scale industrial users, building new generation to meet cryptocurrency load carries an\n\nincreased risk of stranded assets. That is, building 100 MW of new generation to meet growing\n\ncryptocurrency demand presents a significantly higher risk that the mines will shut down or\n\nmove, leaving the 100 MW of generation unused, relative to the risks associated with building\n\nnew generation to meet broad-based demand growth or the needs of other large-scale industrial\n\nelectricity users.\n\n 18. To address this risk, Entergy Arkansas proposed including interruptible provisions\n\nin its \u201cLarge Power High-Load Density\u201d rate structure. These provisions are designed to ensure\n\nthat this load must shut down during periods of peak demand such that the marginal additional\n\nload does not increase Entergy Arkansas\u2019s capacity obligations as a member of MISO, the\n\nregional grid operator. Under the tariff as designed, Entergy Arkansas could serve new\n\ncryptocurrency mining operations without becoming obligated to build new generation resources\n\nspecifically to meet this new load.\n\n 19. On November 4, 2022, the Arkansas Public Service Commission approved the\n\nproposed rate, finding \u201cit is reasonable to impose additional safeguards to protect [Entergy\n\nArkansas\u2019s] customers.\u201d\n\n\n\n 8\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 10 of 19\n\n\n\n\n 20. A better understanding of cryptocurrency mining operations and their interaction\n\nwith the power grid is also important for a better understanding of how cryptocurrency is\n\naffecting grid operations and customer pricing during extreme weather. For example, I\n\nunderstand that on December 23 and 24, 2022, during severe winter weather due to Winter\n\nStorm Elliott, the Tennessee Valley Authority (\u201cTVA\u201d) directed local power companies to\n\nimplement rolling blackouts to address a shortfall of generation capacity. Core Scientific, a\n\nBitcoin mining company, contracts for at least 185 MW of electricity from TVA and one of its\n\nlocal power companies, Murphy Electric Power Board. To my knowledge, there is no publicly\n\navailable information about whether Core Scientific curtailed its load during the December 2022\n\nrolling blackouts and, if so, whether and how much they were compensated for doing so.\n\n 21. Ensuring reliability when new cryptocurrency mines enter the grid may also\n\nrequire significant expenditures on infrastructure. For example, in 2021, the Kentucky Public\n\nService Commission authorized Big Rivers Electric Corporation to spend $12.7 million to\n\nconstruct a 3.8-mile transmission line and two substations to serve a bitcoin mining operation in\n\nPaducah, KY. Big Rivers stated in its application for approval to construct the additional\n\nequipment that without new transmission infrastructure the cryptocurrency load \u201chas the\n\npotential to result in reliability issues due to much heavier loadings on the existing facilities.\u201d\n\nThe costs of this construction will be included in Big Rivers Electric Corporation\u2019s rate base and\n\nOpen Access Transmission Tariff. See Order, In the Matter of Electronic Application of Big\n\nRivers Electric Corporation for a Certificate of Public Convenience and Necessity to Construct\n\na 161kV Transmission Line in McCracken County, Kentucky, Case No. 2021-00275 (January14,\n\n2022).15\n\n\n\n15\n Available at https://psc.ky.gov/order_vault/orders_2022/202100275_01142022_01.pdf.\n 9\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 11 of 19\n\n\n\n\n 22. State officials have raised concerns about these impacts. For example, in October\n\n2022, the utility Kentucky Power sought approval of a ten-year economic development Special\n\nContract with Ebon International LLC (\u201cEbon\u201d), a Delaware corporation, to serve a\n\ncryptocurrency mining facility with an anticipated eventual load of 250 MW. This one facility\u2019s\n\ndemand would be equal to approximately 37% of Kentucky Power\u2019s current total load. Daniel\n\nCameron, Kentucky\u2019s Attorney General, along with an organization representing Kentucky\u2019s\n\nindustrial utility customers, opposed the proposed Special Contract. See Post-Hearing Brief of\n\nthe Attorney General and Kentucky Industrial Utility Customers, In the Matter of Electronic\n\nTariff Filing of Kentucky Power Company for Approval of a Special Contract with Ebon\n\nInternational, LLC, Case No. 2022-0387 (August 8, 2023).16 According to the Attorney\n\nGeneral\u2019s brief in opposition, the proposed agreement between Kentucky Power and Ebon would\n\nhave included a monthly credit for making 225 MW of the load interruptible. Ebon would\n\nreceive that credit whether or not Kentucky Power actually ceased delivery during periods of\n\nhigh demand. Even if Ebon were called upon to curtail load, they could continue to use 22.5 MW\n\n(or 10%) without penalty. According to the Kentucky Attorney General, the estimated cost to\n\nother ratepayers of paying for Ebon\u2019s service to be interruptible would be $14.85 million per\n\nyear. See id. at 5. Under the proposed contract, Kentucky Power could interrupt Ebon\u2019s electrical\n\nservice 20 times each year. To effectively use these interruption opportunities to avoid increased\n\ncapacity obligations or transmission costs, Kentucky Power must accurately forecast the critical\n\nhours on which capacity obligations for subsequent years are based. Any mistakes would mean\n\n\n\n\n16\n Available at https://psc.ky.gov/pscecf/2022-\n00387/mkurtz%40bkllawfirm.com/08082023035800/KIUC-\nAG_Ebon_Brief_%28PUBLIC%29.pdf\n 10\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 12 of 19\n\n\n\n\nsignificant increases in capacity obligations and tens of millions of dollars in additional costs for\n\nratepayers.\n\n 23. The information in EIA Form 862 will enable other utilities to identify the\n\npresence of cryptocurrency operations within their service territories, assess the need for new\n\nrate structures for these operations, and design rate proposals that balance their obligation to\n\nprovide electricity service with their obligation to protect ratepayers from the risks associated\n\nwith the sudden influx of highly flexible loads tied to the volatile price of Bitcoin. Idaho Power\n\nand Entergy Arkansas provide examples of how utilities may be able to proactively adapt to this\n\nload, particularly with sufficient information on the energy consumption, mobility, and risk of\n\ncryptocurrency mining operations.\n\n 24. The location of cryptocurrency loads is also crucial information because the\n\neffects a choice of location can have on transmission across the grid as a whole. For example, in\n\nJanuary 2024, Montana-Dakota Utilities Co. filed a complaint before the Federal Energy\n\nRegulatory Commission. The complaint alleged that Montana-Dakota its retail customers were\n\nbeing overcharged for congestion costs along a stretch of transmission line in North Dakota.17\n\n 25. The congestion charges prompting Montana-Dakota\u2019 complaint were\n\nimplemented after a cryptocurrency mining facility began operating in a \u201cload pocket,\u201d or an\n\narea where the typical demand exceeds the capacity of transmission into the area. As described in\n\nthe complaint:\n\n \u201cIn February 2023, the Atlas Power Data Center (\u201cAtlas\u201d) in Williston, North Dakota\n (part of the NWND Load Pocket) was commissioned. At the time of commissioning,\n Atlas had a 90 MW load. By April 2023, Atlas\u2019s load was estimated at around 200 MW.\n Atlas is a customer of Mountrail Williams Electric Cooperative, which is a member of\n Basin Electric. The additional 200 MW of load from Atlas caused Basin Electric\u2019s gas\n fired generating units to run more frequently than in the past. This increased runtime led\n to the unavailability of these gas turbines due to the fact that the additional runtime\n17\n Montana-Dakota\u2019s complaint is available via ferc.gov at Accession Number 20240123-5146.\n 11\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 13 of 19\n\n\n\n\n depleted the available hours of the units under their air permits, and also because\n additional maintenance outages were required for the units. The cumulative impact of the\n additional load from Atlas, increased gas turbine unavailability, and periods of reduced\n output from local wind farms resulted in a pre-contingent overload of the Charlie Creek\n to Watford City Line in anticipation of the loss of the Basin Electric 345 kV line from\n Charlie Creek to Patent Gate (\u201cCharlie Creek to Patent Gate Line\u201d).\u201d\n\n 26. The Montana-Dakota complaint illustrates the speed at which cryptocurrency\n\ndemand can increase (110 MW within two months), the strain it puts on existing transmission as\n\nwell as generation resources, and the impacts of the increased load on generator availability\n\nwhich in turn impacts the region as a whole.\n\n 27. The information in EIA Form 862 will enable grid operators to identify similar\n\ntransmission constraints and to respond by modifying congestion charges, anticipate the type of\n\nrapid increases in load experienced by Basin Electric due to Atlas\u2019s rapid expansion, or even\n\nnegotiate with cryptocurrency mining operators regarding location to prevent similar load\n\npockets from forming or becoming exacerbated.\n\nEIA Form 862 is Not Burdensome\n\n 28. The complaint and request for relief cite as the substantive harm that \u201cemployees\n\nhave collectively spent at least 40 hours attempting to respond to the initial Survey,\u201d and that the\n\n26-page survey is burdensome. See Dkt. 1 at 74; Dkt. 5 at 12. These claims are clearly\n\noverstated.\n\n 29. EIA Form 862, the Cryptocurrency Mining Facilities Report, is actually just one\n\nand a half pages, comprising just eight substantive questions, all of which are readily known to\n\nthe respondents and are fundamental to their daily operations and internal reporting. The one and\n\na half pages are repeated ten times in Schedules 2A through 2J for respondents with multiple\n\nhigh-consumption facilities.\n\n\n\n\n 12\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 14 of 19\n\n\n\n\n 30. The first page of the form is instruction. The second page, Schedule 1, comprises\n\nbasic survey respondent contact information, which I believe is non-substantive. The second half\n\nof Schedule 1 comprises three questions, two of which are yes/no, and an identification of the\n\nnumber of facilities operated by the respondent. Schedule 2 asks respondents to identify the\n\nmailing address and geographic location of the facility, two basic and non-substantive questions.\n\nThe remaining questions are substantive, but simple and intrinsic to the business of the\n\nrespondents.\n\n 31. Two of the questions on Schedule 2 ask for the total facility energy consumption,\n\nand the electric service provider. This is readily available information, because it appears on the\n\nmonthly energy bills of each respondent - i.e. the amount of energy billed and the electric\n\ncompany billing the respondent.\n\n 32. On the first page of Schedule 2, respondents are asked to estimate or calculate the\n\namount of energy consumed for cryptocurrency mining operations. Because the processors used\n\nfor cryptocurrency mining in proof-of-work (PoW) operations are dedicated processors, and the\n\noperation of these computers is fundamental to the predicted profitability of the facility, this\n\nvalue should either be readily calculated or estimated, as allowed by EIA.\n\n 33. On the second page of Schedule 2, respondents are asked to report energy\n\nsuppliers, and the amount of energy purchased from each supplier. For the vast majority of\n\nrespondents, there will be a single supplier, who in many cases will be the same entity as the\n\nelectric service provider. Where a cryptocurrency respondent has a dedicated relationship with a\n\ndifferent energy supplier, the power purchase agreement or behind-the-meter relationship is both\n\nfundamental to the cost and operation of the facility, and readily known by the respondent.\n\n\n\n\n 13\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 15 of 19\n\n\n\n\n 34. The last four questions of the survey ask for information that is also readily\n\nknown to the respondents, and often shared widely with investors in public reports and\n\npresentations.\n\n 35. The first of these questions asks for the number of mining units used at the facility\n\nduring the reporting period. This refers to the specialized processors, called \u201cApplication-\n\nSpecific Integrated Circuit\u201d (or \u201cASIC\u201d) used in the facility. This numeric value is not only well\n\nknown to the respondents, but often reported publicly to investors. For example, in Riot\u2019s 2023\n\nSEC Form 10-K, the organization reports that \u201cour Bitcoin Mining business segment operated\n\n112,944 miners with a total hash rate capacity of 12.4 exahash per second.\u201c18 Mining operations\n\nregularly tout these statistics in investor-facing reports, such as Riot\u2019s December 6, 2023\n\nCorporate Presentation, in which the company discusses that its Corsicana Facility has ordered\n\n99,840 miners, which will comprise 600 MW of capacity.19\n\n 36. The second of these questions asks for the age of the mining units, including the\n\nnewest and average age. The vintage of the miners provides insight into the efficiency of the\n\nprocessors, and turnover of equipment. This information is also often shared with investors\n\nbecause it is fundamental to the perceived profitability of the respondents. For example, in\n\nDecember 2023, Riot shared its tranches of mining unit purchases from 2021 through 2025,\n\nincluding model numbers, quantity, and efficiency for each of its major facilities.20\n\n 37. The third of these questions asks for the mining electric load, in megawatts\n\n(MW), for the facility. Again, this information is readily known to the respondents, and in fact is\n\n\n\n18\n See Riot Platforms. February 22, 2024. SEC Form 10-K filing for 2023. Available online at\nhttps://s3.amazonaws.com/sec.irpass.cc/2865/0001558370-24-001550.htm at 4.\n19\n See Riot Platforms. December 6, 2023. Riot Platforms Corporate Presentation. Available\nonline at https://d2ghdaxqb194v2.cloudfront.net/2865/192541.pdf at 5.\n20\n Id at 8-9.\n 14\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 16 of 19\n\n\n\n\noften touted to investors as a point of pride. For example, on February 6, 2024, Bitdeer provided\n\nits January 2024 Operations Update, touting that it now had 214,000 mining units under\n\nmanagement, comprising 895 MW of capacity.21 In its annual report, the company reports the\n\nspecific capacity of each of its data centers.22\n\n 38. The last substantive question asks for the aggregate hash rate of the facility. The\n\nhash rate, expressed in terahashes (one trillion hashes) or exahashes (one quintillion hashes) per\n\nsecond represents how many computations the facility is able to execute per second. This value\n\nis core to the production of proof-of-work cryptocurrency mining operations, because it\n\nrepresents the relative likelihood that a mining operation will be the entity that first successfully\n\ncompletes the brute-force equation that allows it to verify the blockchain and win a reward.\n\nCryptocurrency mining operations advertise their hashrates publicly. Riot publishes this value on\n\ntheir landing page,23 as do Bitdeer,24 Marathon,25 and Cleanspark.26\n\n 39. In its investor-presentation explaining its bankruptcy reorganization plan, Core\n\nScientific shows each of these fundamental pieces of information,27 including the number of\n\n\n21\n Bitdeer. February 6, 2024. Bitdeer Announces January 2024 Operations Updates. Accessed\nFebruary 26, 2024. https://ir.bitdeer.com/news-releases/news-release-details/bitdeer-announces-\njanuary-2024-operations-updates\n22\n Bitdeer. April 28, 2023. SEC Form 20-F. Annual Report Pursuant to Section 13 or 15(d) of the\nSecurities Exchange Act of 1934. Available online at https://ir.bitdeer.com/static-files/14b10bfd-\n47d9-437f-ad89-97156cf38aa4 at 68.\n23\n Riot: Rockdale Facility. Accessed February 26, 2024. https://www.riotplatforms.com/bitcoin-\nmining/rockdale/ (\u201cRiot\u2019s total self-mining hash rate capacity is expected to reach 20.1 EH/s by\nmid-2024.\u201d)\n24\n Bitdeer. Accessed February 26, 2024. https://www.bitdeer.com/ (\u201c21.2 EH/s: Managing has\nrate as of Sep 30, 2023\u201d)\n25\n Marathon Digital Holdings. Accessed February 26, 2024. https://www.mara.com/ (\u201c26.4 EH/s:\nOperational Hash Rate as of 01.31.2024\u201d)\n26\n Cleanspark. Accessed February 26, 2024. https://www.cleanspark.com/ (\u201cCleanSpark Exceeds\n14 EH/s as Sandersville Expansion Comes Online\u201d)\n27\n Core Scientific. December 4, 2023. \u201cCore Scientific, Inc. Emergence Overview\u201d. Available\nonline at https://s29.q4cdn.com/356375974/files/doc_presentations/2023/12/FINAL-Core-\nScientific-Emergence-Pres-120423.pdf at 7-8\n 15\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 17 of 19\n\n\n\n\nminers (145,000), the capacity of their facilities (724 MW), their overall hashrate (15.1 EH/s),\n\nand the vintage of their projected mining equipment (from 145,000 in October 2023 to 279,000\n\nby end of year, 2027).\n\n 40. In summary, the answers to the eight substantive questions asked of respondents\n\nare well known to the respondents, and not burdensome. In comparison, EIA Form 860, the\n\nAnnual Electric Generator Report, is a form used by 4,315 respondents, with information used\n\nby utilities, system operators, private businesses, energy buyers, energy traders, and regulators.\n\nThe form poses over 220 multipart questions, and is allocated 16 hours by EIA, or just under 4.5\n\nminutes per question. In contrast, EIA Form 862 is just eight single-part questions, or just under\n\n4 minutes per question. In addition, the responses to the vast majority of the questions will be\n\nidentical month-to-month, unless a facility changes electricity providers or acquires new mining\n\nequipment. In either case, this information would be readily available to the respondents.\n\nThe information requested in EIA Form 862 is inherently not proprietary\n\n 41. Much of the information requested in EIA Form 862 is shared with investors and\n\nis fundamental to the investment proposition of mining operations. EIA Form 862 only requires\n\nthat this information be made available in a consistent form. For example, the vast majority of\n\nthe substantive information in EIA Form 862 can be filled out for complainant Riot Blockchain\n\nfrom publicly disclosed information. Riot\u2019s Rockdale facility, previously owed by Whinstone,28\n\nis served by Oncor, and holds a 345 MW worth of power supply agreement through 2030 with\n\nTXU Energy Retail Company.29 While not required by the form, that energy is provided in three\n\n\n28\n The Rockdale facility was acquired by Riot when it acquired Whinstone on April 8, 2021. See\nRiot Blockchain. April 8, 2021. SEC Form 8-K. Riot to Acquire Whinstone, Creating a US-\nBased Industry Leader in Bitcoin Mining. Available online at\nhttps://www.sec.gov/Archives/edgar/data/1167419/000107997321000261/ex99x1.htm.\n29\n Winstone US, Inc. March 31, 2020. SEC Form 8-K. Available online at\nhttps://www.sec.gov/Archives/edgar/data/1167419/000107997321000745/ex99x2.htm at 12.\n 16\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 18 of 19\n\n\n\n\ncontract blocks of 130 MW, 65 MW, and 150 MW, respectively.30 The facility is 700 MW,\n\nhoused 112,944 miners at the end of 2023,31 and has a 12.4 exahash per second hash rate.32\n\nThe information requested in EIA Form 862 is necessary to understand the energy impacts of\nthe mining operations\n\n 42. The scale of energy (MWh) and capacity (MW) consumption for each facility is\n\ncritical to understand the growth and impact on critical services and planning. The service\n\nprovider and energy supplier questions are necessary to understand which utility entities have\n\nspeculative large loads, and provides transparency for regulators and other customer classes on\n\npotential impacts if cryptocurrency mining operations move or fail financially.\n\n 43. Information on the vintage, hashrate, and number of miners is critical for utilities\n\nand grid operators to understand the operational parameters of cryptocurrency mining operations.\n\nCryptocurrency mining operations are fundamentally very simple. The marginal cost of mining\n\nis largely based on the cost of the energy supply and the efficiency of mining equipment. The\n\nrevenue which can be generated by mining is based on the value of the cryptocurrency (e.g. the\n\nprice of bitcoin). Cryptocurrency mining operations generally make a binary decision based on\n\nthese two price points: if the revenue from mining exceeds the cost of mining, the operation\n\nproceeds at full capacity. If the cost exceeds the revenue, the facility curtails operations. This\n\nkind of price responsive behavior can be impactful on grid operations. For a utility or grid\n\noperator, the presence or absence of a massive load like a mining operation is relevant to daily\n\ndecisions and long-term investments, and the ability to assess the breakeven price at which a\n\n\n\n30\n Riot Platforms. February 22, 2024. SEC Form 10-K for Fiscal Year Ended December 31,\n2023. Available online at https://s3.amazonaws.com/sec.irpass.cc/2865/0001558370-24-\n001550.pdf at F-27.\n31\n Ibid.\n32\n Riot Platforms. December 6, 2023. Riot Platforms Corporate Presentation. Available online at\nhttps://d2ghdaxqb194v2.cloudfront.net/2865/192541.pdf\n 17\n\f Case 6:24-cv-00099-ADA Document 18-4 Filed 02/27/24 Page 19 of 19\n\n\n\n\ncryptomining operation will curtail or operate is a crucial piece of information. In addition, for a\n\nstatistical agency like EIA, the ability to accurately model price responsive cryptocurrency\n\noperations is crucial for system-wide forecasts.\n\n//\n\n//\n\n//\n\nI declare, pursuant to 28 U.S.C. \u00a7 1746, under penalty of perjury that the foregoing is true and\ncorrect.\n\nExecuted in Oakland, California, on February 27, 2024.\n\n\n ________________________\n Jeremy Fisher\n\n\n\n\n 18\n\f","ocr_status":2,"date_upload":"2024-02-28T08:47:50.529041-08:00","document_number":"18","attachment_number":4,"pacer_doc_id":"181031729618","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Exhibit C to Amicus Brief (Fisher Declaration)","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387380084/","id":387380084,"tags":[],"absolute_url":"/docket/68276281/18/5/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T20:07:00.506403-08:00","date_modified":"2025-01-22T17:33:57.254987-08:00","sha1":"47f687d8f02f62a4979a95a5457eda1d049b6b57","page_count":51,"file_size":499394,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.5.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.5.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 18-5 Filed 02/27/24 Page 1 of 51\n\n\n\n\n Exhibit D\n\fTable of Contents Case 6:24-cv-00099-ADA Document 18-5 Filed 02/27/24 Page 2 of 51\n\n UNITED STATES\n SECURITIES AND EXCHANGE COMMISSION\n Washington, D.C. 20549\n FORM 10-K\nX ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n\n For the fiscal year ended December 31, 2023\n\n OR\n\u2610 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n\n For the transition period from: to:\n Commission file number: 001-33675\n RIOT PLATFORMS, INC.\n (Exact name of registrant as specified in its charter)\n\n Nevada XX-XXXXXXX\n (State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.)\n\n\n 3855 Ambrosia Street, Suite 301, Castle Rock, CO 80109\n (Address of principal executive offices) (Zip Code)\n Registrant\u2019s telephone number, including area code (303) 794-2000\n Securities\nSecurities registered under Section 12(b) of the Securities Exchange registered under Section 12(b) of the Securities Exchange Act:\n Act:\n Common Stock, no par value per share RIOT The Nasdaq Capital Market\n (Title of class) (Trading Symbol) (Name of each exchange on which registered)\nSecurities registered pursuant to Section 12(g) of the Securities Exchange Act: None.\nIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes X No \u2610\nIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act: Yes \u2610 No X\nNote - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.\nIndicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period\nthat the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No \u2610\nIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (\u00a7 232.405 of this\nchapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X No \u2610\nIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See\ndefinitions of \"large accelerated filer,\u201d \"accelerated filer,\u201d \"smaller reporting company,\u201d and \"emerging growth company\u201d in Rule 12b-2 of the Exchange Act.\n Large accelerated filer X Accelerated filer \u2610\n Non-accelerated filer \u2610 Smaller reporting company \u2610\n Emerging growth company \u2610\n\nIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting\nstandards provided pursuant to Section 13(a) of the Exchange Act. \u2610\nIndicate by check mark whether the registrant has filed a report on and attestation to its management\u2019s assessment of the effectiveness of its internal control over financial reporting under\nSection 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. X\nIf securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error\nto previously issued financial statements. \u2610\nIndicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant\u2019s executive\nofficers during the relevant recovery period pursuant to \u00a7240.10D-1(b). \u2610\nIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes \u2610 No X\nThe aggregate market value of the shares of common stock, no par value, held by non-affiliates of the registrant as of June 30, 2023, was approximately $1.7 billion, based on the closing sale\nprice per share of the registrant\u2019s common stock as reported by the Nasdaq Capital Market on such date.\nAs of February 20, 2024, the registrant had 253,538,213 shares of its common stock, no par value per share, outstanding, which was the only class of its registered securities outstanding as of\nthat date.\n DOCUMENTS INCORPORATED BY REFERENCE\nPortions of the registrant\u2019s definitive proxy statement for the 2024 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K, to the\nextent indicated. Such definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the close of the registrant\u2019s fiscal year ended\nDecember 31, 2023.\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 3 of 51\n\n\n RIOT PLATFORMS, INC.\n INDEX TO ANNUAL REPORT ON FORM 10-K\n\n Page\n PART I\nItem 1. Business 4\nItem 1A. Risk Factors 15\nItem 1B. Unresolved Staff Comments 28\nItem 1C. Cybersecurity 28\nItem 2. Properties 29\nItem 3. Legal Proceedings 29\nItem 4. Mine Safety Disclosures 29\n\n PART II\nItem 5. Market for Registrant\u2019s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 30\nItem 6. [Reserved] 32\nItem 7. Management\u2019s Discussion and Analysis of Financial Condition and Results of Operations 32\nItem 7A. Quantitative and Qualitative Disclosures About Market Risk 47\nItem 8. Financial Statements and Supplementary Data 49\nItem 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 67\nItem 9A. Controls and Procedures 67\nItem 9B. Other Information 69\nItem 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 69\n\n PART III\nItem 10. Directors, Executive Officers, and Corporate Governance 70\nItem 11. Executive Compensation 70\nItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 70\nItem 13. Certain Relationships and Related Transactions, and Director Independence 71\nItem 14. Principal Accountant Fees and Services 71\n\n PART IV\nItem 15. Exhibits and Financial Statement Schedules 72\nItem 16. Form 10-K Summary 77\n\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 4 of 51\n\n\n RIOT PLATFORMS, INC.\n\nAs used in this Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (this \"Annual Report\u201d), the terms \"we,\u201d \"us,\u201d \"our,\u201d the\n\"Company,\u201d the \"Registrant,\u201d \"Riot Platforms,\u201d and \"Riot\u201d mean Riot Platforms, Inc., a Nevada corporation, and its consolidated subsidiaries, unless\notherwise indicated.\n\n CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS\n\nThis Annual Report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 (the\n\"PSLRA\u201d). The Company may also make forward-looking statements in the other reports and documents filed with the United States Securities and\nExchange Commission (the \"SEC\u201d), including those documents and filings incorporated herein by reference. All statements in this Annual Report and the\ndocuments incorporated by reference herein, other than statements of historical fact, are \"forward-looking statements\u201d within the scope of this cautionary\nnote and the PSLRA, including, but not limited to, statements concerning: our plans, strategies and objectives for future operations; new equipment,\nsystems, technologies, services, or developments; future economic conditions, performance, or outlooks; future political conditions; the outcome of\ncontingencies; potential acquisitions or divestitures; the number and value of Bitcoin rewards and transaction fees we earn from our Bitcoin mining\noperations; expected cash flows or capital expenditures; our beliefs or expectations; activities, events, or developments that we intend, expect, project,\nbelieve, or anticipate will or may occur in the future; and assumptions underlying or based upon any of the foregoing. Forward-looking statements may be\nidentified by their use of forward-looking terminology, such as \"believes,\u201d \"expects,\u201d \"may,\u201d \"should,\u201d \"would,\u201d \"will,\u201d \"intends,\u201d \"plans,\u201d \"estimates,\u201d\n\"anticipates,\u201d \"projects,\u201d and similar words or expressions; however, forward-looking statements may be made without such terminology.\n\nSuch forward-looking statements reflect our management\u2019s opinions, expectations, beliefs, and assumptions regarding future events as of the time they\nare made, based on information then available to management. These forward-looking statements are not guarantees of future performance or actual\nresults, and you should not place undue reliance on them. The future events, conditions, or results expressed in, or implied by, such forward-looking\nstatements may not materialize or prove to be correct due to various risks and uncertainties facing the Company, including those risks which management\nhas identified and believes to be material, as well as those which management has not identified, or which management does not believe to be material as\nof the date hereof. Such identified risk factors are described in greater detail under the heading \"Risk Factors\u201d in Item 1A of Part I of this Annual Report,\nas well as under similar headings in subsequent filings we make with the SEC. The discussion of such risks is not an indication that any such risks have\noccurred at the time of this filing. It is not possible for our management to predict all risks, the potential impact of all factors on our business, or the extent\nto which any factor, or combination of factors, may cause our actual results to differ, perhaps materially, from those contained in, or implied by, any\nforward-looking statements we may make. Should such risks or uncertainties develop into actual events, these developments could have a material\nadverse effect on our business, financial condition, results of operations, stockholder\u2019s equity, and cash flows, and the market price of our securities may\ndecline, as a result.\n\nAccordingly, you should read this Annual Report, and the other filings we make with the SEC, completely and with the understanding that our future\nresults may be materially different from our historical results and from the results expressed in, or implied by, the forward-looking statements contained in\nthis Annual Report and the documents incorporated by reference herein. All forward-looking statements attributable to us speak only as of the date they\nare made and, unless otherwise required by applicable securities laws, we do not assume any obligation and disclaim any intention to update or revise any\nsuch forward-looking statements. All forward-looking statements attributable to us are expressly qualified by the foregoing cautionary statements and are\nmade in reliance of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, (the \"Securities Act\u201d) Section 21E of the\nSecurities Exchange Act of 1934, as amended, (the \"Exchange Act\u201d) and the PSLRA.\n\nIndustry and Market Data\n\nInformation regarding market and industry statistics referenced in or incorporated into this Annual Report has been obtained from industry and other\npublications that we believe to be reliable, but that are not produced for the purposes of securities filings. We have not independently verified any market,\nindustry, or similar data presented or referenced in this Annual Report, and we cannot assure you of the accuracy or completeness of such data. Further,\nwe have not reviewed or included data from all sources. Forecasts and other forward-looking information obtained from third-party sources are subject to\nthe same qualifications and the additional uncertainties discussed above in this cautionary note accompanying any of our forward-looking statements\nregarding estimates of future market size, revenue, and market acceptance of products and services. As a result, investors should not place undue reliance\non any such forecasts and other forward-looking information.\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 5 of 51\n\n\n PART I\n\nITEM 1. BUSINESS\n\nGeneral\n\nWe are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin\nblockchain. We also provide comprehensive and critical infrastructure for institutional-scale Bitcoin mining at our large-scale Bitcoin mining facilities in\nRockdale, Texas (the \"Rockdale Facility\u201d) and Navarro County, Texas (the \"Corsicana Facility\u201d). Our Rockdale Facility is believed to be the largest single\nBitcoin mining facility in North America, as measured by developed capacity, and we are currently evaluating further growing its capacity. Additionally,\nwe are developing the Corsicana Facility, our second large-scale Bitcoin mining facility, which, upon completion, is expected to have approximately one\ngigawatt of Bitcoin mining capacity.\n\nWe operate in an environment and industry which frequently evolves based on the proliferation and uptake of Bitcoin. A significant component of our\nstrategy is to effectively and efficiently allocate capital among opportunities that we believe will generate the highest return on our investment.\n\nWe operate in three reportable business segments: Bitcoin Mining, Data Center Hosting, and Engineering, which are organized based on purpose and\nservices performed. Each of our business segments is further discussed herein.\n\nAmounts in this Annual Report are stated in thousands of U.S. Dollars except for share and per share amounts, numbers of miners, hash rate, and Bitcoin\nquantities and prices, or as otherwise noted.\n\nBusiness Segments\n\nBitcoin Mining\n\nAs of December 31, 2023, our Bitcoin Mining business segment operated 112,944 miners with a total hash rate capacity of 12.4 exahash per second\n(\"EH/s\u201d). In 2023, we mined 6,626 Bitcoin, which represented an increase of 19.3% over the 5,554 Bitcoin we mined in 2022. Based on our existing\noperations and expected deliveries and deployment of miners we have purchased, we anticipate having approximately 28 EH/s of total hash rate in\noperation by the end of 2024.\n\nOur Bitcoin Mining operations are focused on maximizing our ability to successfully mine Bitcoin by growing our hash rate (the amount of computer\npower we devote to supporting the Bitcoin blockchain), to increase our chances of successfully creating new blocks on the Bitcoin blockchain (a process\nknown as \"solving a block\u201d). Generally, the greater share of the Bitcoin blockchain\u2019s total network hash rate (the aggregate hash rate deployed to solving\na block on the Bitcoin blockchain) a miner\u2019s hash rate represents, the greater that miner\u2019s chances of solving a block and, therefore, earning the block\nreward, which is currently 6.25 Bitcoin plus transaction fees per block (subject to periodic halving, as discussed below). As the proliferation of Bitcoin\ncontinues and the market price for Bitcoin increases, we expect additional miner operators to enter the market in response to an increased demand for\nBitcoin which we anticipate to follow increased Bitcoin prices. As these new miner operators enter the market and as increasingly powerful miners are\ndeployed in an attempt to solve a block, the Bitcoin blockchain\u2019s network hash rate grows, meaning an existing miner must increase its hash rate at pace\ncommensurate with the growth of network hash rate to maintain its relative chance of solving a block and earning a block reward. As we expect this trend\nto continue, we will need to continue growing our hash rate to compete in our dynamic and highly competitive industry.\n\nA key component of the Bitcoin Mining business segment is to acquire highly specialized computer servers (known in the industry as \"miners\u201d), which\noperate application-specific integrated circuit (\"ASIC\u201d) chips designed specifically to mine Bitcoin, and deploy such miners at-scale in our Rockdale\nFacility and Corsicana Facility, that utilize innovative and efficient immersion-cooled environments. The Rockdale Facility and the Corsicana Facility,\nwhich are supported by our dedicated best-in-class team, enable our large-scale Bitcoin Mining operations and provide the necessary infrastructure and\navailable power capacity for us to continue scaling our Bitcoin Mining business. We believe ASIC miners are the most effective and energy-efficient\nminers available today, and we believe deploying them at-scale, including in quiet immersion-cooled environments, with their more efficient heat\ndissipation and reduced wear-and-tear compared to traditional air-cooled hardware, will enable us to continue growing our hash rate and optimize the\noutput and longevity of our miners once they are deployed.\n\nDuring the year ended December 31, 2023, we entered into a long-term master purchase and sales agreement, dated as of June 23, 2023, as amended (the\n\"Master Agreement\u201d) with MicroBT Electronics Technology Co., LTD, through its manufacturing affiliate,\n\n 4\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 6 of 51\n\n\nSuperAcme Technology (Hong Kong) Limited (collectively, \"MicroBT\u201d) to secure the long-term supply of state-of-the-art immersion miners from\nMicroBT, all of which are being manufactured in the United States. Pursuant to the Master Agreement, MicroBT agreed to provide us with ready access\nto its newest and most powerful miners, at their most competitive prices. In 2023, we executed two purchase orders under the Master Agreement to\nacquire a total of 99,840 new MicroBT miners (consisting of 8,320 M56S+ model miners, 22,684 M56S++ model miners, 20,778 M66 model miners, and\n48,058 M66S model miners), primarily for use at our Corsicana Facility, for a total purchase price of approximately $453.4 million. Delivery of these miners\nbegan in the fourth quarter of 2023 and will be completed in monthly batches according to the delivery schedules specified under the applicable purchase\norder. All 99,840 miners are expected to be received and deployed by mid-2025. Upon full deployment of these new, state-of-the-art MicroBT immersion\nminers, we anticipate a total self-mining hash rate capacity of 38 EH/s. The Master Agreement also provides us with options to purchase up to 66,560\nadditional miners per year through December 31, 2027, on the same terms as the initial order, for an aggregate of 265,000 additional miners. For additional\ndiscussion of our purchase orders with MicroBT, see the purchase orders incorporated by reference as exhibits to this Annual Report.\n\nMining Pools\n\nA \"mining pool\u201d is a service operated by a mining pool operator that pools the resources of individual miners to share their processing power over a\nnetwork. Mining pools emerged in response to the growing difficulty and network hash rate competing for Bitcoin rewards on the Bitcoin blockchain as a\nway of lowering costs and reducing the risk of an individual miner\u2019s mining activities. The mining pool operator provides a service that coordinates the\ncomputing power of the independent mining enterprises participating in the mining pool. Mining pools are subject to various risks such as disruption and\ndown time. In the event that a pool we utilize experiences down time or is not yielding returns, our results may be impacted.\n\nWe have utilized two types of mining pools:\n\n \u25cf The first type of mining pool uses software that coordinates the pool members\u2019 hash rate, identifies new block rewards, records how much work\n all the participants are doing, and assigns Bitcoin rewards to its participants in proportion to the hash rate each participant contributed to the\n successful mining transaction. Fees are paid to the mining pool operator to cover the costs of maintaining the pool and are deducted from\n amounts we may otherwise earn. Fees and payouts fluctuate and historically have been no more than approximately 2% per reward earned, on\n average. We utilized this type of mining pool during the years ended December 31, 2021 and throughout 2022, until mid-December 2022.\n\n \u25cf The second type of mining pool pays Bitcoin rewards utilizing a \"Full-Pay-Per-Share\u201d payout of Bitcoin based on a contractual formula, which\n calculates payout primarily based on the hash rate provided by us to the mining pool as a percentage of total network hash rate, along with other\n inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator. We transitioned completely to\n this type of mining pool in December 2022, and utilized it for the year ended December 31, 2023.\n\nImmersion-cooling\n\nThe initial phase of the development of the Corsicana Facility involves the construction of 400 megawatts (\"MW\u201d) of immersion-cooled Bitcoin Mining\nand Data Center Hosting infrastructure. We anticipate that immersion-cooling technology will present many unique opportunities to increase efficiencies\nin Bitcoin mining and are constantly evaluating new and emerging technologies in the Bitcoin ecosystem to make our mining operations more efficient.\n\nWhen miners are immersion-cooled, they operate in a more stable environment that is better able to dissipate the heat generated by the miners\u2019 operation,\nallowing the equipment to run at sustained higher productivity rates for longer periods of time. We are continuing to test our immersion-cooling mining\noperations and, if our desired performance metrics are achieved, we plan to leverage our infrastructure development capabilities to expand the\nimplementation of our immersion-cooled Bitcoin mining hardware to increase our Bitcoin mining hash rate without relying solely on purchasing additional\nnew miners and mining equipment, which we believe will result in increased operating efficiencies, and, thus, improved capital efficiencies.\n\nData Center Hosting\n\nOur Data Center Hosting business segment is operated at our Rockdale Facility and focuses on providing co-location services for institutional-scale\nBitcoin mining companies. The Rockdale Facility provides the critical infrastructure and workforce necessary for institutional-scale miners to deploy and\noperate their miners in buildings specifically designed to operate Bitcoin miners at scale.\n\n\n 5\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 7 of 51\n\n\nIn pursuit of achieving the most efficient power strategy, we combine fixed low-cost power agreements, real-time spot power procurement, and credit from\nour participation in ancillary power services programs established by the Electric Reliability Council of Texas (\"ERCOT\u201d). We benefit from this low-cost\nenergy by maximizing production margins.\n\nDuring the year ended December 31, 2023, we completed our expansion of the Rockdale Facility, more than doubling its developed capacity from the time\nof its acquisition in May 2021.\n\nThe expansion of our Rockdale Facility has provided us with the capacity to deploy our current fleet of miners and bring our Bitcoin Mining business\nsegment entirely in-house, while still allowing us to continue offering Data Center Hosting services. We believe deploying our miners at the expanded\nRockdale Facility offers many advantages for our Bitcoin Mining operations, such as operating without incurring third-party colocation services fees and\ndoing so at the low fixed energy costs available to the Rockdale Facility under its long-term Power Purchase Agreement (\"PPA\u201d).\n\nEngineering\n\nOur Engineering business segment designs and manufacturers power distribution equipment and custom engineered electrical products that provide us\nwith the ability to vertically integrate many of the critical electrical components and engineering services necessary for our Corsicana Facility\ndevelopment and Rockdale Facility expansion and to reduce our execution and counter-party risk in ongoing and future expansion projects. Engineering\nand other specialized talent employed in our Engineering business segment also allows us to continue to explore new methods to optimize and develop a\nbest-in-class Bitcoin mining operation and has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin mining hardware.\n\nOur Engineering business segment also provides electricity distribution product design, manufacturing, and installation services primarily focused on\nlarge-scale commercial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power\ngeneration, utility, water, industrial, and alternative energy. Products are custom built to client and industry specifications.\n\nCompetition\n\nOur business is highly competitive and operates 24 hours a day, 7 days a week, on a global basis. The primary drivers of competition are demand for\nBitcoin, sufficient capital resources to acquire large quantities of high-quality miners, the ability to secure these miners from a limited number of suppliers\non rapid delivery schedules, and the ability to execute on those miner deployments with the best-in-class mining infrastructure to generate the highest\nreturns while incurring the lowest costs to mine.\n\nOur competition in the Bitcoin mining space fluctuates due to a number of factors, including, but not limited to, the value of Bitcoin rewards for mining\nand public perception. See more details below under \"Industry Trends\u201d. Our main competitors generally include other large Bitcoin mining companies,\nboth publicly listed and private, as well as other Bitcoin miners who participate in mining pools.\n\nData center hosting, particularly in relation to Bitcoin mining, is also highly competitive. Institutional Bitcoin mining customers demand access to mining\ninfrastructure that can supply large amounts of reliable, low-cost electricity, with best-in-class teams that can execute on deploying miners on compressed\ntimelines. In order to ensure this supply of large amounts of low-cost electricity, we have entered into long-term power purchase agreements with our\nenergy supplier at the Rockdale Facility, which allows us to control our power costs and project them over a long-term, enabling us to focus on\ndeveloping best-in-class mining infrastructure and delivering best-in-class services.\n\nIndustry Trends\n\nDuring 2022 and 2023, we observed several companies in the Bitcoin ecosystem experience significant challenges and initiate bankruptcy proceedings due\nto the significant volatility in the price of Bitcoin, the increase in interest rates, the volatility in spot prices of power, and other national and global\nmacroeconomic factors. We anticipate this trend will likely continue as companies attempt to shift their business models to operate on significantly\ncompressed margins. Further affecting the margins of the companies within the Bitcoin ecosystem, the Bitcoin reward for solving a block is subject to\nperiodic incremental halving, as described below under the heading \"Factors Affecting Profitability - Halving.\u201d\n\nThe dramatic increase in the price of Bitcoin observed in the market during prior years caused many companies to over-leverage themselves, thus\noperating in potentially unsustainable ways given the recent variability in the price of Bitcoin. We chose to refrain from engaging in any significant debt-\nfinancing activities during this period and, as a result, has not been subject to the significant\n\n 6\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 8 of 51\n\n\ndebt-service shortfalls some of our competitors are experiencing. Despite such challenges in the ecosystem, we continue to focus on building long-term\nstockholder value by taking strategic action to vertically integrate our business, expanding the Rockdale Facility and developing the Corsicana Facility.\nManagement believes this focus will positively affect each of our three business segments by providing more capacity for our Bitcoin Mining and Data\nCenter Hosting operations, and by capitalizing on supply chain efficiencies garnered through our Engineering segment. As we grow our business, we\ncontinue to focus on deploying our efficient Bitcoin mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin\nMining and Data Center Hosting facilities.\n\nWe anticipate companies in our industry will continue to experience challenges, and that 2024 may continue to be a period of consolidation in the Bitcoin\nmining industry. Further, given our relative position, liquidity, and absence of any significant long-term debt, we believe we are well positioned to benefit\nfrom such consolidation. We are continuously evaluating strategic opportunities which we may decide to undertake as part of our strategic growth\ninitiatives; however, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on the schedule or within\nthe budget we anticipate, if at all, in our competitive and evolving industry, and our business and financial results may change significantly as a result of\nsuch strategic growth.\n\nThe recent shutdowns of certain digital asset exchanges and trading platforms due to fraud or business failure has negatively impacted confidence in the\ndigital asset industry as a whole and led to increased oversight and scrutiny of the industry. We did not have any exposure to any digital asset lenders or\nexchanges who have declared bankruptcy or have suspended operations. We only hold and sell Bitcoin that we have mined and do not sell, hold, or\nredeem any Bitcoin for any other parties. Our Bitcoin is held in cold storage wallets by a well-known U.S.-based third-party digital asset-focused\ncustodian. We also sell our Bitcoin using our custodian\u2019s U.S. brokerage services.\n\nIn 2023, the banking industry and financial services sector experienced disruptions and instability. In March 2023, Silvergate Capital Corporation, the\nholding company for Silvergate Bank, which was primarily focused on the digital asset industry, announced its intent to wind down operations and\nvoluntarily liquidate its holdings. Also in March, Silicon Valley Bank and Signature Bank both closed. The Federal Deposit Insurance Corporation\n(\"FDIC\u201d) was appointed receiver following their closures and transferred substantially all assets of the former banks to newly created, FDIC-operated\nbridge banks in an action to protect all depositors of the banks. In May 2023, First Republic Bank was closed, and the FDIC sold substantially all of First\nRepublic Bank\u2019s assets to JP Morgan Chase & Co.\n\nAlthough we maintained certain operating accounts with Signature Bank prior to its closure, we have since transferred all our deposits previously held\nwith the bank to other banking institutions. We did not lose access to our accounts or experience interruptions in banking services, and we suffered no\nlosses with respect to our deposits at Signature Bank as a result of the bank\u2019s closure. We did not have any banking relationships with Silicon Valley\nBank, Silvergate Bank, or First Republic Bank, and currently hold our cash and cash equivalents at multiple banking institutions. Although we did not\nsuffer any losses, we continue to monitor for updates to mitigate any future impacts we may be subject to as a result of instability of the banking industry\nand financial services sector.\n\nResearch and Development\n\nIn 2022, we initiated development of the Corsicana Facility to expand our Bitcoin Mining and Data Center Hosting capabilities on a 265-acre site in\nNavarro County, Texas, located next to the Navarro Switch. Once complete, we expect the Corsicana Facility to have one gigawatt of developed capacity\nfor Bitcoin Mining and Data Center Hosting operations.\nThe initial phase of the development of the Corsicana Facility involves the construction of 400 MW of immersion-cooled Bitcoin Mining and Data Center\nHosting infrastructure, as well as a high-voltage power substation and transmission facilities to supply power and water to the facility. Construction of\nthe substation and the data centers is ongoing and operations are expected to commence by the end of the first quarter of 2024, following commissioning\nof the substation.\nMaterials and Suppliers\n\nWe maintain several key supplier relationships that are important to our business to secure mining hardware and infrastructure components and other\nmaterials. Given the complexity of developing mining hardware, there are few suppliers that can produce miners at scale. For example, our purchase orders\nwith MicroBT have future delivery schedules that extend out many months before those miners are delivered to our Rockdale Facility. These fluctuations\nin delivery timelines require us to plan to purchase miners well in advance of when we anticipate deploying those miners.\nOur development of the Corsicana Facility requires large quantities of electrical infrastructure components and construction materials. We seek to procure\nthese materials from our suppliers in sufficient quantities so that we can deploy miners at scale on\n\n 7\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 9 of 51\n\n\naccelerated timelines. Further, our immersion-cooled Bitcoin Mining activities require large volumes of specialized non-conductive fluid, for which there\nare limited manufacturers.\nGlobal Logistics\nGlobal supply logistics have caused delays across all channels of distribution. Similarly, we have also experienced delays in certain of our miner delivery\nschedules and in our infrastructure development schedules due to constraints on the globalized supply chains for miners, electricity distribution\nequipment and construction materials. Through the date of this Annual Report, we have been able to effectively mitigate any delivery delays to avoid\nmaterially impacting our miner deployment schedule; however, there are no assurances we will be able to continue to mitigate any such delivery delays in\nthe future. Additionally, the development of the Corsicana Facility requires large quantities of construction materials, specialized electricity distribution\nequipment and other component parts that can be difficult to source. We have procured and hold many of the required materials to help mitigate global\nsupply logistic and pricing concerns. We continue to monitor developments in the global supply chain and assess their potential impact on our expansion\nplans.\n\nRegulatory\n\nWe anticipate that Bitcoin mining will be a focus for potential increased regulation in the near- and long-term, and we cannot predict how future\nregulations may affect our business or operations.\n\nState regulation of Bitcoin mining is an important consideration with respect to where we conduct our mining operations. Our Rockdale Facility and our\nCorsicana Facility are both located in the State of Texas. To the extent that there is any state regulation of Bitcoin mining, we believe Texas is likely to\nremain one of the most favorable regulatory environments for Bitcoin miners.\n\nIn March 2022, the SEC issued proposed climate-related disclosure requirements for registrants and received thousands of comments on the proposal. We\ncontinue to await the release of any potential finalized rules requiring such disclosures following the analysis of the comments.\n\nIn January 2023, the Board of Governors of the Federal Reserve System (the \"Federal Reserve\u201d), Office of the Comptroller of the Currency, and FDIC\nissued a joint statement regarding perceived risks to banks with clients in crypto-asset industries. In January 2023, the Federal Reserve also issued a\npolicy statement broadening its regulatory authority to limit the activities of state-chartered banks. Several leaders in the U.S. Congress sent oversight\nletters to the prudential regulators pushing back on any efforts to place limits on banking activity for digital asset industries. Riot has also diversified\nbanking relationships to mitigate any potential regulatory risk with respect to financial services.\n\nAdditionally, in January 2023, the U.S. House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets and its\nintention to develop a regulatory framework for the digital asset industry. Bipartisan leadership of the Senate Banking Committee announced that goal as\nwell. Over the course of 2023, the House Financial Services Committee passed various bills, including a bill to provide a market structure for digital assets,\nbut no such legislation has received a vote on the floor of the full House.\n\nIn January 2024, a decade after initial applications were filed, the SEC approved a series of spot Bitcoin exchange-traded funds, which have received\nbillions of dollars of in-flows.\n\nAlso in January 2024, the U.S. Energy Information Administration initiated a provisional survey of electricity consumption information from\ncryptocurrency mining companies operating in the United States. The survey was authorized by the Office of Management and Budget as an emergency\ndata request. This action is purely a survey, and it remains unclear whether or how the information will be used in future regulatory efforts.\n\nLeaders on both the U.S. House Financial Services Committee and U.S. Senate Banking Committee have expressed interest in passing legislation to\nprovide additional regulatory authority to address risks related to the use of digital assets in illicit financial activity. The U.S. Treasury Department has\nalso requested additional authorities to address such risks. However, we have not seen sufficient support emerge in favor of any particular proposal to\nanticipate any specific changes at this time.\n\nWe are unable to predict the impact that any new standards, legislation, or regulations may have on our business at the time of filing this Annual Report.\nHowever, we continue to monitor and proactively engage in dialogue on regulatory and legislative matters related to our industry.\n\n\n 8\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 10 of 51\n\n\nAs the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which\nmay affect our Bitcoin Mining and other activities. For additional discussion regarding our belief about the potential risks that existing and future\nregulation pose to our business, see Part I, Item 1A. \"Risk Factors\u201d of this Annual Report.\n\nEnvironmental\n\nThere are increasing concerns over the quantity of energy, particularly from non-renewable sources, used for Bitcoin mining and its effects on the\nenvironment. Many media reports focus exclusively on the energy requirements of Bitcoin mining and cite it as an environmental concern. However, those\nreports tend to omit discussion of the positive contributions associated with Bitcoin mining to other customers on the electrical grid. Bitcoin mining\noperations present a stable demand for energy and can be quickly curtailed, uniquely positioning businesses that engage in Bitcoin mining to respond to\nincreased electricity demand in emergency situations. Throughout 2023, we voluntarily reduced our operations and curtailed our energy consumption to\nallow our energy provider to redirect our power allotment back into the ERCOT market during extreme weather events. By taking such actions, we\nimmediately helped to stabilize the grid by allowing our power allotment to be delivered to the areas of greatest need, such as heating homes and\npowering hospitals. Overall, our operations incentivize new power generation development and our actions help to reduce the frequency and impact of\npower failures and electricity price surges. In exchange for powering down our systems in response to high electricity demand, we receive benefits\nassociated with the difference between our contractual cost of power and the price at which such power is sold on the ERCOT market (less any applicable\nfees payable to our consultants who assist with our participation in the ERCOT Demand Response Services Program). Additionally, we voluntarily\nparticipate in load response programs operated by ERCOT, whereby we temporarily give ERCOT the right to curtail a set portion of our power load at their\ndiscretion in exchange for a fee. Ultimately, these benefits are shared by us and all participants in the ERCOT market, through the positive incentivizing of\nenergy supply and demand consistency across the ERCOT marketplace, which contributes positively to the overall health of the Texas grid.\n\nHuman Capital Resources\n\nDuring the past year, we have made substantial investments in our workforce to retain and attract best-in-class employees, substantially growing our\nemployee base, while also internally promoting individuals to key positions across the Company. As of December 31, 2023, we had a total workforce of\napproximately 534 employees across our entire organization, including professionals in engineering, information and technology, operations,\nconstruction, manufacturing. finance, legal, communications, and Bitcoin Mining operations. Of our total workforce, approximately 431 employees were in\nengineering, construction, manufacturing, and Bitcoin Mining operations and approximately 103 employees were in a general or administrative support\nfunction, such as information and technology, finance, legal or communications. Approximately 43% of our workforce was in Colorado and 53% was in\nTexas.\n\nOur strategy with human capital resources is to align the interests of our employees with our key long-term success drivers. In execution of this strategy,\nwe adopted a long-term performance incentive program, under which all eligible employees are granted a combination of service-based restricted stock\nawards that generally vest over a three-year period and performance-based restricted stock awards that are eligible to vest based on our achievement of\nspecific performance or total stockholder return milestones. During 2023, certain employees under the long-term performance program were eligible to\nreceive cash in lieu of restricted shares of our common stock awards based on achievement of these same performance milestones. We believe our\nperformance program is a key incentive for our employees that aligns their long-term interests with our long-term objectives as an organization.\n\nIn addition to Riot\u2019s long-term incentive program and competitive cash compensation practices, our employees are provided with excellent health benefits,\npaid parental leave, paid time off, and additional benefits.\n\nWe recognize the positive impact that leaders within a company can have on their teams, and we believe every employee is and should be a leader within\nour Company. Consequently, in addition to seeking out top talent from outside of our organization to foster this positive impact, we offer management\nand executive leadership training, and encourage the continuous development of leaders across the Company, and motivate every Company employee to\ntake ownership over their impact on the Company\u2019s success.\n\nWe seek to attract a pool of diverse, best-in-class candidates and foster their career growth by hiring the best talent available, rather than relying solely\non educational background. In support of such initiative, we look for candidates in local communities and large cities alike, and from a variety of\nbackgrounds. Our goal is a long-term, growth-oriented career for each employee. We also believe that our ability to retain our workforce is dependent on\nour ability to foster an environment that is sustainably safe, respectful, fair, and inclusive of everyone, and promotes diversity, equity, and inclusion both\ninside and outside of our business.\n\n\n 9\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 11 of 51\n\n\nDiversity, Equity, and Inclusion\n\nWe support diversity and inclusion in a workplace where employees can thrive, and our policies are designed to promote fairness and respect for\neveryone. Diverse backgrounds, experiences and opinions are encouraged and welcomed. In support of such diversity and inclusion, we act in\naccordance with our Code of Ethics and Business Conduct and our Non-Discrimination and Anti-Harassment Policy to create a safe environment free\nfrom discrimination or harassment that respects the human rights of our employees. We strive to achieve a workplace where opportunities for success are\ncreated and available for all employees. In support of this goal, in 2023, we required all employees to complete unconscious bias and harassment trainings.\n\nCompensation and Benefits\n\nOur compensation programs are designed to provide incentives to attract, retain, and motivate employees to achieve our long-term goals. Specifically, we\ncompare salary and wages against quantitative benchmarks and adjust monetary compensation to ensure wages are competitive and consistent with\nemployee positions, skill levels, experience, and geographic location. We maintain a robust process for ensuring pay equity across the Company and\nincreases in incentives and compensation based on merit and performance.\n\nWe provide a comprehensive range of benefits options, including medical, dental, and vision insurance for employees and family members, paid and\nunpaid leaves, and life and disability/accident insurance coverage. Benefits for employees outside of the United States are provided based on country-\nspecific practices and are intended to support the health and well-being of our employees and their families.\n\nBitcoin Mining Results\n\nBitcoin Mining Production and Bitcoin Sales\n\nOne way we measure the success of our operations is by the number and U.S. Dollar value of the Bitcoin rewards we earn from our Bitcoin Mining\nactivities. The following table presents information regarding our Mining operations, including Bitcoin production and sales of the Bitcoin we mine.\n\n Quantity Amounts\nBalance as of January 1, 2021 1,078 $ 10,186\n Revenue recognized from Bitcoin mined 3,812 184,422\n Exchange of Bitcoin for employee compensation (6) (295)\n Realized gain on sale/exchange of Bitcoin \u2014 253\n Impairment of Bitcoin \u2014 (43,973)\nBalance as of December 31, 2021 4,884 150,593\n Revenue recognized from Bitcoin mined 5,554 156,870\n Proceeds from sale of Bitcoin (3,425) (79,529)\n Exchange of Bitcoin for employee compensation (39) (1,495)\n Realized gain on sale/exchange of Bitcoin \u2014 30,346\n Impairment of Bitcoin \u2014 (147,365)\nBalance as of December 31, 2022 6,974 109,420\n Cumulative effect upon adoption of ASU 2023-08 \u2014 5,994\n Revenue recognized from Bitcoin mined 6,626 188,996\n Bitcoin receivable (21) (878)\n Proceeds from sale of Bitcoin (6,185) (176,219)\n Exchange of Bitcoin for employee compensation (32) (869)\n Change in fair value of Bitcoin \u2014 184,734\nBalance as of December 31, 2023 7,362 $ 311,178\n\nWe increased the quantity of Bitcoin rewards earned from our Bitcoin Mining operations from 5,554 Bitcoin mined in 2022, to 6,626 Bitcoin mined in 2023,\nrepresenting an increase of approximately 19.3%. Revenue recognized from our Bitcoin Mining activities increased from approximately $156.9 million\nduring 2022 to $189.0 million during 2023, representing an increase of approximately 20.5%. The increase was due to an increase in Bitcoin rewards earned\nas a result of an increase in the number of miners deployed from 88,556 as of December 31, 2022, to 112,944 as of December 31, 2023, partially offset by an\nincrease in the global network hash rate.\n\n\n 10\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 12 of 51\n\n\nFactors Affecting Profitability\n\nMarket Price of Bitcoin\n\nOur business is heavily dependent on the spot price of Bitcoin. The prices of cryptocurrencies, including Bitcoin, have experienced substantial volatility,\nmeaning that high or low prices may be based on speculation and incomplete information, subject to rapidly changing investor sentiment, and influenced\nby factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting. Bitcoin (as well as other\ncryptocurrencies) may have value based on various factors, including, but not limited to, their acceptance as a means of exchange by consumers and\nproducers, scarcity, and market demand, all of which are beyond our control.\n\nHalving\n\nFurther affecting the industry, particularly for the Bitcoin blockchain, the Bitcoin reward for solving a block is subject to periodic incremental halving.\nHalving is a process designed to control the overall supply and reduce the risk of inflation in Bitcoin, which uses a proof-of-work consensus algorithm. At\na predetermined block, the mining reward is cut in half, hence the term \"halving.\u201d For Bitcoin the reward was initially set at 50 Bitcoin currency rewards per\nblock. The Bitcoin blockchain has undergone halvings three times since its inception as follows: (1) on November 28, 2012, at block height 210,000; (2) on\nJuly 9, 2016, at block height 420,000; and (3) on May 11, 2020, at block height 630,000, when the reward was reduced to its current level of 6.25 Bitcoin per\nblock. The next halving for the Bitcoin blockchain is currently anticipated to occur in April 2024 at block height 840,000. Halvings will continue to occur\nuntil the total amount of Bitcoin currency rewards issued reaches approximately 21 million and the theoretical supply of new Bitcoin is exhausted, which is\nexpected to occur around the year 2140. Many factors influence the price of Bitcoin, and potential increases or decreases in prices in advance of or\nfollowing a future halving is unknown.\n\nNetwork Hash Rate and Difficulty\n\nGenerally, a Bitcoin miner\u2019s chance of solving a block on the Bitcoin blockchain and earning a Bitcoin reward is a function of the miner\u2019s hash rate,\nrelative to the global network hash rate (i.e., the aggregate amount of computing power devoted to supporting the Bitcoin blockchain at a given time). As\ndemand for Bitcoin has increased, the global network hash rate has increased rapidly, and as greater adoption of Bitcoin occurs, we expect the demand for\nnew Bitcoin will likewise increase as more mining companies are drawn into the industry by this increased demand. Further, as a greater number of\nincreasingly powerful miners have been deployed, the network difficulty for Bitcoin has consequently also increased. Network difficulty is a measure of\nhow difficult it is to solve a block on the Bitcoin blockchain, which is adjusted every 2,016 blocks (approximately every 2 weeks) so that the average time\nbetween each block validation remains approximately ten minutes. A high difficulty means that more computing power will be required in order to solve a\nblock and earn a new Bitcoin reward, which, in turn, makes the Bitcoin network more secure by limiting the possibility of one miner or mining pool gaining\ncontrol of the network. Therefore, as new and existing miners deploy additional hash rate, the global network hash rate will continue to increase, meaning\na miner\u2019s share of the global network hash rate (and therefore its chance of earning Bitcoin rewards) will decline if it fails to deploy additional hash rate at\npace with the industry.\n\nFor further discussion of the factors affecting our profitability, see the discussion under Part II, Item 7 \"Management\u2019s Discussion and Analysis of\nFinancial Condition and Results of Operations\u201d under the heading \"Summary of Bitcoin Mining Results\u201d of this Annual Report, as well as the discussion\nof various risks, factors, and uncertainties we believe may affect our revenue and results of operations under Part I, Item 1A. \"Risk Factors\u201d of this\nAnnual Report.\n\nPerformance Metrics\n\nWe seek to mine Bitcoin by using our miners to solve complex cryptographic algorithms to support the Bitcoin blockchain (in a process known as\n\"solving a block\u201d). In return for solving a block, we receive the Bitcoin reward, which we can hold or sell on the market to generate cash.\n\nHash Rate\n\nBitcoin miners generally measure their capability in terms of hash rate, which is measured in terms of the number of cryptographic hashing algorithms\nsolved (or \"hashes\u201d) per second. Generally, miners (or mining pools) with a greater hash rate relative to the global Bitcoin network hash rate at a given\ntime will, over time, have a greater chance of earning a Bitcoin reward, as compared to miners with relatively lower total hash rates.\n\n\n 11\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 13 of 51\n\n\nHowever, as the relative market price for Bitcoin increases, more miners are encouraged to attempt to mine Bitcoin, which increases Bitcoin\u2019s global\nnetwork hash rate. Therefore, to remain competitive, miners seek to continually increase their total hash rate, creating a feedback loop: as Bitcoin gains\npopularity and its relative market price increases, more miners attempt to mine Bitcoin and its global network hash rate is increased; in response, existing\nminers and new miners devote more and more hash rate to the Bitcoin blockchain by adding more, and increasingly powerful, miners to attempt to ensure\ntheir ability to earn additional Bitcoin rewards. As a result, the network difficulty of the Bitcoin network is increased to maintain the pace of new block\nadditions, spurring miners to seek to deploy yet further hash rate to earn the same relative number of new Bitcoin rewards. In theory, this process should\ncontinually replicate itself until the supply of available Bitcoin is exhausted.\n\nIn response, miners have attempted to achieve greater hash rate by deploying increasingly sophisticated miners in ever greater quantities. This has\nbecome the Bitcoin mining industry\u2019s great \"arms race.\u201d There are very few manufacturers of miners capable of producing a sufficient number of miners of\nadequate quality to meet this need, and scarcity results, leading to higher prices. Compounding this phenomenon, it has been observed that some\nmanufacturers of Bitcoin miners may increase prices for new miners as the market price of Bitcoin increases. Further, these manufacturers have also been\nimpacted by the ongoing global supply chain crisis resulting from COVID-19, both in terms of increased prices for the components of these new miners\nresulting from the constrained supply of the semiconductors used in the production of the highly specialized ASIC chips miners rely on, and in terms of\nlabor costs to manufacture new miners as workforces are affected by increased absenteeism due to COVID-19 restrictions and employee burnout. Thus,\nminer manufacturers are subject to increasing price pressures due to both increased demand for new miners and decreased supply of necessary\ncomponents and labor, ultimately leading manufacturers to charge higher prices for new miners.\n\nIntellectual Property\n\nWe actively use specific hardware and software for our Bitcoin Mining operations. The Bitcoin blockchain is generally built on open-source code and, in\ncertain cases, the source code and other software assets we use in our Bitcoin Mining operations may be subject to an open-source license. For these\nworks, we adhere to the terms of any license agreements that may be in place. We also rely upon the intellectual property rights of others in certain\nrespects in connection with our immersion-cooling technology.\n\nWe currently rely on trade secrets, trademarks, service marks, trade names, copyrights, and other intellectual property rights, and on licenses to use\nintellectual property rights owned and controlled by others. In addition, we have developed and may further develop certain proprietary software and\nhardware applications in connection with Bitcoin Mining operations, including our immersion-cooled Bitcoin Mining developments.\n\nInformation About Our Executive Officers\n\nThe following sets forth the name, age, and position of each of the persons who were serving as executive officers as of the filing of this Annual Report.\n\nName Age Position\nJason Les 38 Director and Chief Executive Officer (principal executive officer)\nBenjamin Yi 41 Director and Executive Chairman\nColin Yee 48 Executive Vice President, Chief Financial Officer (principal financial officer)\nWilliam Jackman 40 Executive Vice President, General Counsel and Secretary\nJason Chung 42 Executive Vice President, Head of Corporate Development & Strategy\nRyan Werner 44 Senior Vice President, Chief Accounting Officer (principal accounting officer)\n\nJason Les (age 38) has served as our Chief Executive Officer (\"CEO\u201d) since February 2021 and as a member of the board of directors since October 2017.\nHe has been deeply involved with Bitcoin since 2013, with significant experience in Bitcoin mining, as an engineer studying protocol development, and\ncontributing to open-source projects. Mr. Les was previously a founding partner of Binary Digital from May 2017 to November 2020, a software-\ndevelopment company where he led the engineering team and coordinated project development for artificial intelligence, reverse engineering, and inter-\nsoftware compatibility projects. Additionally, his background includes over a decade of unique experience as a former professional heads-up poker player.\nHe holds a Bachelor of Science, Computer Science from the University of California, Irvine.\n\nBenjamin Yi (age 41) has served as our Executive Chairman since May 2021, as a member of the Board since October 2018, and as Chairman of the board of\ndirectors from November 2020 through May 2021. In this role, he is directly involved in our day-to-day operations, playing a key role in setting and\nfulfilling the Board\u2019s strategic aims for the Company. Mr. Yi brings significant corporate governance experience to Riot\u2019s Board and executive\nmanagement team, having served as an independent director and committee chair of several private and public companies. Prior to joining Riot, Mr. Yi led\ncapital markets and corporate development at IOU\n\n 12\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 14 of 51\n\n\nFinancial, a fin-tech enabled lender to small businesses across North America and investee company of Neuberger Berman from January 2017 through\nMay 2021. Mr. Yi brings almost two decades of unique capital markets experience to the Company, and a particular expertise in fintech, specialty finance,\nand investing throughout a company\u2019s capital structure. Mr. Yi holds a Bachelor of Commerce, specialist in Finance, major in Economics from University\nof Trinity College and a Master of Finance from University of Toronto \u2013 Rotman School of Management.\n\nColin Yee (age 48) has served as our Executive Vice President, Chief Financial Officer since July 2023, and Chief Financial Officer from September 2022 to\nJuly 2023. Previously, he was our Head of Corporate and Financial Operations from April 2022 to September 2022. Prior to joining Riot, Mr. Yee founded\nClear Capital Management Corporation which has been operating since September 2007. He served as the Chief Operating Financial Officer of Avebury\nPartners, a leading asset management firm that operates within the real estate, geothermal exchange, and construction sectors, from March 2021 to March\n2022. From 2016 to 2021, Mr. Yee served as the CFO for Forum Equity Partners, a large private equity firm specializing in real estate, renewable energy and\ninfrastructure. Mr. Yee is a Chartered Professional Accountant and holds a Bachelor of Science in Cellular Biology and a Bachelor of Commerce in\nAccounting from the University of Calgary.\n\nWilliam Jackman (age 40) has served as our Executive Vice President, General Counsel and Secretary, since September 2022, and as General Counsel and\nSecretary since July 2021. As a member of the executive team, Mr. Jackman manages the Company\u2019s legal affairs, drawing upon his unique business and\nlegal acumen to navigate strategic decisions and develop innovative solutions to complex challenges. Previously, Mr. Jackman represented S&P 500\ncompanies as well as other public companies in the areas of securities laws, mergers and acquisitions, and power generation. Prior to joining Riot, Mr.\nJackman was a Leader of Public Companies and Securities at Roger Towers, P.A., one of Florida\u2019s oldest and most established law firms, from March 2018\nto January 2022. Additionally, he was a Senior Corporate Attorney at Holland & Knight LLP, a multinational law firm, from May 2014 through August\n2017. Mr. Jackman holds dual Juris Doctorate law degrees from the Universities of Windsor and Detroit, as well as an MBA from Nova Southeastern, and\nis a member of the New York, Florida, and Ontario Bar Associations.\n\nJason Chung (age 42) has served as our Executive Vice President, Head of Corporate Development & Strategy since July 2023, and Head of Corporate\nDevelopment & Strategy from June 2022 to July 2023. Mr. Chung spearheads the coordination of Riot's corporate development, capital markets, and\ninvestor relations efforts. Mr. Chung brings two decades of experience in investment banking and a wealth of knowledge in corporate finance to Riot.\nPrior to joining Riot, Mr. Chung served as Managing Director, M&A, at Nomura Holdings, Inc. from March 2017 through June 2022 and Executive\nDirector, Mergers & Acquisitions from March 2014 through December 2016 where he advised global clients on cross-border transactions in the\ntechnology sector across multiple countries, including the US, Canada, Germany, Japan, Korea, France, and Singapore. Mr. Chung\u2019s investment banking\ncareer spanned nearly $20 billion in mergers and acquisitions transactions and included building and growing advisory teams. Mr. Chung is a CFA charter\nholder and earned a Bachelor of Commerce and Finance degree, minoring in History, from the University of Toronto.\n\nRyan Werner (age 44) has served as our Senior Vice President and Chief Accounting Officer since September 2022. Previously, Mr. Werner served as our\nVice President of Finance from March 2021 to September 2022. Mr. Werner is responsible for the leadership and oversight of our public accounting\nfunction, leading the Company\u2019s team of accounting and finance professionals. Prior to joining Riot, Mr. Werner was a Senior Director, Real Estate and\nTransactions Accounting at UDR, an S&P 500 constituent and multifamily real estate investment trust, from March 2013 through March 2021. Mr. Werner\nbegan his career in Ernst & Young\u2019s audit practice, where he was a Senior Manager and specialized in publicly traded companies. Mr. Werner is a\nCertified Public Accountant and holds a Master of Accounting and Information Systems degree, as well as a Bachelor of Science in Accounting &\nBusiness Administration degree, both from the University of Kansas.\n\nThere are no familial relationships among our executive officers and any directors, except that Mr. Yi is married to the first cousin of Hannah Cho, who\nserves on our board of directors. There are no arrangements or understandings between any of our executive officers and any other person pursuant to\nwhich any of such executive officers were selected.\n\nCorporate Information\n\nOur principal executive office is located at 3855 Ambrosia Street, Suite 301, Castle Rock, Colorado 80109, and our telephone number is (303) 794-2000. Our\nrecords are kept at our principal executive office.\n\nWe were incorporated in the State of Colorado on July 24, 2000, under the name AspenBio, Inc., and have been through a number of subsequent name\nchanges. Effective October 19, 2017, we adopted the corporate name Riot Blockchain, Inc., and changed our state of incorporation to Nevada. Effective\nDecember 30, 2022, we adopted our current corporate name, Riot Platforms, Inc., and remained incorporated in Nevada.\n\n\n 13\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 15 of 51\n\n\nOur website address is www.riotplatforms.com.\n\nAdditional Information\n\nWe file or furnish periodic reports and amendments thereto, including our annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q,\ncurrent reports on Form 8-K, proxy statements and other information with the SEC. These reports, and any amendments thereto, as filed with the SEC, can\nbe accessed, free of charge, on the SEC\u2019s website www.sec.gov. These documents may also be accessed on our website: www.riotplatforms.com through\na link in the \"Investors\u201d section. The contemplated documents are placed on our website as soon as practicable after their filing with the SEC. The\ninformation posted on our website is not incorporated by reference into this Annual Report.\n\n\n\n 14\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 16 of 51\n\n\nITEM 1A. RISK FACTORS\n\nCertain factors may have a materially adverse effect on our business, financial condition, and results of operations, including the risk, factors, and\nuncertainties described under this Part I, Item 1A., and elsewhere in this Annual Report. This is not an exhaustive list, and there are other factors that\nmay be applicable to our business that are not currently known to us or that we currently do not believe are material. Any of these risks could have an\nadverse effect on our business, financial condition, operating results, or prospects, which could cause the trading price of our common stock to\ndecline, and you could lose part or all of your investment. You should carefully consider the risks, factors, and uncertainties described below, together\nwith the other information contained in this Annual Report, as well as the risk, factors, uncertainties, and other information we disclose in other filings\nwe make with the SEC before making an investment decision regarding our securities.\n\nRisks Related to Our Ability to Grow Our Business\n\nIf we fail to grow our hash rate, we may be unable to compete, and our results of operations could suffer.\n\nGenerally, a Bitcoin miner\u2019s chance of solving a block on the Bitcoin blockchain and earning a Bitcoin reward is a function of the miner\u2019s hash rate (i.e.,\nthe amount of computing power devoted to supporting the Bitcoin blockchain), relative to the global network hash rate. As greater adoption of Bitcoin\noccurs, we expect the demand for Bitcoin will increase further, drawing more mining companies into the industry and thereby increasing the global\nnetwork hash rate. As new and more powerful miners are deployed, the global network hash rate will continue to increase, meaning a miner\u2019s chance of\nearning Bitcoin rewards will decline unless it deploys additional hash rate at pace with the industry. Accordingly, to compete in this highly competitive\nindustry, we believe we will need to continue to acquire new miners, both to replace those lost to ordinary wear-and-tear and other damage, and to\nincrease our hash rate to keep up with a growing global network hash rate.\n\nWe plan to grow our hash rate by acquiring newer, more effective and energy-efficient miners. These new miners are highly specialized servers that are\nvery difficult to produce at scale. As a result, there are limited producers capable of producing large numbers of sufficiently effective miners, and, as\ndemand for new miners has increased in response to increased Bitcoin prices, we have observed the price of these new miners has increased. If we are\nunable to acquire enough new miners or access sufficient capital to fund our acquisitions, our results of operations and financial condition could be\nadversely affected, as could investments in our securities.\n\nWe may be impacted by macroeconomic conditions due to global pandemics, epidemics or outbreaks of disease and the resulting global supply chain\ncrisis.\n\nGlobal trade conditions and consumer trends that originated during the COVID-19 pandemic continue to persist and may also have long-lasting adverse\nimpact on us and our industry. There are continued risks arising from new pandemics, epidemics or outbreaks of disease, and ongoing COVID-19 related\nissues which have exacerbated port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of\nnew miners, as well as critical materials needed for our expansion plans. Further, miner manufacturers have been impacted by the constrained supply of\nthe semiconductors used in the production of the highly specialized ASIC chips miners we rely on, and by increased labor costs to manufacture new\nminers as workforces and global supply chains continue to be affected by COVID-19 and may further be impacted by global outbreaks of various\nepidemics or disease, ultimately leading to continually higher prices for new miners. Thus, until the global supply chain crisis is resolved, and these\nextraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners, and we may face\ndifficulties obtaining the new miners we need at prices or in quantities we find acceptable, if at all, and our business and results of operations may suffer\nas a result.\n\nIn addition, labor shortages that have persisted since the COVID-19 pandemic and those arising from any new pandemics, epidemics or outbreaks of\ndisease may lead to increased labor costs and difficulty in hiring and retaining the highly qualified and motivated people we need to conduct our business\nand execute on our strategic growth initiatives. Sustaining our growth plans will require the ongoing readiness and solvency of our suppliers and\nvendors, a stable and motivated production workforce, and government cooperation, each of which may be affected by macroeconomic factors outside of\nour immediate control.\n\nWe cannot predict the duration or direction of current or new global trends or their sustained impact. Ultimately, we continue to monitor macroeconomic\nconditions to remain flexible and to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure\nrequirements globally and deploy our workforce and capital resources accordingly. If we experience unfavorable global market conditions, or if we cannot\nor do not maintain operations at a scope that is commensurate with such conditions or are later required to or choose to suspend such operations again,\nour business, prospects, financial condition, and operating results may be harmed.\n\n\n 15\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 17 of 51\n\n\nWe expect the cost of acquiring new miners to continue to be affected by the ongoing global supply chain crisis.\n\nSimilarly, the ongoing global supply chain crisis, coupled with increased demand for computer chips, has created a shortfall of semiconductors, resulting\nin challenges for the supply chain and production of the miners we employ in our Bitcoin Mining operations. The miners are highly specialized servers\nbuilt around ASIC chips, which very few manufacturers are able to produce in sufficient scale and quality to suit our operations. As a result, the cost to\nproduce these miners has increased, and their manufacturers have passed on increased costs of production to purchasers like us. Therefore, until the\nglobal supply chain crisis is resolved, and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain\nand deploy new miners, which could adversely affect our financial condition and results of operations.\n\nWe may not be able to timely complete our future strategic growth initiatives or within our anticipated cost estimates, if at all.\n\nAs part of our efforts to grow our hash rate and remain competitive in the market, we acquired thousands of new state-of-the-art miners from their\nmanufacturer in 2022, which we started to deploy at our Rockdale Facility. To accommodate these new miners, we expanded the Rockdale Facility\u2019s\ncapacity to 700 MW of electrical power through the construction of four new 100 MW structures and the associated power and facilities infrastructure\nneeded to operate them for industrial-scale Bitcoin Mining. Additionally, we are developing our Corsicana Facility, and we expect to complete Phase I in\n2024. We will require additional new state-of-the-art miners to deploy at the Corsicana Facility as well as associated infrastructure development.\nMoreover, we have carried out these expansions amid the ongoing global supply chain crisis and residual ongoing issues related to COVID-19, and our\ncosts of supplies, labor, and material have increased as a result. While our present expansion projects are proceeding on track with expectations, we\ncannot guarantee we will complete these expansions (or any future strategic growth initiatives) on time or within our cost estimates, if at all, due in part to\nthe ongoing effects of the global supply chain crisis related to macroeconomic effects of COVID-19, increased inflation and changing conditions within\nthe United States labor market. If we are unable to complete our planned expansions on schedule and within our anticipated cost estimates, our\ndeployment of newly purchased miners may be delayed, which could affect our competitiveness and our results of operation, which could have a material\nadverse effect on our financial condition and the market price for our securities.\n\nWe may be unable to access sufficient additional capital for future strategic growth initiatives.\n\nThe expansion of our miner fleet and construction of our Corsicana Facility are capital-intensive projects, and we anticipate that future strategic growth\ninitiatives will likewise continue to be capital-intensive. We expect to raise additional capital to fund these and other future strategic growth initiatives;\nhowever, we may be unable to do so in a timely manner, in sufficient quantities, or on terms acceptable to us, if at all. If we are unable to raise the\nadditional capital needed to execute our future strategic growth initiatives, we may be less competitive in our industry and the results of our operations\nand financial condition may suffer, and the market price for our securities may be materially and adversely affected.\n\nExpansion of our Rockdale Facility and construction of our Corsicana Facility potentially exposes us to additional risks.\n\nWe were expanding and may continue to expand our Rockdale Facility, and we are currently constructing our Corsicana Facility, which potentially\nexposes us to significant risks we may otherwise not be exposed to, including risks related to, among other sources: construction delays; lack of\navailability of parts and/or labor, increased prices as a result, in part, of inflation, and delays for data center equipment; labor disputes and work\nstoppages, including interruptions in work due to pandemics, epidemics, and other health risks; unanticipated environmental issues and geological\nproblems; delays related to permitting and approvals to commence operations from public agencies and utility companies; and delays in site readiness\nleading to our failure to meet commitments made in connection with such expansion.\n\nAll construction-related projects depend on the skill, experience, and attentiveness of our personnel throughout the design and construction process.\nShould a designer, general contractor, significant subcontractor or key supplier experience financial difficulties or other problems during the design or\nconstruction process, we could experience significant delays, increased costs to complete the project and/or other negative impacts to our expected\nreturns.\n\nIf we are unable to overcome these risks and additional pressures to complete our expansion and construction projects in a timely manner, if at all, we may\nnot realize their anticipated benefits, and our business and financial condition may suffer as a result.\n\nEconomic and geopolitical events may create increased uncertainty and price changes.\n\nWe are subject to price volatility and uncertainty due to geopolitical crises and economic downturns. Such geopolitical crises and global economic\ndownturns may be a result of invasion, or possible invasion by one nation of another, leading to increased inflation\n\n 16\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 18 of 51\n\n\nand supply chain volatility. Such crises will likely continue to have an effect on our ability to do business in a cost-effective manner. Inflation has caused\nthe price of materials to increase leading to increased expenses to our business. Global crises and economic downturns may also have the effect of\ndiscouraging investment in Bitcoin as investors shift their investments to less volatile assets. Such shifts could have a materially adverse effect on our\nbusiness, operations and the value of the Bitcoin we mine or the institutional data center clients we host.\n\nFailure to successfully integrate acquired businesses could negatively impact our balance sheet and results of operations.\n\nStrategic acquisitions such as the Whinstone Acquisition and the ESS Metron Acquisition, both in 2021 (see Note 3. Acquisitions to our Consolidated\nFinancial Statements for further information) are an important element of our growth strategy and the success of any acquisition we make depends in part\non our ability to integrate the acquired business and realize anticipated synergies. Integrating acquired businesses may involve unforeseen difficulties,\nmay require a disproportionate amount of our management\u2019s attention, and may require us to reallocate our resources, financial or otherwise.\n\nFor example, we may encounter challenges in the integration process such as: difficulties associated with managing the resulting larger and more complex\ncompany; conforming administrative and corporate structures and standards, controls, procedures and policies, business cultures, hiring and retention of\nkey employees, and compensation and benefits structures, coordinating geographically dispersed operations; and our ability to deliver on our strategy\ngoing forward.\n\nFurther, our acquisitions may subject us to new liabilities and risks, some of which may be unknown. Although we and our advisors conduct due\ndiligence on the operations of businesses we acquire, there can be no guarantee that we are aware of all liabilities of an acquired company. These\nliabilities, and any additional risks and uncertainties related to an acquired company not known to us or that we may deem immaterial or unlikely to occur\nat the time of the acquisition, could negatively impact our future business, financial condition, and results of operations.\n\nWe can give no assurance that we will ultimately be able to effectively integrate and manage the operations of any acquired business or realize anticipated\nsynergies. The failure to successfully integrate the cultures, operating systems, procedures and information technologies of an acquired business could\nhave a material adverse effect on our financial condition and results of operations.\n\nWe may experience increased compliance costs as a result of our strategic acquisitions.\n\nFuture strategic acquisitions could carry substantial compliance burdens, which may limit our ability to realize the anticipated benefits of such\nacquisitions, and which may require our management and personnel to shift their focus to such compliance burdens and away from their other functions.\nSuch increased costs and compliance burdens could affect our ability to realize the anticipated benefits of such strategic acquisitions, and our business,\nresults of operations, and financial condition may suffer as a result.\n\nWe have financed our strategic growth primarily by issuing new shares of our common stock in public offerings, which dilutes the ownership interests\nof our current stockholders, and which may adversely affect the market price of our securities.\n\nWe have raised capital to finance the strategic growth of our business through public offerings of our common stock, and we expect to raise additional\ncapital through similar public offerings to finance the completion of current and future expansion initiatives. We may not be able to obtain additional debt\nor equity financing on favorable terms, if at all, which could impair our growth and adversely impact our existing operations. In 2022 and 2023, a number of\ndigital asset platforms and exchanges filed for bankruptcy and/or became the subjects of investigation by various governmental agencies for, among\nother things, fraud. These disruptions in the crypto asset market may impact our ability to obtain favorable financing. If we raise additional equity\nfinancing, our stockholders may experience dilution of their ownership interests, and the per share value of our common stock could decline. If we are\nunable to generate cash flows from operation sufficient to support our strategic growth, we may be required to adopt one or more alternatives, such as\nreducing or delaying investments or capital expenditures, selling assets, or obtaining additional equity financing on terms that may be onerous or highly\ndilutive. Furthermore, if we engage in debt financing, the holders of any debt we issue would likely have priority over the holders of shares of our common\nstock in terms of order of payment preference. We may be required to accept terms that restrict our ability to incur additional indebtedness or take other\nactions including accepting terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our\nstockholders.\n\nWe have a history of operating losses, and we may report additional operating losses in the future.\n\nOur primary focus is on vertically integrating our Bitcoin Mining, and we have recorded historical losses and negative cash flow from our operations\nwhen the value of Bitcoin we mine does not exceed our associated costs. Further, as part of our strategic growth plans, we have made capital investments\nin expanding and vertically integrating our Bitcoin Mining operations, including the\n\n 17\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 19 of 51\n\n\nexpansion of our Rockdale Facility, and the ongoing construction of our Corsicana Facility, increasing our employee base, and incurring additional costs\nassociated with owning and operating a self-mining facility. However, future market prices of Bitcoin are difficult to predict, and we cannot guarantee that\nour future Bitcoin Mining revenue will exceed our associated costs.\n\nThe lack of regulation of digital asset exchanges which Bitcoin, and other cryptocurrencies, are traded on may expose us to the effects of negative\npublicity resulting from fraudulent actors in the cryptocurrency space and can adversely affect an investment in the Company.\n\nThe digital asset exchanges on which Bitcoin is traded are relatively new and largely unregulated. Many digital asset exchanges do not provide the public\nwith significant information regarding their ownership structure, management teams, corporate practices, or regulatory compliance. As a result, the\nmarketplace may lose confidence in, or may experience problems relating to, such digital asset exchanges, including prominent exchanges handling a\nsignificant portion of the volume of digital asset trading. In 2022 and 2023, a number of digital asset exchanges filed for bankruptcy proceedings and/or\nbecame the subjects of investigation by various governmental agencies for, among other things, fraud, causing a loss of confidence and an increase in\nnegative publicity for the digital asset ecosystem. As a result, many digital asset markets, including the market for Bitcoin, have experienced increased\nprice volatility. The Bitcoin ecosystem may continue to be negatively impacted and experience long term volatility if public confidence decreases.\n\nThese events are continuing to develop and it is not possible to predict, at this time, every risk that they may pose to us, our service providers, or the\ndigital asset industry as a whole. A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset\nexchanges due to business failure, hackers or malware, government-mandated regulation, or fraud may reduce confidence in digital asset networks and\nresult in greater volatility in cryptocurrency values. These potential consequences of a digital asset exchange\u2019s failure could adversely affect an\ninvestment in us.\n\nWe depend on attracting and retaining officers, managers, and skilled professionals.\n\nOur success depends, in large part, on our ability to hire, retain and motivate talented officers, leadership, and professionals. We cannot guarantee that\nsuch employees will be retained which may inhibit our management functions, strategic development, and other critical functions. Our growth may be\nconstrained by human capital resource limitations as we compete with other companies for skilled employees. We will need to take strategic action to\ndevelop our pool of management and skilled employees as well as grow such pool to meet the demands of our corporate functions. If we are not able to do\nso, our business, and thus our ability to grow, may be materially adversely affected.\n\nRisks Related to the Price of Bitcoin\n\nOur ability to achieve profitability is largely dependent on the price of Bitcoin, which has historically been volatile.\n\nOur primary focus on vertically integrating our Bitcoin Mining operations, the associated expansion of our Rockdale Facility, and the ongoing\nconstruction of our Corsicana Facility is largely based on our assumptions regarding the future value of Bitcoin, which has been subject to significant\nhistorical volatility and may be subject to influence from malicious actors, real or perceived scarcity, political, economic, and regulatory conditions, and\nspeculation making its price more volatile or creating \"bubble\u201d type risks for the trading price of Bitcoin. Further, unlike traditional stock exchanges, which\nhave listing requirements and vet issuers, requiring them to comply with rigorous listing standards and rules, and which monitor transactions for fraud\nand other improprieties, markets for Bitcoin and other cryptocurrencies tend to be underregulated, if they are regulated at all. In general, less stringent\nmarkets are perceived to have a higher risk of fraud or manipulation and any lack of oversight or perceived lack of transparency could reduce confidence\nin the price of Bitcoin and other cryptocurrencies, which could adversely affect the price of Bitcoin. As disclosed in Part I, Item 1. \"Business\u201d of this\nAnnual Report, under the subheading \"Regulatory,\u201d Bitcoin and crypto asset markets generally may be subject to increased scrutiny and regulation by\nthe U.S. legislature and government agencies, and such evolving regulatory and legal environment may impact our Bitcoin Mining and other activities.\n\nThese factors make it difficult to accurately predict the future market price of Bitcoin and may also inhibit consumer trust in, and market acceptance of,\ncryptocurrencies as a means of exchange, which could limit the future adoption of Bitcoin and, as a result, our assumptions could prove incorrect. If our\nassumptions prove incorrect and the future price of Bitcoin is not sufficiently high, our income from our Bitcoin Mining operations may not exceed our\ncosts, and our operations may never achieve profitability.\n\n\n 18\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 20 of 51\n\n\nBitcoin market exposure to financially troubled cryptocurrency-related companies may impact our reputation, the price of Bitcoin and the\nprofitability of our Bitcoin Mining operations.\n\nThe failure of several crypto platforms has impacted and may continue to impact the broader crypto economy; the full extent of these impacts may not yet\nbe known. Bitcoin is subject to price volatility resulting from financial instability, poor business practices, and fraudulent activities of players in the\nbroader cryptocurrency market. When investors in cryptocurrency and cryptocurrency-based companies experience financial difficulty as a result of price\nvolatility, poor business practices, and/or fraud, it has caused, and may continue to cause, loss of confidence in the cryptocurrency space, reputational\nharm to cryptocurrency assets, heightened scrutiny by regulatory authorities and law makers, and a steep decline in the value of Bitcoin, among other\nmaterial impacts. Such adverse effects have affected, and may in the future, affect the profitability of our Bitcoin Mining operations and our ability to\nobtain a profit from hosting institutional-scale data center clients.\n\nBitcoin is subject to halving, and our Bitcoin Mining operations may generate less revenue as a result.\n\nAs disclosed in Part I, Item 1. \"Business\u201d of this Annual Report, under the subheading \"Halving,\u201d the number of new Bitcoin awarded for solving a block\nis cut in half \u2013 hence, \"halving\u201d \u2013 at mathematically predetermined intervals. The next halving for the Bitcoin blockchain is currently anticipated to occur\nin April 2024. While Bitcoin prices have historically increased around these halving events, there is no guarantee that the price change will be favorable or\nwould compensate for the reduction in mining rewards. If a corresponding and proportionate increase in the price of Bitcoin does not follow future\nhalving events, the revenue we earn from our Bitcoin Mining operations would see a decrease, which could have a material adverse effect on our results\nof operations and financial condition.\n\nTransaction fees may decrease demand for Bitcoin and prevent expansion.\n\nAs the number of Bitcoin currency rewards granted for solving a block in the Bitcoin blockchain has decreased, transaction fees have increasingly been\nused to incentivize miners to continue to contribute to the Bitcoin network. However, high Bitcoin transaction fees may slow the adoption of Bitcoin as a\nmeans of payment, which may decrease demand for Bitcoin and future prices of Bitcoin may suffer as a result. If Bitcoin prices are not sufficiently high,\nour Bitcoin Mining revenue may not exceed our associated costs, and our results of operations and financial condition may suffer. Further, because the\nprice of shares of our common stock may be linked to the price of Bitcoin, if demand for Bitcoin decreases, causing future Bitcoin prices to decrease, the\nmarket price of our securities may be materially and adversely affected, limiting our ability to raise additional capital to fund our strategic growth plans.\n\nBitcoin faces significant scaling obstacles that can lead to high fees or slow transaction settlement times.\n\nBitcoin (and cryptocurrencies, generally) face significant scaling obstacles that can lead to high fees or slow transaction settlement times and attempts to\nincrease the volume of transactions may not be effective. Scaling cryptocurrencies is essential to the widespread acceptance of cryptocurrencies as a\nmeans of payment, including Bitcoin. Many cryptocurrency networks face significant scaling challenges. For example, cryptocurrencies are limited with\nrespect to how many transactions can occur per second. Participants in the cryptocurrency ecosystem debate potential approaches to increasing the\naverage number of transactions per second that a network can handle and have implemented mechanisms or are researching ways to increase scale, such\nas increasing the allowable sizes of blocks, and therefore the number of transactions per block, and sharding (a horizontal partition of data in a database or\nsearch engine), which would not require every single transaction to be included in every single miner\u2019s or validator\u2019s block. There is, however, no\nguarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of cryptocurrency transactions will be effective.\n\nIf adoption of Bitcoin (and cryptocurrencies, generally) as a means of payment does not occur on the schedule or scale we anticipate, the demand for\nBitcoin may stagnate or decrease, which could adversely affect future Bitcoin prices, and our results of operations and financial condition, which could\nhave a material adverse effect on the market price for our securities.\n\nRisks Related to our Operations\n\nTo remain competitive in our industry, we seek to grow our hash rate to match the growing network hash rate and increasing network difficulty of the\nBitcoin blockchain, and if we are unable to grow our hash rate at pace with the global network hash rate, our chance of earning Bitcoin from our\nBitcoin Mining operations would decline.\n\nAs the adoption of Bitcoin has increased, the price of Bitcoin has generally appreciated, causing the demand for new Bitcoin rewards for successfully\nsolving blocks on the Bitcoin blockchain to likewise increase. This has encouraged more miners to attempt to mine Bitcoin, which increases the global\nnetwork hash rate deployed in support of the Bitcoin blockchain.\n\n\n 19\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 21 of 51\n\n\nBecause a miner\u2019s relative chance of successfully solving a block and earning a new Bitcoin reward is generally a function of the ratio the miner\u2019s\nindividual hash rate bears to the global network hash rate, as the global network hash rate increases, a miner must increase its individual hash rate to\nmaintain its chances of earning new Bitcoin rewards. Therefore, as new miners enter the industry and as miners deploy greater and greater numbers of\nincreasingly powerful machines, existing miners must seek to continually increase their hash rate to remain competitive. Thus, a feedback loop is created:\nas Bitcoin gains popularity and its relative market price increases, more miners attempt to mine Bitcoin and the Bitcoin network hash rate is increased; in\nresponse, existing miners and new miners devote more and more hash rate to the Bitcoin blockchain by deploying greater numbers of increasingly\npowerful machines in an attempt to ensure their ability to earn additional Bitcoin rewards does not decrease. Compounding this feedback loop, the\nnetwork difficulty of the Bitcoin network (i.e., the amount of work (measured in hashes) necessary to solve a block) is periodically adjusted to maintain the\npace of new block additions (with one new block added to the blockchain approximately every ten minutes), and thereby control the supply of Bitcoin. As\nminers deploy more hash rate and the Bitcoin network hash rate is increased, the Bitcoin network difficulty is adjusted upwards by requiring more hash\nrate to be deployed to solve a block. Thus, miners are further incentivized to grow their hash rate to maintain their chance of earning new Bitcoin rewards.\nIn theory, these dual processes should continually replicate themselves until the supply of available Bitcoin is exhausted. In response, miners have\nattempted to achieve greater hash rate by deploying increasingly sophisticated and expensive miners in ever greater quantities. This has become the\nBitcoin mining industry\u2019s great \"arms race.\u201d Moreover, because there are very few manufacturers of miners capable of producing a sufficient number of\nminers of adequate quality to meet this need, scarcity results, leading to higher prices. Compounding this phenomenon, it has been observed that some\nmanufacturers of Bitcoin miners may increase the prices for new miners as the market price of Bitcoin increases.\n\nAccordingly, to maintain our chances of earning new Bitcoin rewards and remaining competitive in our industry, we must seek to continually add new\nminers to grow our hash rate at pace with the growth in the Bitcoin global network hash rate. However, as demand has increased and scarcity in the\nsupply of new miners has resulted, the price of new miners has increased sharply, and we expect this process to continue in the future as demand for\nBitcoin increases. Therefore, if the price of Bitcoin is not sufficiently high to allow us to fund our hash rate growth through new miner acquisitions and if\nwe are otherwise unable to access additional capital to acquire these miners, our hash rate may stagnate and we may fall behind our competitors. If this\nhappens, our chances of earning new Bitcoin rewards would decline and, as such, our results of operations and financial condition may suffer.\n\nBecause our miners are designed specifically to mine Bitcoin and may not be readily adaptable to other uses, a sustained decline in Bitcoin\u2019s value\ncould adversely affect our business and results of operations.\n\nWe have invested substantial capital in acquiring miners using ASIC chips designed specifically to mine Bitcoin and other cryptocurrencies using the\n256-bit secure hashing algorithm (\"SHA-256\u201d) as efficiently and as rapidly as possible on our assumption that we will be able to use them to mine Bitcoin\nand generate revenue from our operations. Therefore, our Bitcoin Mining operations focus exclusively on mining Bitcoin, and our Bitcoin Mining revenue\nis based on the value of Bitcoin we mine. Accordingly, if the value of Bitcoin declines and fails to recover, for example, because of the development and\nacceptance of competing blockchain platforms or technologies, including competing cryptocurrencies which our miners may not be able to mine, the\nrevenue we generate from our Bitcoin Mining operations will likewise decline. Moreover, because our miners use these highly specialized ASIC chips, we\nmay not be able to successfully repurpose them in a timely manner, if at all, to other uses, following a sustained decline in Bitcoin\u2019s value or if the Bitcoin\nblockchain stops using SHA-256 for solving blocks. This would result in a material adverse effect on our business and could potentially impact our ability\nto continue as a going concern.\n\nOur reliance on third-party miners may subject our operations to increased risk of design flaws.\n\nThe performance and reliability of our miners and our technology is critical to our reputation and our operations. We currently use Bitmain Technologies\nLimited (\"Bitmain\u201d) Antminer, and MicroBT WhatsMiner type miners, and if there are issues with those machines, such as a design flaw in the ASIC chips\nthey employ, our system could be substantially affected. Further, we have encountered, and may in the future encounter, software and firmware\ncomplications associated with adapting our miners to operate in our immersion-cooled Bitcoin mining hardware, which may delay or otherwise limit the\nbenefits we anticipate from our adoption of immersion-cooled mining. Any system error or failure may significantly delay response times or even cause\nour system to fail. Any disruption in our ability to continue mining could result in lower yields and harm our reputation and business. Any exploitable\nweakness, flaw, or error common to the Bitmain or MicroBT miners we currently utilize could affect substantial portions of our miners; therefore, if a defect\nor other flaw exists and is exploited, a majority of, or all of our miner fleet could be adversely impacted. Any interruption, delay or system failure could\nresult in financial losses, a decrease in the trading price of our common stock and damage to our reputation.\n\n\n 20\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 22 of 51\n\n\nOur reliance primarily on immersion-cooling exposes us to additional risks.\n\nWe are increasingly relying on immersion-cooling for our Bitcoin Mining infrastructure, to a large extent at the Rockdale Facility, and entirely (at this\nphase) at our Corsicana Facility. Immersion-cooling is an emerging technology in Bitcoin mining, which is not in wide-spread use, and has yet to be\ndeployed at this scale. As such, there is a risk we may not succeed in deploying immersion-cooling at such a large scale to achieve sufficient cooling\nperformance. All Bitcoin mining infrastructure, including immersion-cooling and air-cooling, is an evolving study. Cooling of Bitcoin miners in general is a\nrisk to achieving full potential from our hash rate, especially in the State of Texas.\n\nWe require meaningful volumes of water to support cooling of our Bitcoin miners for both immersion-cooling and air-cooling operations. The inability to\nsecure adequate water, or the loss of access to such required water, would impact our ability to sustain efficient mining operations.\n\nOur use of third-party mining pools exposes us to certain risks.\n\nWe receive Bitcoin rewards from our mining activity through third-party mining pool operators. Mining pools allow miners to combine their processing\npower, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to\nour contribution to the pool\u2019s overall mining power, after deducting the applicable pool fee, if any, used to solve a block on the Bitcoin blockchain.\nShould the pool operator\u2019s system suffer downtime due to a cyber-attack, software malfunction or other issue, it could negatively impact our ability to\nmine and receive revenue, if we are unable to quickly switch to another pool or to self-mine without a pool. Furthermore ,it is possible that the mining pool\noperator could fail to accurately record the total processing power provided to the pool for a given Bitcoin mining application, which would inhibit our\nability to confirm the proportion of that total processing power which we provided. While we have internal methods of tracking both the hash rate we\nprovide and the total used by the pool, the mining pool operator uses its own record-keeping to determine our proportion of a given reward, which may\nnot match our own. If we are unable to consistently obtain accurate proportionate rewards from our mining pool operators, we may not receive accurate\nblock rewards from the pool, with limited recourse to correct these inaccuracies. This could lead us to decide against further participation in a mining pool,\nor mining pools generally, which may affect the predictability of our mining returns, which could have an adverse effect on our business and operations.\n\nWe may not be able to realize the benefits of forks.\n\nThe Bitcoin blockchain is subject to modification based on a consensus of the users on its network. When a significant minority of users on the network\nagree to a modification that is not compatible with the prior network protocol, a \"fork\u201d of the network results, with one prong running the pre-modified\nprotocol and the other running the modified protocol. The effect of such a fork would be the existence of two \"versions\u201d of the blockchain running in\nparallel that are not interchangeable, which requires exchange-type transactions to convert between the two forks. Additionally, it may be unclear\nfollowing a fork which of the two protocols represents the original and which is the new protocol. Different metrics adopted by industry participants to\ndetermine which is the original asset following a fork in the Bitcoin blockchain may include: referring to the blockchain with the greatest network hash\nrate, or to the \"length\u201d of blockchain (i.e., the time between the first transaction recorded in the blockchain\u2019s distributed ledger and the date of the most\nrecent transaction). Accordingly, it is possible that a fork may occur on the Bitcoin blockchain that results in an asset different from our current Bitcoin\nholdings, or a protocol different from SHA-256 (which our miners are specifically designed to operate), gaining predominance, and the value of our Bitcoin\nassets may suffer, or we may not be able to adapt our miners to the new protocol. Therefore, we may not realize the economic benefit of a fork in the\nBitcoin blockchain, either immediately or ever, which could adversely affect an investment in our securities.\n\nCyber-attacks, data breaches or malware may disrupt our operations and trigger significant liability for us, which could harm our operating results\nand financial condition, and damage our reputation or otherwise materially harm our business.\n\nAs a publicly traded company, we experience cyber-attacks, such as phishing, and other attempts to gain unauthorized access to our systems on a regular\nbasis, and we anticipate continuing to be subject to such attempts. There is an ongoing risk that some or all of our cryptocurrencies could be lost or\nstolen as a result of one or more of these incursions. As we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or\nother security threats, and, despite our implementation of strict security measures and frequent security audits, it is impossible to eliminate all such\nvulnerability. For instance, we may not be able to ensure the adequacy of the security measures employed by third parties, such as our service providers\nand any of our Data Center Hosting customers. Additionally, though we provide cybersecurity training for employees, we cannot guarantee that we will\nnot be affected by further phishing attempts. Efforts to limit the ability of malicious actors to disrupt the operations of the internet or undermine our own\nsecurity efforts may be costly to implement and may not be successful. Such breaches, whether attributable to a vulnerability in our systems or otherwise,\ncould result in claims of liability against us, damage our reputation and materially harm our business.\n\n\n 21\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 23 of 51\n\n\nWe rely on a well-known U.S. based third-party digital asset-focused custodian to safeguard our Bitcoin. If our third-party service provider experiences a\nsecurity breach or cyber-attack and unauthorized parties obtain access to our Bitcoin, we may lose some or all of our Bitcoin and our financial condition\nand results of operations could be materially adversely affected.\n\nTo date, we have not experienced a material cyber incident; however, we continue to encounter ongoing cyber-attacks and the occurrence of any such\nevent in the future could subject us to liability to our customers, suppliers, business partners and others, or give rise to legal and/or regulatory action,\nwhich could damage our reputation or otherwise materially harm our business, operating results, and financial condition.\n\nIncorrect or fraudulent Bitcoin transactions may be irreversible and we could lose access to our Bitcoin.\n\nBitcoin transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the Bitcoin from\nthe transaction. Because of the decentralized nature of the Bitcoin blockchain, once a transaction has been verified and recorded in a block that is added\nto the Bitcoin blockchain, an incorrect transfer of a Bitcoin or a theft thereof generally will not be reversible, and we may not have sufficient recourse to\nrecover our losses from any such transfer or theft. It is possible that, through computer or human error, or through theft or criminal action, our Bitcoin\nrewards could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. Though recent high profile enforcement\nactions against individuals laundering stolen Bitcoin have demonstrated some means of bringing malicious actors to justice for their theft, the stolen\nBitcoin is likely to remain unrecoverable. Furthermore, we utilize a third-party custodian for our Bitcoin, and thus do not maintain a private key. However,\nif they lose access to our wallet, or if a malicious actor successfully denies the third-party custodian access to our wallet, we may be permanently denied\naccess to the Bitcoin held in the wallet corresponding to the lost, stolen or blocked keys. Though we have taken and continue to take reasonable steps to\nsecure our data and to store our Bitcoin with institutional custodians, if we, or our third-party custodian were to experience data loss relating to our digital\nwallets, we could effectively lose access to and the ability to use our Bitcoin assets. Moreover, we may be unable to secure insurance policies for our\nBitcoin assets at rates or on terms acceptable to us, if at all, and we may choose to self-insure. To the extent that we are unable to recover our losses from\nsuch action, error or theft, such events could have a material adverse effect on our business, results of operations and financial condition.\n\nOur miners and mining infrastructure may not be adaptable to new technologies.\n\nThe market for data centers is characterized by rapidly changing technology, evolving industry and process standards, frequent new product\nintroductions, and changing customer demands. Changes in industry practice or in technology could also reduce demand for the physical hosting space\nand infrastructure that we provide or make previous improvements in the Rockdale Facility and Corsicana Facility obsolete. Our ability to deliver\ntechnologically sophisticated infrastructure at the Rockdale Facility and Corsicana Facility, including power and cooling, is a significant factor in our\ncustomers\u2019 decisions to collocate with us at the Rockdale Facility. The infrastructure at the Rockdale Facility and Corsicana Facility may become obsolete\ndue to the development of new systems that deliver power to, or eliminate heat from, the miners or other customer equipment that we house, which may\nrequire us to expend significant capital resources to retrofit or otherwise upgrade our current systems to compete with data centers deploying these new\nsystems.\n\nWhile we believe the Rockdale Facility and upcoming Corsicana Facility are primed to be adaptable, new technology can be, by its nature, unpredictable.\nMoreover, even if we are able to respond, we may not be able to efficiently upgrade or change these systems without incurring significant costs.\nOperations may be negatively impacted by these upgrades as they are in process. This may impact our customers\u2019 experience in the short term, which may\nhave a negative impact on our operating cash flows, liquidity, and financial condition.\n\nThe Rockdale Facility is subject to a long-term ground lease, and we may be unable to fully realize the anticipated benefits of its expansion if the\nlease is not renewed or is otherwise terminated.\n\nThe Rockdale Facility is subject to a ground lease with an initial term of ten years, followed by three ten-year renewal periods at our option, unless\nterminated earlier. The long-term success of our plans for the Rockdale Facility is largely based on our ability to maintain the lease in effect and to renew it\ngoing forward. If we fail to maintain the lease or renew it once its initial term expires and the landlord requires the Rockdale Facility to vacate the premises,\nwe will likely incur significant costs in relocating its operations, if we could do so at all, and our Bitcoin Mining and Data Center Hosting operations would\nbe interrupted during such relocation. Further, if we fail to renew the lease on terms favorable to us, and our costs are increased, then we may not realize\nthe anticipated benefits of our investment in the Rockdale Facility or any future development of its remaining available capacity. Any disruptions or\nchanges to the Rockdale Facility\u2019s present relationship with the landlord could disrupt our business and our results of operations negatively.\n\n\n 22\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 24 of 51\n\n\nOur business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.\n\nOur operations require a significant amount of electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient\nelectrical power, or if we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether. If this occurs,\nour business and results of operations may be materially and adversely affected.\n\nWe are subject to risks associated with our need for significant electrical power.\n\nOur operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet, operate our Rockdale Facility, and\nbegin to operate our Corsicana Facility, we anticipate our demand for electrical power will continue to grow. The fluctuating price of electricity we require\nfor our operations, and to power our expansion, may inhibit our profitability. If we are unable to continue to obtain sufficient electrical power on a cost-\neffective basis, we may not realize the anticipated benefits of our significant capital investments.\n\nAdditionally, our operations could be materially adversely affected by prolonged power outages. Although certain critical functions of our Rockdale\nFacility may be powered by backup generators on a temporary basis, it would not be feasible or cost-effective to run miners on back-up power generators\nfor extended periods of time. Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the\nunavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected.\n\nOur operations have been, and may continue to be, adversely affected by events outside of our control, such as natural disasters.\n\nWe may be impacted by natural disasters, wars, health epidemics, weather conditions, the long-term effects of climate change, power outages or other\nevents outside of our control. For example, we voluntarily halted operations at our Rockdale Facility during the severe winter storms in the first quarter of\n2022 and 2021 that had a widespread impact on utilities and transportation. Additionally, as previously disclosed, we sustained damage to the Rockdale\nFacility\u2019s infrastructure during the severe winter storms affecting Texas in December 2022 which caused miners to be offline and impacted approximately\n2.5 EH/s of our hash rate capacity. In the future, regulators or power providers may, under new or revised rules, require us to power down the Rockdale\nFacility and/or the Corsicana Facility, once it begins operations, during such events. If major disasters such as earthquakes, floods or other climate-related\nevents occur, the Rockdale Facility, Corsicana Facility, or our other offices are severely damaged, or our information system or communications break\ndown or operate improperly, our operations may be interrupted. We may incur expenses or delays relating to such events outside of our control, which\nmay not be covered by insurance, and such events could have a material adverse impact on our business, operating results and financial condition.\n\nIncreased scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance (\"ESG\u201d) practices and\nthe impacts of climate change may result in additional costs or risks.\n\nCompanies across many industries are facing increasing scrutiny related to their ESG practices. Investor advocacy groups, certain institutional investors,\ninvestment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on\nthe non-financial impacts of their investments. Furthermore, increased public awareness and concern regarding environmental risks, including global\nclimate change, has resulted and may continue to result in increased public scrutiny of our business and our industry, and our management team may\ndivert significant time and energy away from our operations and towards responding to such scrutiny and reassuring our employees.\n\nThe SEC has proposed rule changes that would require companies to include certain climate-related disclosures such as climate-related risks that are\nreasonably likely to have a material impact on business, results of operations, or financial conditions. Should such proposed rules be adopted, increased\npublic scrutiny of our business may affect our operations, competitive position, and financial condition.\n\nIn addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supply of energy,\ndemand for Bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage\nincurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events. If environmental laws or\nregulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our\noperations, or if our operations are disrupted due to the physical impacts of climate change, our business, capital expenditures, results of operations,\nfinancial condition and competitive position could be negatively impacted.\n\n\n 23\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 25 of 51\n\n\nRisks Related to Governmental Regulation and Enforcement\n\nChanging environmental regulation and public energy policy may expose our business to new risks.\n\nOur Bitcoin Mining operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs we incur, including\nfor electricity, are lower than the revenue we generate from our operations. As a result, any mine we establish can only be successful if we can obtain\nsufficient electrical power for that mine on a cost-effective basis, and our establishment of new mines requires us to find locations where that is the case.\nFor instance, our plans and strategic initiatives for the Rockdale Facility and Corsicana Facility are based, in part, on our understanding of current\nenvironmental and energy regulations, policies, and initiatives enacted by federal and Texas regulators. If new regulations are imposed, or if existing\nregulations are modified, the assumptions we made underlying our plans and strategic initiatives may be inaccurate, and we may incur additional costs to\nadapt our planned business, if we are able to adapt at all, to such regulations.\n\nIn addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the\nBitcoin mining industry, with its energy demand, may become a target for future environmental and energy regulation. New legislation and increased\nregulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements,\ncapital equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Further, any future climate change\nregulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.\n\nMoreover, in the State of Texas, we currently participate in energy demand response programs to curtail operations, return capacity to the electrical grid,\nand receive funds to offset foregone operational revenue when necessary, such as in extreme weather events. Furthermore, we, as well as other Bitcoin\nminers operating primarily in the State of Texas, have recently received a mandatory survey from the U.S. Energy Information Administration (the \"EIA\u201d),\nseeking extensive information regarding our facilities\u2019 use of electricity, and certain information regarding our operations, solely for the month of January\n2024. It is possible that mandatory surveys such as this will be used by the EIA to generate negative reports regarding the Bitcoin mining industry\u2019s use\nof power and other resources, which could spur additional negative public sentiment and adverse legislative and regulatory action against us or the\nBitcoin mining industry as a whole. Surveys and other regulatory actions could increase our cost of operations or otherwise make it more difficult for us to\noperate at our current locations.\n\nGiven the political significance and uncertainty around the impact of climate change and how it should be addressed, and energy disclosure and use\nregulations, we cannot predict how legislation and regulation will affect our financial condition and results of operations in the future in the United States\nand the State of Texas. Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential\nimpacts on climate change or energy use by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a\nmaterial adverse effect on our business and financial condition.\n\nThe compliance costs of responding to new and changing regulations could adversely affect our operations at our Rockdale Facility and our future\noperations at our Corsicana Facility.\n\nWe (along with those from whom we purchase electricity) are subject to various federal, state, local, and international environmental laws and regulations,\nincluding those relating to the generation, storage, handling, and disposal of hazardous substances and wastes. Certain of these laws and regulations\nalso impose joint and several liability, without regard to fault, for investigation and cleanup costs on current and former owners and operators of real\nproperty and persons who have disposed of or released hazardous substances into the environment. Our operations may involve the use of hazardous\nsubstances and materials, such as petroleum fuel for emergency generators, as well as batteries, cleaning solutions, and other materials.\n\nElectricity costs could also be affected due to existing or new regulations on greenhouse gas emissions, whether such regulations apply to all consumers\nof electricity or just to specified uses, such as Bitcoin mining. These regulations may be federal, or we may be exposed to such regulations due to our\nTexas-based operations. There has been interest in the U.S. federal government and in the state government of Texas in addressing climate change,\nincluding through regulation of Bitcoin mining. Past policy proposals to address climate change include measures ranging from taxes on carbon use or\ngeneration to energy consumption disclosure regimes to federally imposed limits on greenhouse gas emissions or energy use restrictions specific to\nBitcoin mining. Further, although Texas has historically sought to maintain some degree of energy independence from the United States as a whole, it is\nunclear how future legislation and regulation will affect the Rockdale Facility and the Corsicana Facility. The course of future legislation and regulation in\nthe United States and in Texas remains difficult to predict, and potential increased costs associated with new legislation or regulation cannot be estimated\nat this time.\n\n\n 24\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 26 of 51\n\n\nRegulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects\nour business, prospects, or operations.\n\nAs cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain\ngovernments have deemed them illegal, and others have allowed their use and trade without restriction, while some jurisdictions, such as the United\nStates, subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory\nrequirements.\n\nFor example, in January 2023, the Federal Reserve, Office of the Comptroller of the Currency, and FDIC issued a joint statement effectively discouraging\nbanks from doing business with clients in crypto-asset industries, which could potentially create challenges regarding access to financial services. In\nJanuary 2023, the Federal Reserve also issued a policy statement broadening its authority to cover state-chartered institutions. Moreover, in January 2023,\nthe White House issued a statement cautioning deepening ties between crypto-assets and the broader financial system. Meanwhile, the SEC has\nannounced several actions aimed at curtailing activities it deems sales of unregistered securities.\n\nHowever, also during January 2023, the U.S. House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets and\nthe intention to develop a regulatory framework for the use and trade of digital assets and related financial services products in the United States.\nBipartisan leadership of the Senate Banking Committee announced a similar objective.\n\nGiven the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that they could have\na material adverse effect on our business, prospects or operations.\n\nOur interactions with a blockchain may expose us to specially designated nationals (\"SDN\u201d) or blocked persons and new legislation or regulation\ncould adversely impact our business or the market for cryptocurrencies.\n\nThe Office of Financial Assets Control (\"OFAC\u201d) of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct\nbusiness with persons named on its SDN list. However, because of the pseudonymous nature of blockchain transactions we may inadvertently and\nwithout our knowledge engage in transactions with persons named on OFAC\u2019s SDN list. Our Company\u2019s policy prohibits any transactions with such\nSDN individuals, and we take all commercially reasonable steps to avoid such transactions, but we may not be adequately capable of determining the\nultimate identity of the individual with whom we transact with respect to selling Bitcoin assets. Moreover, there is a risk that some bad actors will continue\nto attempt to use cryptocurrencies, including Bitcoin, as a potential means of avoiding federally imposed sanctions, such as those imposed in connection\nwith the Russian invasion of Ukraine.\n\nWe are unable to predict the nature or extent of new and proposed legislation and regulation affecting the Bitcoin industry, or the potential impact of the\nuse of Bitcoin by SDN or other blocked or sanctioned persons, which could have material adverse effects on our business and our industry more broadly.\nFurther, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any\nregulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock.\n\nBitcoin and Bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in,\nwhich could adversely affect our business prospects and operations.\n\nIt is possible that state or federal regulators may seek to impose harsh restrictions or total bans on Bitcoin mining which may make it impossible for us to\ndo business without relocating our mining operations, which could be very costly and time consuming. Further, although Bitcoin and Bitcoin mining, as\nwell as cryptocurrencies generally, are largely unregulated in most countries (including the United States), regulators could undertake new or intensify\nregulatory actions that could severely restrict the right to mine, acquire, own, hold, sell, or use cryptocurrency or to exchange it for traditional fiat\ncurrency such as the United States Dollar. Such restrictions may adversely affect us as the large-scale use of Bitcoin as a means of exchange is presently\nconfined to certain regions globally. Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our\nbusiness, prospects or operations and potentially the value of any Bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own\naccount, and thus harm investors.\n\n\n 25\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 27 of 51\n\n\nRisks Related to Ownership of Our Common Stock\n\nThe trading price of shares of our common stock has been subject to volatility.\n\nThe trading price of our common stock has been, and is likely to continue to be, volatile, and may be influenced by various factors including the risks,\nuncertainties and factors described in this Annual Report and our other filings with the SEC, as well as factors beyond our control or of which we may be\nunaware. If these risks come to pass and our business and results of operation suffer as a result, the market price of our securities may decline, which\ncould have a material adverse effect on an investment in our securities.\n\nBitcoin is subject to price volatility resulting from financial instability, poor business practices, fraudulent activities of players in the market, and other\nfactors outside of our control. Such factors may cause a decline in the price of Bitcoin, which may affect the trading price of our shares of common stock.\n\nWe have issued new shares of our common stock, which has a dilutive effect.\n\nWe have, primarily, financed our strategic growth through our at-the-market (\"ATM\u201d) offerings and issuances of our common stock. Our ATM offerings\nallow us to raise capital as needed by tapping into the existing trading market for our shares by selling newly issued shares into the market depending on\nprevailing market prices. Our efforts to raise capital is for the purpose of executing on development plans and strategic growth opportunities as they\narise; however, holders of our common stock may experience dilution as a result of our sales of newly issued shares of our common stock in such ATM\nofferings.\n\nWe have a classified board of directors; therefore, only approximately one-third of the Board is up for election at each annual stockholders\u2019 meeting,\nwhich could limit stockholders\u2019 ability to influence directors\u2019 decision making.\n\nOur Bylaws provide for a classified board of directors consisting of three classes of directors serving staggered three-year terms, and each year our\nstockholders elect one class of our directors. We believe that a classified board structure facilitates continuity and stability of leadership and policy by\nhelping ensure that, at any given time, a majority of our directors have prior experience as directors of our Company and are familiar with our business and\noperations. In our view, this permits more effective long-term planning and helps create long-term value for our stockholders. The classified board\nstructure, however, could prevent a party who acquires control of a majority of our outstanding voting stock from obtaining control of our board of\ndirectors until the second annual stockholders\u2019 meeting following the date that party obtains control of a majority of our voting stock. The classified\nboard structure may discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to obtain control of us, as the\nstructure makes it more difficult for a stockholder to replace a majority of our directors.\n\nArticle X of our Bylaws, as amended, designates the courts of the State of Nevada as the sole and exclusive forum for certain types of actions and\nproceedings that may be initiated by our stockholders, and therefore may limit our stockholders\u2019 ability to choose a forum for disputes with us or our\ndirectors, officers, employees, or agents.\n\nArticle X of our Bylaws, as amended, provides that, to the fullest extent permitted by law, and unless we consent to the selection of an alternative forum,\nthe state and federal courts in and for the State of Nevada shall be the sole and exclusive forum for the resolution of certain actions and proceedings that\nmay be initiated by our stockholders, and that, by purchasing our securities, our stockholders are deemed to have notice of and consented to this forum\nselection clause. Under Article X of our Bylaws, the following claims are subject to this forum selection clause: (a) any derivative action or proceeding\nbrought on behalf of the Company; (b) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer of the\nCompany to the Company or the Company\u2019s stockholders; (c) any action or proceeding asserting a claim against the Company arising pursuant to any\nprovision of the Nevada Revised Statutes or the Company\u2019s Articles of Incorporation or Bylaws (as either might be amended from time to time); or (d) any\naction or proceeding asserting a claim against the Company governed by the internal affairs doctrine.\n\nBy its terms, the forum selection clause in our Bylaws applies to the foregoing claims to the fullest extent permitted by law, and, as such, should not be\ninterpreted as precluding our stockholders from bringing claims under the Exchange Act in the appropriate federal court with jurisdiction over such claims,\nor any other claim for which the federal courts of the United States have exclusive jurisdiction.\n\nWe believe the choice-of-forum provision in our Bylaws will help provide for the orderly, efficient, and cost-effective resolution of legal issues affecting\nus by designating courts located in the State of Nevada as the exclusive forum for cases involving such issues. However, this provision may limit a\nstockholder\u2019s ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers, employees, or agents,\nwhich may discourage such actions against us and our directors, officers, employees, and agents.\n\n\n 26\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 28 of 51\n\n\nThe Nevada revised statutes permit us to make this selection in our Bylaws. However, if a court were to find the choice-of-forum provision in our Bylaws\ninapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with\nresolving such matters in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.\n\nNevada law contains provisions that could discourage, delay or prevent a change in control of our Company, prevent attempts to replace or remove\ncurrent management and reduce the market price of our stock.\n\nCertain provisions of Nevada law described below may make us a less attractive candidate for acquisition, which may adversely impact the value of the\nshares of our capital stock held by our stockholders. We have not opted out of these provisions in our Bylaws, as permitted under the Nevada Revised\nStatutes.\n\nNevada Revised Statutes Sections 78.411 through 78.444 (the \"Nevada Combinations Statute\u201d) generally prohibit \"combinations\u201d including mergers,\nconsolidations, sales and leases of assets, issuances of securities and similar transactions by a Nevada corporation having a requisite number of\nstockholders of record (of which we are one) with any person who beneficially owns (or any affiliate or associate of the corporation who within the\nprevious two years owned), directly or indirectly, 10% or more of the voting power of the outstanding voting shares of the corporation (an \"interested\nstockholder\u201d), within two years after such person first became an interested stockholder unless (i) the board of directors of the corporation approved the\ncombination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) the\nboard of directors of the corporation has approved the combination in question and, at or after that time, such combination is approved at an annual or\nspecial meeting of the stockholders of the target corporation, and not by written consent, by the affirmative vote of holders of stock representing at least\n60% of the outstanding voting power of the target corporation not beneficially owned by the interested stockholder or the affiliates or associates of the\ninterested stockholder.\n\nTwo years after the date the person first became an interested stockholder, the Nevada Combinations Statute prohibits any combination with that\ninterested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an\ninterested stockholder before the person first became an interested stockholder or (ii) such combination is approved by a majority of the outstanding\nvoting power of the corporation not beneficially owned by the interested stockholder or any affiliate or associate of the interested stockholder. The\nNevada Combinations Statute does not apply to combinations with an interested stockholder after the expiration of four years from when the person first\nbecame an interested stockholder.\n\nBecause we do not currently intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their\nshares unless they sell them.\n\nWe currently intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash\ndividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares\nunless they sell them. There is no assurance that stockholders will be able to sell shares when desired.\n\nWe previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the\nfuture or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial\nstatements or cause us to fail to meet our periodic reporting obligations.\n\nWe are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act. Section 404 requires that we document and test our internal\ncontrol over financial reporting and issue management\u2019s assessment of our internal control over financial reporting. Management assessed the\neffectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, we used the criteria set forth by the\nCommittee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control \u2014 Integrated Framework. A material weakness is a\ndeficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material\nmisstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on our assessment, as of\nDecember 31, 2023, we concluded that our internal control over financial reporting contained no material weaknesses. However, to remediate previously\nidentified material weaknesses, our management previously implemented and continues to implement measures designed to ensure that control\ndeficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively.\n\nWe believe that these actions remediated the material weaknesses. However, the remediation cannot be deemed successful until the applicable controls\noperate for a sufficient period of time and our management has concluded, through testing, that these controls\n\n 27\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 29 of 51\n\n\nare operating effectively. If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of\nour annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information,\nwhich could have a negative effect on the trading price of our common stock. In addition, a material weakness in the effectiveness of our internal control\nover financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require\nadditional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and\nfinancial condition.\n\nITEM 1B. UNRESOLVED STAFF COMMENTS\n\nNone.\n\nITEM 1C. Cybersecurity\n\nWe recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in\nItem 106(a) of Regulation S-K. These material risks are managed across Riot, our subsidiaries, and third-party contractors, and monitoring such risks and\nthreats is integrated into our overall risk management program. Our risk management program is comprised of, among other things, policies that are\ndesigned to identify, assess, manage, and mitigate cybersecurity risk, and is based on applicable laws and regulations, informed by industry standards\nand best practices.\n\nWe conduct risk assessments to evaluate the effectiveness of our systems and processes in addressing threats and to identify opportunities for\nenhancements. Additionally, we conduct privacy and cybersecurity reviews, as well as annual employee training, and monitor emerging laws and\nregulations related to information security and data protection. We utilize third party tools and techniques to test and enhance our security controls,\nperform annual cybersecurity framework assessments, conduct ongoing penetration testing of our systems, and benchmark against industry practices.\nOur internal audit function provides independent assessment on the overall operations of our cybersecurity program and the supporting frameworks.\n\nIn support of our risk management program, we have adopted an Information Security Policy (the \"Info-Sec Policy\u201d) and an Incident Response Plan (the\n\"Response Plan\u201d) that establish administrative, physical, and technical controls and procedures to protect the integrity, confidentiality, and accessibility\nof sensitive data that may exist throughout the Company as well as processes to assess, identify, manage, and report cybersecurity risks and incidents.\nOur Info-Sec Policy applies to all persons working for the Company, as well as any third parties working with Riot in any capacity. Violation of our Info-\nSec Policy may result in revocation of access privileges, and disciplinary action up to and including termination of employment or service relations for\nthird parties.\n\nOur cybersecurity team analyzes all third-party vendors for compliance with our internal Info-Sec Policy in order to help us assess potential risks\nassociated with their security controls. We also generally require third parties to, among other things, maintain security controls to protect our\nconfidential information or data, and to notify us promptly, but in any case, no later than twenty-four (24) hours after the occurrence of any data breach or\ncybersecurity incident that may impact our data. After coordinating a response to any third-party cybersecurity incident, the incident response team\nreviews service providers\u2019 compliance with the privacy and data security requirements of our Info-Sec Policy, obtains written assurance of corrective\nactions, as appropriate, and considers whether additional measures need to be taken to protect the Company.\n\nOur cybersecurity team engages and utilizes third-party services as it monitors and actively responds to cybersecurity threats. We utilize an Endpoint\nDetection and Response (EDR) platform, an anti-virus application, through which incoming electronic communications are filtered, and an email security\nplatform which seeks out identifiers in communications that disguise, impersonate, or otherwise misrepresent the source of the communication. Any such\ncommunications are then subject to quarantine or removal depending on the severity of issue. Additionally, we use a Security Information and Event\nManagement (SIEM) system, which allows us to store logs off the system of record to prevent log tampering and provides the cybersecurity team\nfunctionality to build alerts on specific use cases that are important and unique to our business. If our applications fail or our software does not\nsuccessfully block a malicious electronic communication, employees are required to notify an immediate supervisor or the cybersecurity team promptly,\nbut in no circumstances later than twenty-four (24) hours after such occurrence.\n\nOur board of directors has ultimate oversight of our strategic and business risk management and, as such, has oversight responsibilities for risks and\nincidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on\nfinancial and other risks. Management is responsible for identifying, assessing, and managing material cybersecurity risks on an ongoing basis,\nestablishing and updating processes to ensure such potential risks are monitored, putting in place appropriate mitigation measures, and providing regular\nreports on cybersecurity trends and risks, and should they arise, any material incidents with our board of directors.\n\n\n 28\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 30 of 51\n\n\nOur Chief Financial Officer is responsible for our cybersecurity program, and our Manager of Cybersecurity is our incident response team leader. In this\nposition, our Manager of Cybersecurity oversees our cybersecurity team, and guides our incident response team, which is comprised of members from\nacross our organization, including cybersecurity, IT support, mining operations, software engineering, compliance and legal, as well as contractors and\nother partners, as they support our cybersecurity functions. Our Manager of Cybersecurity has nearly two decades of experience in cybersecurity\nmanagement and policy, achieved through job training, higher education, and military experience, and possesses a background in security and alignment\nof information technology solutions.\n\nOur Response Plan, developed by management and our cybersecurity team, and IT support team, serves as a Company-wide guide to facilitate\ncoordinated, prompt, and systematic responses to any cybersecurity incidents and utilizes four interconnecting phases: (1) Preparation; (2) Detection and\nAnalysis; (3) Containment, Eradication, and Recovery; and (4) Post-Incident Activity.\n\nUpon detection of a cybersecurity incident and initial intake and validation by our cybersecurity team, our incident response team triages and evaluates\nthe cybersecurity incident, and, depending on the severity, escalates the incident to management and a cross-functional working group. Any incident\nassessed as potentially being or potentially becoming material is immediately escalated for further assessment and reported to executive management.\nDetermination of what resources are needed to address the incident, prioritizing of response activities, forming of action plans, and notification of external\nparties as needed are then undertaken by executive management and the cross-functional working group, led by our Chief Financial Officer and Manager\nof Cybersecurity. We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our executive\nmanagement makes the final materiality and disclosure determinations, among other compliance decisions.\n\nIn 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy,\nresults of operations or financial condition. However, despite our efforts, we may not be successful in eliminating all risks from cybersecurity threats and\ncan provide no assurances that undetected cybersecurity incidents have not occurred. See Part I, Item 1A. \"Risk Factors\u201d of this Annual Report for more\ninformation regarding the cybersecurity risks we face.\n\nITEM 2. PROPERTIES\n\nLeased Property\n\nAs of December 31, 2023, we leased various corporate offices, manufacturing facilities in Denver, Colorado used for our Engineering segment, temporary\noffice space at our Corsicana Facility, which is used for our Bitcoin Mining segment, and had a long-term ground lease for the land upon which the\nRockdale Facility is constructed, which is used for our Bitcoin Mining and Data Center Hosting segments.\n\nProperty Owned\n\nAs of December 31, 2023, we owned the Rockdale Facility and the land upon which the Corsicana Facility is being constructed. We will own the Corsicana\nFacility once it is constructed.\n\nIn our opinion, our facilities, whether owned or leased, are suitable and adequate for their intended purposes, are well-maintained and generally in regular\nuse and have capacities adequate for current and projected needs. Other than the ground lease for the Rockdale Facility noted above, there are no material\nencumbrances on any of our owned facilities.\n\nITEM 3. LEGAL PROCEEDINGS\n\nFor a discussion of our legal proceedings, see Note 17. Commitments and Contingencies to our Consolidated Financial Statements.\n\nITEM 4. MINE SAFETY DISCLOSURES\n\nNot applicable.\n\n 29\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 31 of 51\n\n\n PART II\n\nITEM 5. MARKET FOR REGISTRANT\u2019S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY\nSECURITIES\n\nMarket Information\n\nOur common stock trades on the Nasdaq Capital Market under the symbol \"RIOT\u201d.\n\nHolders of our Common Stock\n\nAs of February 20, 2024, there were approximately 1,815 holders of record of our common stock. The actual number of stockholders is greater than this\nnumber of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.\n\nDividend Policy\n\nWe have historically not declared or paid cash dividends on our capital stock. Any future determination regarding the declaration and payment of\ndividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition,\noperating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.\n\n\n 30\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 32 of 51\n\n\nStock Performance Graph\n\nThis performance graph shall not be deemed \"filed\u201d for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Riot\nPlatforms, Inc. under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.\n\nThe following graph shows a comparison over a five-year period from December 31, 2018 through December 31, 2023, of the cumulative total return on (a)\nour common stock (RIOT), (b) our self-constructed Peer Group Index, (c) the RUSSELL 3000 Index (\"RUSSELL 3000\u201d), (d) the NASDAQ Composite Index\n(\"NASDAQ Composite\u201d), and (e) the RUSSELL 2000 Index (\"RUSSELL 2000\u201d), assuming an aggregate initial investment in each of $100 on December 31,\n2018 (and weighted based on the market cap of each peer in the Peer Group Index as of December 31, 2018), including reinvestments of any dividends.\nSuch returns are based on historical results and are not intended to suggest future performance. Historically, we have not declared or paid cash dividends\non our common stock.\n\nFor the year ended December 31, 2023, the Company elected to change the relative benchmark groups from NASDAQ Composite and RUSSELL 2000, to a\nself-constructed Peer Group Index, and RUSSELL 3000. Management believes that the self-constructed Peer Group Index includes companies that are\nmore aligned with Riot than NASDAQ Composite, which was previously used due to the infancy of the industry and the lack of an established peer\ngroup. Additionally, the change from RUSSELL 2000 to RUSSELL 3000 reflects the Company\u2019s decision to utilize RUSSELL 3000 to determine our stock\u2019s\nrelative performance under the Company\u2019s 2019 Equity Incentive Plan, as amended (the \"2019 Equity Incentive Plan\u201d). During the year ended December\n31, 2023, we established a peer group as disclosed in our definitive proxy statement for our 2023 annual meeting of stockholders (the \"2023 Proxy\nStatement\u201d).\n\nOur self-constructed Peer Group Index consists of the members of our peer group with available publicly traded market data as of, and subsequent to,\nDecember 31, 2018, and consists of: Marathon Digital Holdings, Inc. (MARA), Hut 8 Corp. (HUT), CleanSpark, Inc. (CLSK), HIVE Digital Technologies,\nLtd. (HIVE), Bit Digital, Inc. (BTBT), TeraWulf Inc. (WULF), and Mawson Infrastructure Group, Inc. (MIGI).\n\n\n\n\n 31\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 33 of 51\n\n\nIssuer Purchases of Securities\n\nDuring the three months ended December 31, 2023, certain of our employees surrendered shares of common stock awarded to them to satisfy statutory\nminimum federal and state tax obligations associated with the vesting of restricted stock awards issued under our 2019 Equity Incentive Plan. The\nfollowing table summarizes these repurchases:\n\n Total Number Maximum\n of Shares Number of\n Purchased as Shares that\n Total Part of May Yet Be\n Number of Average Publicly Purchased\n Shares Price Paid Announced Plans Under the Plans\nPeriod Purchased per Share (a) or Programs or Programs\nOctober 1, 2023 through October 31, 2023 2,098 $ 9.15 N/A N/A\nNovember 1, 2023 through November 30, 2023 7,034 10.68 N/A N/A\nDecember 1, 2023 through December 31, 2023 1,335 15.66 N/A N/A\nTotal 10,467 $ 11.01\n\n (a) The price paid per share is based on the closing price of our common stock as of the date of the determination of the statutory minimum for\n federal and state tax obligations.\n\nRecent Sales of Unregistered Securities\n\nOn December 1, 2021, we issued 715,413 shares of our common stock, subject to a holdback of 70,165 shares to the sellers in connection with the ESS\nMetron Acquisition. The shares of common stock in connection with the ESS Metron Acquisition were issued in reliance upon an exemption from\nregistration provided by Section 4(a)(2) of the Securities Act. Subsequently, we registered for resale the 645,248 shares issued to the sellers at the closing\nof the ESS Metron Acquisition and the 70,165 shares to the sellers upon expiration of the holdback period during 2023.\n\nOn May 26, 2021, at the closing of the Whinstone Acquisition, we issued 11.8 million shares of our common stock to Northern Data in exchange for all of\nthe issued and outstanding equity interests of Whinstone US, Inc. (\"Whinstone\u201d). These shares were issued in reliance upon an exemption from\nregistration provided by Section 4(a)(2) of the Securities Act. Subsequently, we registered the shares issued to Northern Data for resale pursuant to\nregistration rights granted under the shareholders\u2019 agreement we entered into with Northern Data in connection with closing of the Whinstone\nAcquisition.\n\nITEM 6. [RESERVED]\n\nNot applicable.\n\nITEM 7. MANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS\n\nThe following Management\u2019s Discussion and Analysis of Financial Condition and Results of Operations (\"MD&A\u201d) provides information that will assist\nthe reader in understanding our results of operations and financial condition. This MD&A should be read in conjunction with our Consolidated Financial\nStatements and the related notes that are included in Part II, Item 8. \"Financial Statements and Supplementary Data\u201d of this Annual Report.\n\nThis MD&A generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year\ncomparisons between 2022 and 2021 are not included, and can be found in \"Management\u2019s Discussion and Analysis of Financial Condition and Results\nof Operations\u201d in Part II, Item 7 of the Company\u2019s Annual Report on Form 10-K for the year ended December 31, 2022.\n\nForward Looking Statements\n\nThis MD&A includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives,\nexpectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as\na result of a number of factors. See \"Cautionary Note Regarding Forward-Looking Statements.\u201d\n\n\n 32\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 34 of 51\n\n\nBusiness Overview and 2023 Highlights\n\nWe are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin\nblockchain. We also provide comprehensive and critical mining infrastructure for institutional-scale hosted clients to mine Bitcoin at our Rockdale Facility.\nThe Rockdale Facility currently provides 700 MW in total developed capacity for our Bitcoin mining and data center hosting services for institutional-\nscale hosted clients. Our Rockdale Facility is believed to be the largest Bitcoin mining facility in North America, as measured by developed capacity.\nAdditionally, we are developing the Corsicana Facility, a second large-scale Bitcoin mining data center facility, which, upon completion, is expected to\nhave approximately one gigawatt of capacity available for our own Bitcoin mining and data center hosting services for institutional-scale hosted clients.\nDuring 2023, Riot continued to expand on our growth-focused corporate strategy by capitalizing on our positioning within the market, and appropriately\nallocating resources to continue to expand and develop in a volatile market.\n\nWe operate in an environment which frequently evolves based on the proliferation of Bitcoin and cryptocurrencies in general. A significant component of\nour strategy is to effectively and efficiently allocate capital between opportunities that generate the highest return on our investment.\n\nBitcoin Mining\n\nWe own and operate one of the largest Bitcoin Mining operations in North America. During the year ended December 31, 2023, we continued to deploy\nminers at our Rockdale Facility and continued development activities at the Corsicana Facility, with the objective of increasing our operational efficiency\nand performance in the future.\n\nAs of December 31, 2023, our Bitcoin Mining business segment operated 112,944 miners, with a hash rate capacity of 12.4 EH/s.\n\nDuring the year ended December 31, 2023, we mined 6,626 Bitcoin, which represented an increase of 19.3% over the 5,554 Bitcoin we mined in the year\nended December 31, 2022. We anticipate achieving a total self-mining hash rate capacity of 28 EH/s by the end of 2024.\n\nDuring the year ended December 31, 2023, we entered into the Master Agreement to acquire 99,840 miners from MicroBT (consisting of 8,320 M56S+\nmodel miners, 22,684 M56S++ model miners, 20,778 M66 model miners, and 48,058 M66S model miners), primarily for use at the Corsicana Facility, for a\ntotal purchase price of approximately $453.4 million. Delivery of the miners began in the fourth quarter of 2023, with all miners expected to be received and\ndeployed by mid-2025. Upon full deployment of the 99,840 miners, we anticipate a total self-mining hash rate capacity of 38 EH/s. The Master Agreement\nalso provides us with an option to purchase up to an additional 265,000 additional miners, on the same terms as the initial order.\n\nFor the year ended December 31, 2023, Bitcoin Mining revenue was approximately $189.0 million.\n\nData Center Hosting\n\nFollowing our acquisition of Whinstone, we commenced an expansion of our Rockdale Facility to more than double its developed capacity at the time of\nacquisition and, as of December 31, 2023, this expansion had been completed.\n\nThe expansion of our Rockdale Facility has provided capacity to enable us to deploy our current fleet of miners in a self-hosted facility, while allowing us\nto continue offering our Data Center Hosting services. We believe deploying our miners at the expanded Rockdale Facility offers many advantages for our\nBitcoin Mining operations, including allowing us to operate our miners without incurring third-party colocation services fees and to do so at the low fixed\nenergy costs available to the Rockdale Facility under its long-term PPA.\n\nData Center Hosting revenue includes upfront payments, which we record as deferred revenue and generally recognize as services are provided. We\nprovide energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at our Rockdale\nFacility under long-term contracts. We account for these agreements as a single performance obligation for services being delivered in a series with\ndelivery being measured by daily successful operation of the mining hardware. As such, we recognize revenue over the life of the contract as its series of\nperformance obligations are met. The contracts are recognized in the amount for which we have the right to invoice because we elected the \"right to\ninvoice\u201d practical expedient.\n\nFor the year ended December 31, 2023, Data Center Hosting revenue was approximately $27.3 million.\n\n\n 33\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 35 of 51\n\n\nEngineering\n\nOur Engineering business segment designs and manufacturers power distribution equipment and custom engineered electrical products that provide us\nwith the ability to vertically integrate many of the critical electrical components and engineering services necessary for our Corsicana Facility\ndevelopment and Rockdale Facility expansions and to reduce our execution and counter-party risk in ongoing and future expansion projects. Engineering\nand other specialized talent employed in our Engineering business segment also allows us to continue to explore new methods to optimize and develop a\nbest-in-class Bitcoin Mining operation and has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin mining hardware.\n\nOur Engineering business segment also provides electricity distribution product design, manufacturing, and installation services primarily focused on\nlarge-scale commercial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power\ngeneration, utility, water, industrial, and alternative energy. Products are custom built to client and industry specifications.\n\nEngineering revenue is derived from the sale of custom products built to customers\u2019 specifications under fixed-price contracts with one identified\nperformance obligation. Engineering revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which\nwe have an enforceable right to receive compensation as defined under the contract.\n\nFor the year ended December 31, 2023, Engineering revenue was approximately $64.3 million.\n\nIndustry Trends\n\nDuring 2022 and 2023, we observed several companies in the Bitcoin ecosystem experience significant challenges and initiate bankruptcy proceedings due\nto the significant volatility in the price of Bitcoin, the increase in interest rates, the volatility in the spot price of power, and other national and global\nmacroeconomic factors. We anticipate this trend will likely continue as companies attempt to shift their business models to operate on significantly\ncompressed margins. Further affecting the margins of the companies within the Bitcoin ecosystem, the Bitcoin reward for solving a block is subject to\nperiodic incremental halving, which is next anticipated to occur in April 2024. The network halving is a preprogrammed, fixed process of the Bitcoin\nnetwork where the Bitcoin reward for solving a block received by miners is reduced by half approximately every four years. The network halving will\ncontinue to occur on this schedule until the amount of Bitcoin in existence reaches the cap of 21.0 million. The network halving is a process designed to\nimplement a periodic decreasing schedule of the issuance of new Bitcoin into the market which results in a predictable and controlled inflationary rate.\n\nThe dramatic increase in the price of Bitcoin observed in the market during prior years caused many companies to over-leverage themselves, thus\noperating in potentially unsustainable ways given the recent variability in the price of Bitcoin. Riot chose to refrain from engaging in any significant debt-\nfinancing activities during this period and, as a result, has not been subject to the significant debt-service shortfalls some of our competitors are\nexperiencing. Despite such challenges in the ecosystem, Riot continues to focus on building long-term stockholder value by taking strategic action to\nvertically integrate our business, utilizing the Rockdale Facility and developing the Corsicana Facility. Management believes this focus will positively\naffect each of Riot\u2019s three business segments by providing more capacity for our Bitcoin Mining and Data Center Hosting operations, and by capitalizing\non supply chain efficiencies garnered through our Engineering segment. As we grow our business, we continue to focus on deploying our efficient\nBitcoin mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining and Data Center Hosting facilities.\n\nWe anticipate companies in our industry will continue to experience challenges, and that 2024 will be a period of consolidation in the Bitcoin mining\nindustry. Further, given our relative position, liquidity, and absence of any significant long-term debt, we believe we are well positioned to benefit from\nsuch consolidation. We are continuously evaluating strategic opportunities which we may decide to undertake as part of our strategic growth initiatives;\nhowever, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on the schedule or within the budget\nwe anticipate, if at all, in our competitive and evolving industry, and our business and financial results may change significantly as a result of such\nstrategic growth.\n\nThe recent shutdowns of certain digital asset exchanges and trading platforms due to fraud or business failure has negatively impacted confidence in the\ndigital asset industry as a whole and led to increased oversight and scrutiny of the industry. We did not have any exposure to any digital asset lenders or\nexchanges who have declared bankruptcy or have suspended operations. We only hold and sell Bitcoin that we have mined and do not sell, hold, or\nredeem any Bitcoin for any other parties. Our Bitcoin is held in cold storage wallets by a well-known U.S.-based third-party digital asset-focused\ncustodian. We also sell our Bitcoin using our custodian\u2019s U.S. brokerage services.\n\n\n 34\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 36 of 51\n\n\nIn 2023, the banking industry and financial services sector experienced disruptions and instability. In March 2023, Silvergate Capital Corporation, the\nholding company for Silvergate Bank, which was primarily focused on the digital asset industry, announced its intent to wind down operations and\nvoluntarily liquidate its holdings. Also in March 2023, Silicon Valley Bank and Signature Bank both closed and the FDIC was appointed receiver following\ntheir closures and transferred substantially all assets of the former banks to newly created, FDIC-operated bridge banks in an action to protect all\ndepositors of the banks. In May 2023, First Republic Bank was closed, and the FDIC sold substantially all of First Republic Bank\u2019s assets to JP Morgan\nChase & Co.\n\nAlthough we maintained certain operating accounts with Signature Bank prior to its closure, we have since transferred all our deposits previously held\nwith the bank to other banking institutions. We did not lose access to our accounts or experience interruptions in banking services, and we suffered no\nlosses with respect to our deposits at Signature Bank as a result of the bank\u2019s closure. We did not have any banking relationships with Silicon Valley\nBank, Silvergate Bank, or First Republic Bank, and currently hold our cash and cash equivalents at multiple banking institutions. Although we did not\nsuffer any losses, we continue to monitor for updates to mitigate any future impacts we may be subject to as a result of instability of the banking industry\nand financial services sector.\n\nSee Part I, Item 1A. \"Risk Factors\u201d of this Annual Report for additional discussion regarding potential impacts our competitive and evolving industry may\nhave on our business.\n\nGlobal Logistics\n\nGlobal supply logistics have caused delays across all channels of distribution. Similarly, we have also experienced delays in certain of our miner delivery\nschedules and in our infrastructure development schedules due to constraints on the globalized supply chains for miners, electricity distribution\nequipment and construction materials. Through the date of this Annual Report, we have been able to effectively and efficiently mitigate delivery delays to\navoid materially impacting our miner deployment schedule, however, we cannot guarantee that we will be able to continue to mitigate any such delivery\ndelays in the future.\n\nAdditionally, the development of our new Corsicana Facility requires large quantities of construction materials, specialized electricity distribution\nequipment and other component parts that can be difficult to source. We have procured and already hold many of the required materials to help navigate\nchallenges related to global supply logistics and mitigate any inflationary pricing concerns that may come from global supply delays.\n\nWe continue to monitor developments in the global supply chain and assess their potential impact on our expansion plans.\n\n\n 35\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 37 of 51\n\n\nSummary of Bitcoin Mining Results\n\nThe following table presents additional information about our Bitcoin Mining activities, including Bitcoin production and sales of the Bitcoin mined:\n\n Quantity Amounts\nBalance as of January 1, 2021 1,078 $ 10,186\n Revenue recognized from Bitcoin mined 3,812 184,422\n Exchange of Bitcoin for employee compensation (6) (295)\n Realized gain on sale/exchange of Bitcoin \u2014 253\n Impairment of Bitcoin \u2014 (43,973)\nBalance as of December 31, 2021 4,884 150,593\n Revenue recognized from Bitcoin mined 5,554 156,870\n Proceeds from sale of Bitcoin (3,425) (79,529)\n Exchange of Bitcoin for employee compensation (39) (1,495)\n Realized gain on sale/exchange of Bitcoin \u2014 30,346\n Impairment of Bitcoin \u2014 (147,365)\nBalance as of December 31, 2022 6,974 109,420\n Cumulative effect upon adoption of ASU 2023-08 \u2014 5,994\n Revenue recognized from Bitcoin mined 6,626 188,996\n Bitcoin receivable (21) (878)\n Proceeds from sale of Bitcoin (6,185) (176,219)\n Exchange of Bitcoin for employee compensation (32) (869)\n Change in fair value of Bitcoin \u2014 184,734\nBalance as of December 31, 2023 7,362 $ 311,178\n\nResults of Operations Comparative Results for the Years Ended December 31, 2023 and 2022\n\nRevenue\n\nTotal revenue for the years ended December 31, 2023 and 2022, was $280.7 million and $259.2 million, respectively, and consisted of our Bitcoin Mining\nrevenue, Data Center Hosting revenue, Engineering revenue, and other revenue.\n\nFor the years ended December 31, 2023 and 2022, Bitcoin Mining revenue was $189.0 million and $156.9 million, respectively. The increase of $32.1 million\nwas primarily due to a 19.3% increase in the number of Bitcoin mined in the 2023 period as compared to the 2022 period as a result of an increase in miners\ndeployed, partially offset by an increase in the Bitcoin network difficulty. Additionally, we continued employing our power strategy to significantly\nreduce overall power costs. As described below, during the years ended December 31, 2023 and 2022, we earned $71.2 million and $27.3 million,\nrespectively, in power credits, which were recognized as offsets to our operating expenses, but equated to approximately 2,497 Bitcoin and 968 Bitcoin,\nrespectively, as computed using the average daily Bitcoin prices for the applicable period.\n\nFor the years ended December 31, 2023 and 2022, Data Center Hosting revenue was $27.3 million and $36.9 million, respectively. The decrease of $9.6\nmillion was primarily due to hosting fewer customers during the 2023 period as we continue to address legacy contracts. For information regarding\nmeasures we have taken to address legacy contracts, see the discussion under \"Legacy Hosting Customer Disputes\u201d in Note 17. Commitments and\nContingencies to our Consolidated Financial Statements.\n\nFor the years ended December 31, 2023 and 2022, Engineering revenue was $64.3 million and $65.3 million, respectively. The decrease of $1.0 million was\nprimarily attributable to supply chain constraints resulting in decreased receipts of materials, delaying the completion of certain custom products, and\ntherefore, the recognition of revenue. Our custom electrical products such as switchgear and power distribution centers are used as important\ncomponents in data center development and in power generation and distribution facilities, and there has been increased demand for these products due\nto the continued increase in data center construction by developers, as well as the continually increasing worldwide demand for power.\n\nCosts and expenses\n\nCost of revenue for Bitcoin Mining for the years ended December 31, 2023 and 2022 was $96.6 million and $74.3 million, respectively, representing an\nincrease of approximately $22.3 million. As a percentage of Bitcoin Mining revenue, cost of revenue totaled 51.1% and 47.4% for each of the years ended\nDecember 31, 2023 and 2022, respectively. Bitcoin Mining cost of revenue\n\n 36\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 38 of 51\n\n\nconsists primarily of direct production costs of mining operations, including electricity, labor, insurance and, for a portion of 2022, the variable Coinmint\nhosting fee, but excluding depreciation and amortization, which are separately stated. The increase was primarily due to the increase in mining capacity at\nthe Rockdale Facility, which requires more headcount and direct costs necessary to maintain and support the mining operations. During the years ended\nDecember 31, 2023 and 2022, we earned $71.2 million and $27.3 million, respectively, in power credits, to be credited against our power invoices, as a result\nof temporarily pausing our operations. These credits are recognized in power curtailment credits in the statements of operations, outside of cost of\nrevenue, but significantly reduce our overall cost to mine Bitcoin. When reducing the cost of revenue for Bitcoin Mining by the power curtailment credits\nallocated to Bitcoin Mining, the non-GAAP Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, as a percentage of\nrevenue was 73.6% and 60.3% for the years ended December 31, 2023 and 2022, respectively, compared with Bitcoin Mining revenue in excess of cost of\nrevenue, as a percentage of revenue of 48.9% and 52.6% (without reducing the cost of revenue for Bitcoin Mining by the power curtailment credits\nallocated to Bitcoin Mining) for the years ended December 31, 2023 and 2022, respectively. For a reconciliation of Bitcoin Mining revenue in excess of cost\nof revenue to Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, see the subheading below titled \"Non-GAAP\nMeasures\u201d.\n\nCost of revenue for Data Center Hosting for the years ended December 31, 2023 and 2022 was $97.1 million and $61.9 million, respectively, an increase of\napproximately $35.2 million. The costs consisted primarily of direct power costs, with the balance primarily incurred for rent and compensation costs. The\nincrease was primarily attributable to the significant increase in size of our Rockdale Facility over the period, which has more than doubled since 2021.\n\nCost of revenue for Engineering for the years ended December 31, 2023 and 2022 was $60.6 million and $57.5 million, respectively. The costs consisted\nprimarily of direct materials and labor, as well as indirect manufacturing costs. The increase was primarily due to increased cost of labor and materials,\npartially offset by decreased receipts of materials resulting from increased competition for direct materials due to supply chain constraints.\n\nSelling, general and administrative expenses during the years ended December 31, 2023 and 2022 totaled $100.3 million and $67.5 million, respectively.\nSelling, general and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs. The\nincrease of $32.9 million was primarily attributable to an increase in compensation expense, which increased by $12.2 million as a result of hiring additional\nemployees to support our ongoing growth, increased stock-based compensation of $7.6 million due to the adoption of the long-term incentive plan and\nadditional headcount, increased legal and professional fees of $8.1 million primarily related to ongoing litigation and public company compliance, and an\nincrease of $5.0 million in other general operating costs such as insurance and information technology projects to support our growth.\n\nDepreciation and amortization expense during the years ended December 31, 2023 and 2022 totaled $252.4 million and $108.0 million, respectively. The\nincrease of $144.4 million was primarily due to higher depreciation expense recognized for the Rockdale Facility and the significant increase in the number\nof recently acquired and deployed miners.\n\nChange in fair value of Bitcoin for the year ended December 31, 2023, was a gain of $184.7 million, and was recognized as a result of adopting Accounting\nStandards Update (\"ASU\u201d) No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto\nAssets (\"ASU 2023-08\u201d), effective January 1, 2023, under which Bitcoin is recognized at fair value with changes in fair value recognized in net income. The\ngain recognized was attributable to increases in the price of Bitcoin and the increased quantity of Bitcoin held as of December 31, 2023, as compared to\nDecember 31, 2022.\n\nChanges in fair value of our derivative asset for the years ended December 31, 2023 and 2022 were gains of $6.7 million and $71.4 million, respectively, and\nwere recorded to adjust the fair value of our PPA, which was classified as a derivative asset and measured at fair value. The changes in fair value were due\nto changes in future power prices over the applicable period.\n\nPower curtailment credits during the years ended December 31, 2023 and 2022 were $71.2 million and $27.3 million, respectively, and represent sales of\nunused power under our PPA and participation in ancillary services under ERCOT Demand Response Services Programs. The amount of these credits\nvaries from period to period depending on various factors impacting the supply of power to, and the demand for power on, the ERCOT power grid, such\nas weather and global fuel costs.\n\nRealized gains on sale/exchange of Bitcoin for the years ended December 31, 2023 and 2022 were zero and $30.3 million, respectively, and impairment of\nBitcoin was zero and $147.4 million, respectively. As a result of adopting ASU 2023-08 effective January 1, 2023, under which Bitcoin is recognized at fair\nvalue, gains on the sale/exchange of Bitcoin and impairment of Bitcoin are no longer recognized.\n\nCasualty-related (charges) recoveries, net during the years ended December 31, 2023 and 2022 were $6.0 million and ($9.7) million, respectively. In\nDecember 2022, the Rockdale Facility was damaged during severe winter storms in Texas, resulting in casualty-\n\n 37\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 39 of 51\n\n\nrelated charges being recognized in 2023 and 2022. The income recognized during the year ended December 31, 2023, was the result of cash recoveries\nfrom insurance claims related to the December 2022 winter storms.\n\nGain (loss) on the sale/exchange of equipment during the years ended December 31, 2023 and 2022 was $(5.3) million and $16.3 million, respectively. The\nloss on sale during the year ended December 31, 2023 was attributable to the sale of 2,700 Antminer model S19 XP miners for gross proceeds of $6.4\nmillion. The gain on sale during the year ended December 31, 2022 was attributable to us exchanging approximately 5,700 Antminer model S19 Pro miners\npreviously deployed at the Coinmint Facility for 5,000 factory-new Antminer model S19j Pro miners.\n\nOther income (expense)\n\nFor the years ended December 31, 2023 and 2022, total other income (expense) was $8.5 million and ($8.6) million, respectively. The income recognized\nduring the year ended December 31, 2023 was primarily attributable to interest income earned as a result of higher cash balances and increased interest\nrates. The loss incurred in 2022 primarily consisted of realized losses on marketable equity securities of $9.0 million upon the sale of all of our marketable\nequity securities.\n\nIncome Taxes\n\nFor the years ended December 31, 2023 and 2022, total income tax benefit (expense) was $5.1 million and $11.7 million, respectively. The decrease in income\ntax benefit of $6.6 million was primarily attributable to the change in the contingent consideration liability.\n\nNon-GAAP Measures\n\nIn addition to financial measures presented under generally accepted accounting principles in the United States (\"GAAP\u201d), we consistently evaluate our\nuse of and calculation of non-GAAP financial measures such as \"Adjusted EBITDA.\u201d EBITDA is computed as net income before interest, taxes,\ndepreciation, and amortization. Adjusted EBITDA is a financial measure defined as EBITDA adjusted to eliminate the effects of certain non-cash and/or\nnon-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that\nrepresents a key indicator of our core business operations of Bitcoin mining. The adjustments include fair value adjustments such as derivative power\ncontract adjustments, equity securities value changes, and non-cash stock-based compensation expense, in addition to financing and legacy business\nincome and expense items.\n\nWe believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and\ncompare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. Additionally,\nAdjusted EBITDA is used as a performance metric for share-based compensation.\n\nAdjusted EBITDA is provided in addition to, and should not be considered to be a substitute for, or superior to, net income, the most comparable\nmeasure under GAAP to Adjusted EBITDA. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted\nearnings per share or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a\nmeasure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this financial measure either in isolation or\nas a substitute for analyzing our results as reported under GAAP.\n\n\n 38\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 40 of 51\n\n\nThe following table reconciles Adjusted EBITDA to Net income (loss), the most comparable GAAP financial measure:\n\n Years Ended December 31,\n 2023 2022 2021\nNet income (loss) $ (49,472) $ (509,553) $ (15,437)\n Interest (income) expense (8,222) (454) 296\n Income tax expense (benefit) (5,093) (11,749) 254\n Depreciation and amortization 252,354 107,950 26,324\nEBITDA 189,567 (413,806) 11,437\n\nAdjustments:\n Stock-based compensation expense 32,170 24,555 68,491\n Acquisition-related costs \u2014 78 21,198\n Change in fair value of derivative asset (6,721) (71,418) (12,112)\n Change in fair value of contingent consideration \u2014 (159) 975\n Realized gain on sale/exchange of long-term investment \u2014 \u2014 (26,260)\n Realized loss on sale of marketable equity securities \u2014 8,996 \u2014\n Unrealized (gain) loss on marketable equity securities \u2014 \u2014 13,655\n Loss (gain) on sale/exchange of equipment 5,336 (16,281) \u2014\n Casualty-related charges (recoveries), net (5,974) 9,688 \u2014\n Impairment of goodwill \u2014 335,648 \u2014\n Impairment of miners \u2014 55,544 \u2014\n Other (income) expense (260) 59 (2,378)\n License fees (97) (97) (97)\nAdjusted EBITDA $ 214,021 $ (67,193) $ 74,909\n\nIn addition to Adjusted EBITDA, we believe \"Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits\u201d, \"Data Center\nHosting revenue in excess of cost of revenue, net of power curtailment credits\u201d, \"Cost of revenue \u2013 Bitcoin Mining, net of power curtailment credits\u201d and\n\"Cost of revenue \u2013 Data Center Hosting, net of power curtailment credits\u201d are additional non-GAAP performance metrics that represent a key indicator of\nour core business operations of both Bitcoin Mining and Data Center Hosting.\n\nWe believe our ability to offer power back to the grid at market-driven spot prices, thereby reducing our operating costs, is integral to our overall strategy,\nspecifically our power management strategy and our commitment to supporting the ERCOT power grid. While participation in various grid demand\nresponse programs may impact our Bitcoin production, we view this as an important part of our partnership-driven approach with ERCOT and our\ncommitment to being a good corporate citizen in our communities.\n\nWe also believe netting the power sales against our costs can be an important financial measure because it allows management, investors, and our board\nof directors to evaluate and compare our operating results, including our operating efficiencies, from period-to-period by making such adjustments. We\nhave allocated the benefit of the power sales to our Bitcoin Mining and Data Center Hosting segments based on their proportional power consumption\nduring the periods presented.\n\nBitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, Data Center Hosting revenue in excess of cost of revenue, net of\npower curtailment credits, Cost of revenue \u2013 Bitcoin Mining, net of power curtailment credits and Cost of revenue \u2013 Data Center Hosting, net of power\ncurtailment credits are provided in addition to and should not be considered to be a substitute for, or superior to Revenue \u2013 Bitcoin Mining, Revenue \u2013\nData Center Hosting, Cost of revenue \u2013 Bitcoin Mining or Cost of revenue \u2013 Data Center Hosting as presented in our Consolidated Statements of\nOperations.\n\n 39\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 41 of 51\n\n\nThe following table presents reconciliations of these non-GAAP performance metrics to the most comparable GAAP financial measures:\n\n Years Ended December 31,\n 2023 2022 2021\nBitcoin Mining\nRevenue (A) $ 188,996 $ 156,870 $ 184,422\nCost of revenue 96,597 74,335 45,513\nBitcoin Mining revenue in excess of cost of revenue (B) 92,399 82,535 138,909\n\nPower curtailment credits allocated to Bitcoin Mining 46,646 11,991 \u2014\nBitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits (C) $ 139,045 $ 94,526 $ 138,909\n\nBitcoin Mining revenue in excess of cost of revenue, as a percentage of revenue (B/A) 48.9% 52.6% 75.3%\nBitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, as a\npercentage of revenue (C/A) 73.6% 60.3% 75.3%\n\nData Center Hosting\nRevenue (A) $ 27,282 $ 36,862 $ 24,546\nCost of revenue 97,122 61,906 32,998\nData Center Hosting revenue in excess of cost of revenue (B) (69,840) (25,044) (8,452)\n\nPower curtailment credits allocated to Data Center Hosting 24,569 15,354 6,514\nData Center Hosting revenue in excess of cost of revenue, net of power curtailment credits (C) $ (45,271) $ (9,690) $ (1,938)\n\nData Center Hosting revenue in excess of cost of revenue, as a percentage of revenue (B/A) (256.0)% (67.9)% (34.4)%\nData Center Hosting revenue in excess of cost of revenue, net of power curtailment credits, as a\npercentage of revenue (C/A) (165.9)% (26.3)% (7.9)%\n\nAllocation of Power Curtailment Credits\nConsolidated power curtailment credits 71,215 27,345 6,514\nPercentage of consolidated power curtailment credits allocated to Bitcoin Mining 65.5% 43.9% 0.0%\nPercentage of consolidated power curtailment credits allocated to Data Center Hosting 34.5% 56.1% 100.0%\n\nLIQUIDITY AND CAPITAL RESOURCES\n\nAs of December 31, 2023, we had net working capital of approximately $887.6 million, including cash and cash equivalents of $597.2 million. We reported a\nnet loss of $49.5 million during the year ended December 31, 2023. The net loss included $91.7 million in non-cash income items, primarily consisting of\n$189.0 million of Bitcoin revenue and $184.7 million in Change in fair value of Bitcoin, partially offset by depreciation and amortization of $252.4 million.\n\nDuring the year ended December 31, 2023, we sold 6,185 Bitcoin for proceeds of approximately $176.2 million. We monitor our balance sheet on an\nongoing basis and evaluate the level of Bitcoin retained from monthly production in consideration of our cash requirements for ongoing operations and\nexpansion.\n\nContractual Commitments (Miners and Mining Equipment)\n\nDuring the year ended December 31, 2023, the Company paid $191.1 million in deposits and payments to MicroBT for the purchase of miners described\nherein. The remaining commitment of approximately $270.4 million is due in installments through approximately April 2025 based on the estimated miner\ndelivery schedule. Total payments of $220.0 million and $50.4 million are expected to be made in 2024 and 2025, respectively.\n\n 40\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 42 of 51\n\n\nDuring the year ended December 31, 2023, the Company paid $31.2 million in deposits and payments to Midas Green Technologies, LLC (d/b/a Midas\nImmersion Cooling) (\"Midas\u201d) for the purchase of immersion cooling systems described herein. The remaining commitment of approximately $21.1 million\nis due in installments in early 2024, based on the estimated delivery schedule.\nDevelopment of the Corsicana Facility Data Center\n\nDuring the year ended December 31, 2022, we announced the initiation of a large-scale development to expand our Bitcoin mining and data center hosting\ncapabilities in Navarro County, Texas with the acquisition of a 265-acre site where the anticipated one-gigawatt Corsicana Facility is being constructed.\nWe received approval from ERCOT for the entire one-gigawatt capacity. The initial phase of the development of the Corsicana Facility involves the\nconstruction on the 265-acre site of 400 MW of immersion-cooled Bitcoin mining and data center hosting infrastructure spread across multiple buildings,\nas well as a high-voltage power substation and transmission facilities to supply power to the facility. Construction of the substation and the data centers\nis expected to be carried out concurrently, with self-mining operations expected to commence by the end of the first quarter of 2024, following the\ncommissioning of the substation.\n\nThis first phase of the development of the Corsicana Facility includes land acquisition, site preparation, substation development, and transmission\nconstruction, along with construction of ancillary buildings and four buildings utilizing our immersion-cooling infrastructure and technology. We estimate\nthat the total cost of the first phase of the development will be approximately $333.0 million, which is scheduled to be invested through mid-2024. Through\nDecember 31, 2023, we had incurred costs of approximately $217.8 million related to the development of the Corsicana Facility, which consisted of $10.1\nmillion for land, $203.0 million of initial developments costs and equipment and a $4.7 million deposit for future power usage. We expect to incur costs of\napproximately $115.2 million during the first half of 2024.\n\nRevenue from Operations\n\nBitcoin Mining\n\nFunding our operations on a go-forward basis will rely significantly on our ability to mine Bitcoin at a price above our Bitcoin Mining costs and revenue\ngenerated from our Engineering customers. We expect to generate ongoing revenue from Bitcoin rewards in connection with our Bitcoin Mining\noperations and our ability to liquidate Bitcoin rewards at future values will be regularly evaluated to generate cash for operations.\n\nGenerating Bitcoin rewards, for example, which exceed our production and overhead costs will determine our ability to report profit margins related to such\nmining operations, although accounting for our reported profitability is significantly complex. Furthermore, regardless of our ability to generate proceeds\nfrom the sale of our Bitcoin produced from our Bitcoin Mining business, we may need to raise additional capital in the form of equity or debt to fund our\noperations and pursue our business strategy.\n\nThe ability to raise funds through the sale of equity, debt financings, or the sale of Bitcoin to maintain our operations is subject to many risks and\nuncertainties and, even if we were successful, future equity issuances or convertible debt offerings could result in dilution to our existing stockholders\nand any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize\nrevenue through Bitcoin production and successfully convert Bitcoin into cash or fund overhead with Bitcoin is subject to a number of risks, including\nregulatory, financial and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the\nmarket price of Bitcoin and, as such, future prices cannot be predicted. See the discussion of risks affecting our business under Part I, Item 1A. \"Risk\nFactors\u201d of this Annual Report.\n\nData Center Hosting\n\nIn general, we provide power for our data center customers on a variable (sub-metered) basis. A customer pays us variable monthly fees for the specific\namount of power utilized at rates specified in each contract, subject to certain minimums. We recognize variable power revenue each month as the\nuncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer\nsimultaneously receives and consumes the benefits of our performance).\n\nWe generate engineering and construction services revenue from the fabrication and deployment of immersion cooling technology for Bitcoin mining\ncustomers, for which we bill the customer at a fixed monthly fee or at an hourly rate. For the construction of customer-owned equipment, revenue is\nrecognized upon completion of each phase of the construction project, as defined in each contract. For the construction of assets owned by us but paid\nfor and used by the customer during the term of their data center hosting contract, revenue is recognized on a straight-line basis over the remaining life of\nthe contract.\n\n\n 41\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 43 of 51\n\n\nMaintenance services include cleaning, cabling, and other services to maintain the customers\u2019 equipment. We bill the customer at a fixed monthly fee or at\nan hourly rate. Revenue is recognized as these services are provided.\n\nEngineering\n\nSubstantially all engineering revenue is derived from the sale of custom products built to customers\u2019 specifications under fixed-price contracts. Revenue\nis recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive\ncompensation as defined under the contract. The length of time required to complete a custom product varies but is typically between four to 12 weeks.\n\nCustomers are typically required to make periodic progress payments based on contractually agreed-upon milestones.\n\nIf we are unable to generate sufficient revenue from our Bitcoin Mining, Data Center Hosting, or Engineering operations when needed or secure additional\nsources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.\n\nATM Equity Offerings\n\n2023 ATM Offering\n\nIn August 2023, we entered into the 2023 ATM sales agreement under which we could offer and sell up to $750.0 million in shares of our common stock.\n\nDuring the year ended December 31, 2023, we received net proceeds of approximately $571.6 million ($583.3 million of gross proceeds, net of $11.7 million\nin commissions and expenses) from the sale of 45,758,400 shares of our common stock at a weighted average fair value of $13.07 per share under the 2023\nATM Offering.\n\n2022 ATM Offering\n\nIn March 2022, we entered into an ATM sales agreement under which we could offer and sell up to $500.0 million in shares of our common stock.\n\nDuring the year ended December 31, 2022, we received gross proceeds of approximately $304.8 million ($298.2 million, net of $6.6 million in commissions\nand expenses), from the sale of 37,052,612 shares of common stock at an average fair value of $8.23 per share under the 2022 ATM Offering.\n\nDuring the year ended December 31, 2023, we received net proceeds of approximately $191.2 million ($195.2 million of gross proceeds, net of $3.9 million in\ncommissions and expenses) from the sale of 16,447,645 shares of our common stock at a weighted average fair value of $11.86 per share under the 2022\nATM Offering. With the sale and issuance of these shares, all $500.0 million in shares of our common stock available for sale under the 2022 ATM\nOffering had been issued.\n\nLegal Proceedings\n\nWe have been named a defendant in several class action and other investor related lawsuits as more fully described in Note 17. Commitments and\nContingencies to our Consolidated Financial Statements. While we maintain policies of insurance, such policies may not cover all of the costs or\nexpenses associated with responding to such matters or any liability or settlement associated with any lawsuits and are subject to significant deductible\nor retention amounts.\n\nOperating Activities\n\nFor the year ended December 31, 2023, net cash provided by operating activities was $33.1 million, which primarily consisted of net cash inflows of $174.3\nmillion due to changes in operating assets and liabilities, including proceeds of $176.2 million from the sale of Bitcoin, partially offset by net income from\nnon-cash reconciling items of $91.7 million and the consolidated net loss of $49.5 million. The net income from non-cash reconciling items primarily\nconsisted of Bitcoin Mining revenue of $189.0 million and change in fair value of Bitcoin of $184.7 million, partially offset by depreciation and amortization\nof $252.4 million, which was primarily attributable to the depreciation of our miners.\n\n\n 42\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 44 of 51\n\n\nFor the year ended December 31, 2022, net cash provided by operating activities was $0.5 million, which primarily consisted of net cash inflows of $95.1\nmillion due to changes in operating assets and liabilities, including proceeds of $79.5 million from the sale of Bitcoin, and a net loss from non-cash\nreconciling items of $415.0 million, partially offset by the consolidated net loss of $509.6 million. The net loss from non-cash reconciling items primarily\nconsisted of Impairment of goodwill of $335.6 million, impairment of Bitcoin of $147.4 million, depreciation and amortization of $108.0 million, which was\nprimarily attributable to the depreciation of our miners, and impairment of our miners of $55.5 million, partially offset by Bitcoin Mining revenue of $156.9\nmillion and the change in fair value of our derivative assets of $71.4 million.\n\nInvesting Activities\n\nFor the year ended December 31, 2023, net cash used in investing activities was $414.8 million, which primarily consisted of deposits paid on equipment of\n$230.4 million, which was primarily related to the purchase of new miners, and purchases of property and equipment of $193.7 million, which was primarily\nrelated to the development of the Corsicana Facility and the now complete expansion of the Rockdale Facility.\n\nFor the year ended December 31, 2022, net cash used in investing activities was $354.9 million, which primarily consisted of deposits paid on equipment of\n$194.9 million, which was primarily related to the purchase of new miners, and purchases of property and equipment of $148.4 million, which was primarily\nrelated to the expansion of the Rockdale Facility.\n\nFinancing Activities\n\nFor the year ended December 31, 2023, net cash provided by financing activities was $748.5 million, which primarily consisted of net proceeds from the\nissuance of our common stock in connection with our ATM offerings of $761.8 million, partially offset by the repurchase of shares of common stock\nwithheld to satisfy employee withholding taxes of $14.0 million in connection with the settlement of vested equity awards granted under the 2019 Equity\nIncentive Plan.\n\nFor the year ended December 31, 2022, net cash provided by financing activities was $272.3 million, which primarily consisted of net proceeds from the\nissuance of our common stock in connection with our ATM Offerings of $298.2 million, partially offset by payments on our contingent consideration\nliability related to the acquisition of Whinstone of $15.7 million and the repurchase of shares of common stock withheld to satisfy employee withholding\ntaxes of $10.1 million in connection with the settlement of vested equity awards granted under our 2019 Equity Incentive Plan.\n\nCritical Accounting Estimates\n\nThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect\nthe amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty.\nTherefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences\nmay be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include\nrevenue recognition, valuing the derivative asset classified under Level 3 fair value hierarchy, determining the useful lives and recoverability of long-lived\nassets, impairment analysis of fixed assets and finite-lived intangibles, stock-based compensation, and the valuation allowance associated with our\ndeferred tax assets.\n\nOur financial position, results of operations and cash flows are impacted by the accounting policies we have adopted. In order to get a full understanding\nof our financial statements, one must have a clear understanding of the accounting policies employed. A summary of our critical accounting policies\nfollows:\n\nBitcoin\n\nBitcoin purchased are recorded at cost and Bitcoin awarded to us through our mining activities are accounted for in connection with our revenue\nrecognition policy.\n\nBitcoin held are accounted for as intangible assets with indefinite useful lives. Bitcoin is measured on a first-in-first-out (\"FIFO\u201d). The Company adopted\nASU 2023-08 effective January 1, 2023, which requires our Bitcoin to be valued at fair value each reporting period with changes in fair value recorded in\nnet income.\n\n\n 43\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 45 of 51\n\n\nPrior to the adoption of ASU 2023-08, Bitcoin was measured for impairment whenever indicators of impairment are identified based on the intraday low\nquoted price of Bitcoin. To the extent an impairment loss was recognized, the loss established the new cost basis of the Bitcoin. Subsequent reversal of\nimpairment losses was not permitted.\n\nBitcoin is classified on our balance sheet as a current asset due to our ability to sell it in a highly liquid marketplace and our intent to liquidate our Bitcoin\nto support operations when needed.\n\nPurchases and sales of Bitcoin by us and Bitcoin awarded to us are included within Cash flows from operating activities on the Consolidated Statements\nof Cash Flows as substantially all of our Bitcoin production is sold within days of being produced, but never more than our production on a monthly\nbasis per our internal policy. The change in fair value of Bitcoin is included in Operating income (expense) on the Consolidated Statements of\nOperations. During 2024, the Company made a strategic decision to temporarily cease the sales of all its Bitcoin production and instead, increase its\nBitcoin holdings. The Company will continue to monitor its cash needs and expects to sell Bitcoin in the future to fund its cash expenditures.\n\nImpairment of long-lived assets\n\nManagement reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may\nnot be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted\nfuture cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the\namount by which the carrying amount of the assets exceeds the fair value of the assets.\n\nRevenue recognition\n\nBitcoin Mining\n\nWe have entered into digital asset mining pools by executing contracts with mining pool operators to provide computing power to the mining pool. Our\nenforceable right to compensation begins only when, and lasts as long as, we provide computing power to the mining pool operator and is created as\npower is provided over time. The only consideration due to us relates to the provision of computing power. The contracts are terminable at any time by\nand at no cost to us, and by the pool operator under certain conditions specified in the contract. Providing computing power in digital asset transaction\nverification services is an output of our ordinary activities. Providing such computing power is the only performance obligation in our contracts with\nmining pool operators.\n\nThe transaction consideration we receive, if any, is noncash consideration in the form of Bitcoin. Changes in the fair value of the noncash consideration\ndue to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and therefore, are not included in\nrevenue. Certain mining pool operators charge fees to cover the costs of maintaining the pool and are deducted from amounts we may otherwise earn and\nare treated as a reduction to the consideration received. Fees fluctuate and historically have been no more than approximately 2% per reward earned, on\naverage. The terms of the agreements provide that neither party can dispute settlement terms after approximately thirty-five days following settlement. In\nexchange for providing computing power, we are entitled to either:\n\n \u25cf a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool\n as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the\n mining pool operator. The contract is in effect until terminated by either party.\n\n \u25cf The consideration is all variable. Because it is probable that a significant reversal of cumulative revenue will not occur and we are able\n to calculate the payout based on the contractual formula, noncash consideration is estimated and recognized based on the spot price of\n Bitcoin determined using our principal market for Bitcoin at the inception of each contract. Noncash consideration is measured at fair\n value at contract inception. Fair value of the crypto asset consideration is determined using the quoted price on our principal market for\n Bitcoin at the beginning of the contract period at the single bitcoin level (one bitcoin). This amount is recognized in revenue as hash\n rate is provided.\n\n \u25cf We transitioned completely to this mining pool type in December 2022 and utilized it for the year ended December 31, 2023.\n\nOr:\n\n\n 44\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 46 of 51\n\n\n \u25cf a fractional share of the fixed Bitcoin award the mining pool operator receives (less digital asset transaction fees to the mining pool operator\n which are immaterial and are recorded as a deduction from revenue) for successfully adding a block to the blockchain based on a proportion of\n our \"scoring hash rate\u201d to the pool\u2019s \"scoring hash rate\u201d where the scoring hash rate as defined by the pool is the exponential moving average\n of the hash power contributed by us or by all pool members combined. Our fractional share of the Bitcoin reward is based on the proportion of\n computing power we contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving\n the current algorithm.\n\n \u25cf Because the consideration to which we expect to be entitled for providing computing power is entirely variable, as well as being\n noncash consideration, we assess the estimated amount of the variable noncash consideration to which it expects to be entitled for\n providing computing power at contract inception and subsequently, to determine when and to what extent it is probable that a\n significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty associated with the variable\n consideration is subsequently resolved (the \"constraint\u201d). Only when significant revenue reversal is concluded probable of not\n occurring can estimated variable consideration be included in revenue. Based on evaluation of likelihood and magnitude of a reversal in\n applying the constraint, the estimated variable noncash consideration is constrained from inclusion in revenue until the end of the\n contract term, when the underlying uncertainties have been resolved and number of Bitcoin to which we are entitled becomes known.\n\n \u25cf Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the\n mining pool operator successfully places a block (by being the first to solve an algorithm) and we receive confirmation of the\n consideration it will receive, at which time revenue is recognized based on the spot rate of Bitcoin determined using our principal market\n for Bitcoin at the time of receipt.\n\nThere is no significant financing component in these transactions, due to the performance obligations and settlement of the transactions being on a daily\nbasis.\n\nData Center Hosting\n\nIn general, we provide power for our data center customers on a variable (sub-metered) basis. A customer pays us variable monthly fees for the specific\namount of power utilized at rates specified in each contract, subject to certain minimums. We recognize variable power revenue each month as the\nuncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer\nsimultaneously receives and consumes the benefits of our performance).\n\nWe have determined that our contracts contain a series of performance obligations which qualify to be recognized under a practical expedient available\nknown as the \"right to invoice.\u201d This determination allows variable consideration in such contracts to be allocated to and recognized in the period to\nwhich the consideration relates, which is typically the period in which it is billed, rather than requiring estimation of variable consideration at the inception\nof the contract. We have also determined that the contracts contain a significant financing component because the timing of revenue recognition differs\nfrom the timing of invoicing by a period, exceeding one year.\n\nWe generate engineering and construction services revenue from the fabrication and deployment of immersion cooling technology for Bitcoin mining\ncustomers, for which we bill the customer at a fixed monthly fee or at an hourly rate. For the construction of customer-owned equipment, revenue is\nrecognized upon completion of each phase of the construction project, as defined in each contract. For the construction of assets owned by us but paid\nfor and used by the customer during the term of their data center hosting contract, revenue is recognized on a straight-line basis over the remaining life of\nthe contract. Due to the long-term nature of the hosting contracts, there is a significant financing component in transactions where the customer paid for\nthe construction of assets we own.\n\nMaintenance services include cleaning, cabling, and other services to maintain the customers\u2019 equipment. We bill the customer at a fixed monthly fee or at\nan hourly rate. Revenue is recognized as these services are provided.\n\nDeferred revenue is primarily from advance payments received and is recognized to revenue in a manner consistent with the service being provided, as\ndescribed above.\n\nOur primary data center hosting contracts contain Service Level Agreement clauses, which guarantee a certain percentage of time the power will be\navailable to our customer. In the rare case that we may incur penalties under these clauses, we recognize the\n\n 45\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 47 of 51\n\n\npayment as variable consideration and a reduction of the transaction price and, therefore, of revenue, when not in exchange for a good or service from the\ncustomer.\n\nEngineering\n\nSubstantially all revenue is derived from the sale of custom products built to customers\u2019 specifications under fixed-price contracts with one identified\nperformance obligation. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an\nenforceable right to receive compensation as defined under the contract.\n\nTo determine the amount of revenue to recognize over time, we utilize the cost-to-cost method as management believes cost incurred best represents the\namount of work completed and remaining on projects. As the cost-to-cost method is driven by incurred cost, we calculate the percentage of completion\nby dividing costs incurred to date by the total estimated cost. The percentage of completion is then multiplied by estimated revenue to determine\ninception-to-date revenue. Approved changes to design plans are generally recognized as a cumulative adjustment to the percentage of completion\ncalculation. Revenue recognized for the period is the current inception-to-date recognized revenue less the prior period inception-to-date recognized\nrevenue. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined, and any\nadditional losses incurred subsequently are recognized in the subsequent reporting periods as they are identified. Additionally, contract costs incurred to\ndate and expected total contract costs are continuously monitored during the term of the contract.\n\nChanges in the job performance, job conditions and final contract settlements are factors that influence management\u2019s assessment of total contract value\nand the total estimated costs to complete those contracts, and therefore, profit and revenue recognition. Any costs to obtain a contract are not material to\nour financial statements and would be expensed as incurred. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible\nthat the estimates used will change within the near term. The length of time for us to complete a custom product varies but is typically between four to 12\nweeks.\n\nCustomers are typically required to make periodic progress payments to us based on contractually agreed-upon milestones. Invoices are due net, 30 days,\nand retainage, if any, is generally due 30 days after delivery. Taxes collected from customers and remitted to governmental authorities are excluded from\nrevenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.\n\nFair value of financial instruments\n\nWe recognize financial instruments under the following fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value\ninto three levels as follows:\n\n Level 1 \u2014 quoted prices (unadjusted) in active markets for identical assets or liabilities;\n\n Level 2 \u2014 observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or\n similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value\n drivers are observable; and\n\n Level 3 \u2014 assets and liabilities whose significant value drivers are unobservable.\n\nObservable inputs are based on market data obtained from independent sources, while unobservable inputs are based on our market assumptions.\nUnobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into\ndifferent levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is\nsignificant to the fair value measurement. Such determination requires significant management judgment. The carrying amounts of our financial assets and\nliabilities, such as cash and cash equivalents, and accounts payable, approximate fair value due to the short-term nature of these instruments.\n\n\n 46\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 48 of 51\n\n\nFinite-lived intangible assets\n\nIntangible assets with finite lives are comprised of customer contracts, trademarks, UL Listings, and patents that are amortized on a straight-line basis\nover their expected useful lives, which is their contractual term or estimated useful life. Patents costs consisting of filing and legal fees incurred are initially\nrecorded at cost. Certain patents are in the legal application process and therefore are not currently being amortized. We perform assessments to\ndetermine whether finite-lived classification is still appropriate at least annually. The carrying value of finite-lived assets and their remaining useful lives\nare also reviewed at least annually to determine if circumstances exist which may indicate a potential impairment or revision to the amortization period. A\nfinite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows to be derived from it.\nWe exercise judgment in selecting the assumptions used in the estimated future undiscounted cash flows analysis. Impairment is measured by the amount\nthat the carrying value exceeds fair value.\n\nThe use of different estimates or assumptions could result in significantly different fair values for our reporting units and intangible assets.\n\nOperating segments\n\nOperating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief\nOperating Decision Maker (\"CODM\u201d) in deciding how to allocate resources to an individual segment and in assessing performance. Our CODM is\ncomprised of several members of our executive management team who use revenue and cost of revenue of our three reporting segments to assess the\nperformance of the business of our reportable operating segments.\n\nStock-based compensation\n\nWe account for share-based payment awards exchanged for services at the estimated grant date fair value of the award, which is based on the fair market\nvalue of our common stock at the time of the grant. For performance-based share-based payment awards, we recognize compensation cost over the\nperformance period when achievement of the milestones and targets is probable.\n\nWe have elected to account for forfeitures of awards as they occur.\n\nRecently issued and adopted accounting pronouncements\n\nWe continually assess any new accounting pronouncements to determine their applicability. When it is determined that a new accounting\npronouncement affects our financial reporting, we undertake a review to determine the consequences of the change to our financial statements and\nbelieve that there are proper controls in place to ascertain that our financial statements properly reflect the change.\n\nSee Note 2. Significant Accounting Policies and Recent Accounting Pronouncements to our Consolidated Financial Statements for a description of\napplicable recent accounting pronouncements and any material impact on our financial statements.\n\nOff-Balance Sheet Arrangements\n\nWe do not have any off-balance sheet arrangements.\n\nITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK\n\nThe following discussion about our market risk exposures involves forward-looking statements. Actual results could differ materially from those projected\nin our forward-looking statements. For more information regarding the forward-looking statements used in this section and elsewhere in this Annual\nReport, see the \"Cautionary Note Regarding Forward-Looking Statements\u201d at the forepart of this Annual Report.\n\nRisk Regarding the Price of Bitcoin.\n\nOur business and development strategy is focused on maintaining and expanding our Bitcoin Mining operations to maximize the amount of new Bitcoin\nrewards we earn. As of December 31, 2023, we held 7,362 Bitcoin that was recognized at its fair value of $311.2 million. All Bitcoin held were produced from\nour Bitcoin Mining operations.\n\n\n 47\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 49 of 51\n\n\nWe cannot accurately predict the future market price of Bitcoin, the future value of which will affect revenue from our operations, and any future declines\nin the fair value of the Bitcoin we mine and hold for our account would be reported in our financial statements and results of operations as a charge\nagainst net income, which could have a material adverse effect on the market price for our securities.\n\nA 10% increase or decrease in both the price of Bitcoin produced during the year ended December 31, 2023 and the fair value of Bitcoin as of December\n31, 2023, would have increased or decreased net income by approximately $48.9 million.\n\nA 10% increase or decrease in future power prices at December 31, 2023, would have increased or decreased net income by approximately $43.2 million.\n\n\n\n 48\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 50 of 51\n Riot Platforms, Inc.\n Notes to Consolidated Financial Statements\n\nThe following table presents the Company\u2019s finite-lived intangible assets as of December 31, 2022:\n\n Weighted-\n Gross Accumulated Net book average life\n book value amortization value (years)\nCustomer contracts $ 6,300 $ (671) $ 5,629 10\nTrademark 5,000 (542) 4,458 10\nUL Listings 2,700 (244) 2,456 12\nPatents 10,060 (1,126) 8,934 Various\n Finite-lived intangible assets $ 24,060 $ (2,583) $ 21,477\n\nDuring the years ended December 31, 2023, 2022, and 2021, amortization expense related to finite-lived intangible assets was $5.8 million, $2.1 million, and\n$0.2 million, respectively.\n\nThe following table presents the estimated future amortization of the Company\u2019s finite-lived intangible assets as of December 31, 2023:\n\n2024 $ 5,823\n2025 1,355\n2026 1,355\n2027 1,355\n2028 1,355\nThereafter 4,455\n Total $ 15,697\n\nThe Company did not identify any impairment of its finite-lived intangible assets during the years ended December 31, 2023, 2022, and 2021.\n\nNote 9. Power Purchase Agreement\n\nIn May 2020, the Company, through its subsidiary, Whinstone, entered into the PPA to provide for the delivery of power to its Rockdale Facility, via the\nnearby Sandow Switch. Pursuant to the PPA, the Company has agreed to acquire a total of 345 MW of long-term, fixed-price power, in multiple blocks, as\nfollows: 130 MW contracted in May 2020, at fixed prices through April 30, 2030; 65 MW contracted in March 2022, at fixed prices through April 30, 2030;\nand 150 MW contracted in November 2022, at fixed prices through October 31, 2027. Additionally, under the PPA, the Company has the option to\npurchase additional power at market prices, as needed.\n\nIf electricity used exceeds the amount contracted, the cost of the excess electricity is incurred at the then-current spot rate. Concurrently with the PPA, the\nCompany entered into an interconnection agreement for the extension of delivery system transmission/substation facilities to facilitate delivery of the\nelectricity to the Rockdale Facility (the \"Facilities Agreement\u201d). Power costs incurred under the Facilities Agreement are determined every 15 minutes\nusing settlement information provided by the ERCOT and are recorded in Cost of revenue on the Consolidated Statements of Operations.\n\nIn collaboration with market participants such as the Company, ERCOT has implemented Demand Response Services Programs for customers that have\nthe ability to reduce or modify electricity use in response to ERCOT instructions or signals. These Demand Response Services Programs provide the\nERCOT market with valuable reliability and economic services by helping to preserve system reliability, enhancing competition, mitigating price spikes,\nand stabilizing the grid by encouraging the demand side of the market to give more visibility and control of their power consumption to grid operators.\nMarket participants with electrical loads like the Company may participate in these Demand Response Service Programs directly by offering their electrical\nloads into the ERCOT markets, or indirectly by voluntarily reducing their energy usage in response to increasing power demand in the ERCOT\nmarketplace.\n\nUnder these Demand Response Services Programs, the Company can participate in a variety of programs known as \"ancillary services\u201d by electing to\ndesignate a portion of its available electrical load for participation in such programs on an hourly basis. For each respective Demand Response Services\nProgram, the Company receives a cash payment based on hourly rates for power, and the amount of electrical load into which it bids. Through ancillary\nservices, the Company competitively bids amongst other market participants to sell ERCOT the ability to control Riot\u2019s electrical load on demand, and to\npower down when directed to by ERCOT,\n\n F-27\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-5 Filed 02/27/24 Page 51 of 51\n Riot Platforms, Inc.\n Notes to Consolidated Financial Statements\n\nas part of ERCOT\u2019s efforts to stabilize the grid. The Company receives compensation for its participation in ancillary services whether or not the Company\nis actually called to power down.\n\nRiot also participates in ERCOT\u2019s Four Coincident Peak (\"4CP\u201d) program, which refers to the highest-load settlement intervals in each of the four summer\nmonths (June, July, August, and September), during which time, demand for power is at its highest. 4CP participants may voluntarily power down\noperations during these times and in doing so, reduce the electrical load demand on the ERCOT grid. Participants that reduce their load in these peak\nperiods receive credits to transmission costs on future power bills during the subsequent year, reducing overall power costs. As a result of Riot\u2019s\nparticipation in 4CP in 2022, the Company\u2019s transmission charges in its 2023 monthly power bills were substantially reduced.\n\nUnder the PPA, the Company may also elect not to utilize its long-term, fixed-price power for its operations, and instead elect to sell that power in\nexchange for credits against future power costs when there is a benefit to the Company, depending on the spot market price of electricity. The Company\u2019s\npower strategy combines participation in Demand Response Services Programs and sales of power during times of peak demand, to attempt to manage\noperating costs most efficiently.\n\nDuring the years ended December 31, 2023, 2022, and 2021, the Company earned credits against future power costs in exchange for power resold of\napproximately $71.2 million, $27.3 million, and $6.5 million, respectively. These amounts are recorded in Power curtailment credits on the Consolidated\nStatements of Operations.\n\nThe Company determined the PPA meets the definition of a derivative because it allows for net settlement. However, because the Company has the ability\nto offer the power back for sale, rather than taking physical delivery, the Company determined that physical delivery is not probable through the entirety\nof the contract and therefore, the Company does not believe the normal purchases and normal sales scope exception applies to the PPA. Accordingly, the\nPPA (a non-hedging derivative contract) is accounted for as a derivative and recorded at its estimated fair value each reporting period in Derivative\nasset on the Consolidated Balance Sheets with the change in the fair value recorded in Change in fair value of derivative asset on the Consolidated\nStatements of Operations. The PPA is not designated as a hedging instrument.\n\nThe estimated fair value of the Company\u2019s Derivate asset is classified under Level 3 of the fair value hierarchy due to the significant unobservable inputs\nutilized in the valuation. Specifically, the Company\u2019s discounted cash flow estimation models contain quoted commodity exchange spot and forward\nprices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the PPA, which is scheduled to end as of April 30, 2030.\nThe significant assumptions used to estimate fair value of the derivative contract include a discount rate of 23.1%, which reflected the nature of the\ncontract as it relates to the risk and uncertainty of the estimated future mark-to-market adjustments, forward price curves of the power supply,\nbroker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors. The discount rate includes observable\nmarket inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors.\n\nThe terms of the PPA require margin-based collateral, calculated as exposure resulting from fluctuations in the market cost rate of electricity compared to\nthe fixed price stated in the contract. As of December 31, 2023, the margin-based collateral requirement of the Company was zero.\n\nWhile the Company manages operating costs at the Rockdale Facility in part by periodically selling back unused or uneconomical power, the Company\ndoes not consider such actions to be trading activities.\n\nThe following table presents changes in the estimated fair value of the Derivative asset:\n\nBalance as of December 31, 2022 $ 97,497\n Change in fair value of derivative asset 6,721\nBalance as of December 31, 2023 $ 104,218\n\n\n F-28\n\f","ocr_status":2,"date_upload":"2024-02-28T08:47:51.103611-08:00","document_number":"18","attachment_number":5,"pacer_doc_id":"181031729619","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Exhibit D to Amicus Brief (Riot 10-K)","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387380085/","id":387380085,"tags":[],"absolute_url":"/docket/68276281/18/6/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T20:07:00.530849-08:00","date_modified":"2025-01-22T17:33:57.283842-08:00","sha1":"e5a78ca737dd6e338b18b96b6a22f443a3c5c1eb","page_count":48,"file_size":364920,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.6.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.18.6.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 1 of 48\n\n\n\n\n Exhibit E\n\fTable of ContentsCase 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 2 of 48\n\n\n UNITED STATES\n SECURITIES AND EXCHANGE COMMISSION\n Washington, D.C. 20549\n FORM 10-Q\n X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n For the quarterly period ended September 30, 2023\n OR\n \u2610 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n For the transition period from: to:\n Commission file number: 001-33675\n RIOT PLATFORMS, INC.\n (Exact name of registrant as specified in its charter)\n\n Nevada XX-XXXXXXX\n (State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.)\n\n\n 3855 Ambrosia Street, Suite 301, Castle Rock, CO 80109\n (Address of principal executive offices) (Zip Code)\n Registrant\u2019s telephone number, including area code (303) 794-2000\nAct: Securities registered under Section 12(b) of the Securities Exchange Act:\n Common Stock, no par value per share RIOT The Nasdaq Capital Market\n (Title of class) (Trading Symbol) (Name of each exchange on which registered)\n\n\nIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding\n12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No \u2610\nIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (\u00a7232.405 of\nthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X No \u2610\nIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.\nSee definition of \"large accelerated filer,\u201d \"accelerated filer,\u201d \"smaller reporting company\u201d and \"emerging growth company\u201d in Rule 12b-2 of the Exchange Act.\n Large accelerated filer X Accelerated filer \u2610\n Non-accelerated filer \u2610 Smaller reporting company \u2610\n Emerging growth company \u2610\n\nIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial\naccounting standards provided pursuant to Section 13(a) of the Exchange Act. \u2610\nIndicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes \u2610 No X\nAs of November 6, 2023, the registrant had 206,515,415 shares of its common stock, no par value per share, outstanding, which was the only class of its registered securities\noutstanding as of that date.\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 3 of 48\n\n\n\n RIOT PLATFORMS, INC.\n Page\n PART I - FINANCIAL INFORMATION\n\nItem 1. Financial Statements 1\n Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 (Unaudited) 1\n Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited) 2\n Condensed Consolidated Statements of Stockholders\u2019 Equity for the Three and Nine Months Ended September 30, 2023 and 2022\n (Unaudited) 3\n Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited) 4\n Notes to Condensed Consolidated Financial Statements (Unaudited) 5\nItem 2. Management\u2019s Discussion and Analysis of Financial Condition and Results of Operations 23\nItem 3. Quantitative and Qualitative Disclosures About Market Risk 35\nItem 4. Controls and Procedures 35\n\n PART II - OTHER INFORMATION\n\nItem 1. Legal Proceedings 35\nItem 1A. Risk Factors 36\nItem 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 36\nItem 5. Other Information 36\nItem 6. Exhibits 37\nSignatures 39\n\n\n\n\n i\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 4 of 48\n\n\n\n RIOT PLATFORMS, INC.\n\nAs used in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 (this \"Quarterly Report\u201d), the terms \"we,\u201d \"us,\u201d \"our,\u201d\nthe \"Company,\u201d the \"Registrant,\u201d \"Riot Platforms,\u201d and \"Riot\u201d mean Riot Platforms, Inc., a Nevada corporation, and its consolidated subsidiaries, unless\notherwise indicated.\n\n CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS\n\nThis Quarterly Report contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (the \"PSLRA\u201d).\nThe Company may also make forward-looking statements in the other reports and documents filed with the United States Securities and Exchange\nCommission (the \"SEC\u201d), including those documents and filings incorporated herein by reference. All statements in this Quarterly Report and the\ndocuments incorporated by reference herein other than statements of historical fact are \"forward-looking statements\u201d within the scope of this cautionary\nnote, including, but not limited to, statements concerning: our plans, strategies and objectives for future operations; new equipment, systems,\ntechnologies, services or developments, such as our development and implementation of industrial-scale immersion-cooled Bitcoin mining hardware and\nour one-gigawatt data center outside of Corsicana, Texas; future economic conditions, performance, or outlooks; future political conditions; the outcome\nof contingencies; potential acquisitions or divestitures; the number and value of Bitcoin rewards and transaction fees we earn from our Bitcoin mining\noperations; expected cash flows or capital expenditures; our beliefs or expectations; activities, events or developments that we intend, expect, project,\nbelieve, or anticipate will or may occur in the future; and assumptions underlying or based upon any of the foregoing. Forward-looking statements may be\nidentified by their use of forward-looking terminology, such as \"believes,\u201d \"expects,\u201d \"may,\u201d \"should,\u201d \"would,\u201d \"will,\u201d \"intends,\u201d \"plans,\u201d \"estimates,\u201d\n\"anticipates,\u201d \"projects\u201d and similar words or expressions; however, forward-looking statements may be made without such terminology.\n\nSuch forward-looking statements reflect our management\u2019s opinions, expectations, beliefs, and assumptions based on information currently available to\nmanagement regarding future events, which may not materialize or prove to be correct due to certain risks and uncertainties, including those risks which\nthe Company\u2019s management has identified and believes to be material and those which management has not identified, or which management does not\nbelieve to be material. Such risk factors are described in greater detail under the heading \"Risk Factors\u201d in Part II, Item 1A of this Quarterly Report and in\nPart I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 (\"2022 Annual Report\u201d), as well as under similar headings in\nsubsequent filings we may make with the SEC. It is not possible for our management to predict all risks, the potential impact of all factors on our business,\nor the extent to which any factor, or combination of factors, may cause our actual results to differ, perhaps materially, from those contained in, or implied\nby, any forward-looking statements we may make. You should not place undue reliance on these forward-looking statements, which reflect our\nmanagement\u2019s opinions only as of the date the statements are made and are not guarantees of future performance or actual results. Should any risks or\nuncertainties develop into actual events, these developments could have a material adverse effect on our business, financial condition, results of\noperations, stockholder\u2019s equity, and cash flows, and the market price of our securities may decline, as a result.\n\nAccordingly, you should read this Quarterly Report, and the other filings we make with the SEC, completely and with the understanding that our future\nresults may be materially different from our historical results and from the results expressed in, or implied by, the forward-looking statements contained in\nthis Quarterly Report and the documents incorporated by reference herein. The forward-looking statements contained in this Quarterly Report and the\ndocuments incorporated by reference herein speak only as of the date they are made and, unless otherwise required by applicable securities laws, we\ndisclaim any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or\notherwise. All forward-looking statements attributable to us are expressly qualified by the foregoing cautionary statements and are made in reliance of the\nsafe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the \"Securities Act\u201d), Section 21E of the Securities Exchange Act of\n1934, as amended (the \"Exchange Act\u201d), and the PSLRA.\n\n\n\n\n ii\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 5 of 48\n\n\nPART I - FINANCIAL INFORMATION\nItem 1. Financial Statements\n\n Riot Platforms, Inc.\n Condensed Consolidated Balance Sheets\n (Unaudited; and in thousands, except for share amounts)\n\n September 30, December 31,\n 2023 2022\n ASSETS\nCurrent assets\n Cash and cash equivalents $ 290,107 $ 230,328\n Accounts receivable, net 12,683 26,932\n Contract assets, including retainage of $3,997 and $3,012, respectively 22,513 19,743\n Prepaid expenses and other current assets 35,989 32,661\n Bitcoin 151,825 109,420\n Future power credits, current portion 271 24,297\n Total current assets 513,388 443,381\n\nProperty and equipment, net 667,808 692,555\nDeposits 120,936 42,433\nFinite-lived intangible assets, net 17,159 21,477\nDerivative asset 108,771 97,497\nOperating lease right-of-use assets 21,064 21,673\nFuture power credits, less current portion 638 638\nOther long-term assets 5,620 310\n Total assets $ 1,455,384 $ 1,319,964\n\n LIABILITIES AND STOCKHOLDERS\u2019 EQUITY\nCurrent liabilities\n Accounts payable $ 8,898 $ 18,445\n Contract liabilities 5,787 8,446\n Accrued expenses 25,200 65,464\n Deferred gain on acquisition post-close dispute settlement 26,007 \u2014\n Deferred revenue, current portion 2,564 2,882\n Contingent consideration liability - future power credits, current portion 271 24,297\n Operating lease liability, current portion 2,388 2,009\n Total current liabilities 71,115 121,543\n\nDeferred revenue, less current portion 16,331 17,869\nOperating lease liability, less current portion 19,516 20,242\nContingent consideration liability - future power credits, less current portion 638 638\nOther long-term liabilities 7,083 8,230\n Total liabilities 114,683 168,522\n\nCommitments and contingencies - Note 16\n\nStockholders\u2019 equity\n Preferred stock, no par value, 15,000,000 shares authorized:\n 2% Series A Convertible Preferred stock, 2,000,000 shares authorized; no shares issued and outstanding as of\n September 30, 2023 and December 31, 2022 \u2014 \u2014\n 0% Series B Convertible Preferred stock, 1,750,001 shares authorized; no shares issued and outstanding as of\n September 30, 2023 and December 31, 2022 \u2014 \u2014\n Common stock, no par value; 340,000,000 shares authorized; 196,300,944 and 167,751,112 shares issued and outstanding as of\n September 30, 2023 and December 31, 2022, respectively 2,225,743 1,907,784\n Accumulated deficit (885,042) (756,342)\n Total stockholders\u2019 equity 1,340,701 1,151,442\n Total liabilities and stockholders\u2019 equity $ 1,455,384 $ 1,319,964\n\n See the accompanying Notes to these Condensed Consolidated Financial Statements.\n\n\n 1\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 6 of 48\n\n\n\n Riot Platforms, Inc.\n Condensed Consolidated Statements of Operations\n (Unaudited; and in thousands, except for share and per share amounts)\n\n Three Months Ended Nine Months Ended\n September 30, September 30,\n 2023 2022 2023 2022\nRevenue:\n Bitcoin Mining $ 31,222 $ 22,070 $ 128,987 $ 126,166\n Data Center Hosting 5,108 8,371 21,811 27,899\n Engineering 15,536 15,824 50,995 44,886\n Other revenue 25 25 73 73\n Total revenue 51,891 46,290 201,866 199,024\n\nCosts and expenses:\n Cost of revenue:\n Bitcoin Mining 24,449 14,677 69,995 51,766\n Data Center Hosting 26,135 14,223 73,929 44,392\n Engineering 13,194 13,780 46,939 40,504\n Acquisition-related costs \u2014 \u2014 \u2014 78\n Selling, general, and administrative 29,067 16,004 61,578 37,549\n Depreciation and amortization 64,569 26,559 190,071 61,366\n Change in fair value of derivative asset (3,943) 17,749 (11,274) (86,865)\n Power curtailment credits (49,601) (13,070) (66,146) (21,328)\n Change in fair value of contingent consideration \u2014 \u2014 \u2014 176\n Realized gain on sale of Bitcoin (13,495) (3,109) (47,098) (28,034)\n Loss (gain) on sale/exchange of equipment 5,306 (7,667) 5,336 (16,281)\n Casualty-related charges \u2014 \u2014 1,526 \u2014\n Impairment of Bitcoin 4,041 3,021 14,151 130,310\n Impairment of goodwill \u2014 \u2014 \u2014 335,648\n Total costs and expenses 99,722 82,167 339,007 549,281\n Operating income (loss) (47,831) (35,877) (137,141) (350,257)\n\nOther income (expense):\n Interest income (expense) 2,318 348 3,331 (9)\n Realized loss on sale of marketable equity securities \u2014 \u2014 \u2014 (1,624)\n Unrealized gain (loss) on marketable equity securities \u2014 142 \u2014 (6,306)\n Other income (expense) 31 \u2014 96 (59)\n Total other income (expense) 2,349 490 3,427 (7,998)\n\nNet income (loss) before taxes (45,482) (35,387) (133,714) (358,255)\n\nCurrent income tax benefit (expense) 157 (89) (31) (828)\nDeferred income tax benefit (expense) \u2014 3,041 5,045 9,667\nTotal income tax benefit (expense) 157 2,952 5,014 8,839\n\nNet income (loss) $ (45,325) $ (32,435) $ (128,700) $ (349,416)\n\nBasic and diluted net income (loss) per share $ (0.25) $ (0.21) $ (0.76) $ (2.61)\nBasic and diluted weighted average number of shares outstanding 180,952,689 153,895,123 168,758,240 133,894,338\n\n See the accompanying Notes to these Condensed Consolidated Financial Statements.\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 7 of 48\n\n\n\n Riot Platforms, Inc.\n Condensed Consolidated Statements of Stockholders\u2019 Equity\n (Unaudited; and in thousands, except for share amounts)\n\nThree Months Ended September 30, 2023\n Total\n Common Stock Accumulated stockholders\u2019\n Shares Amount deficit equity\nBalance as of July 1, 2023 182,250,554 $ 2,080,627 $ (839,717) $ 1,240,910\n Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards,\n net of tax withholding 2,435,045 (974) \u2014 (974)\n Issuance of common stock/At-the-market offering, net of offering costs 11,615,345 132,571 \u2014 132,571\n Stock-based compensation \u2014 13,519 \u2014 13,519\n Net income (loss) \u2014 \u2014 (45,325) (45,325)\nBalance as of September 30, 2023 196,300,944 $ 2,225,743 $ (885,042) $ 1,340,701\n\n\nThree Months Ended September 30, 2022\n Total\n Common Stock Accumulated stockholders\u2019\n Shares Amount deficit equity\nBalance as of July 1, 2022 147,986,173 $ 1,857,108 $ (563,770) $ 1,293,338\n Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock\n awards, net of tax withholding 12,817,944 (1,058) \u2014 (1,058)\n Issuance of common stock/At-the-market offering, net of offering costs 6,492,795 31,372 \u2014 31,372\n Stock-based compensation \u2014 3,561 \u2014 3,561\n Net income (loss) \u2014 \u2014 (32,435) (32,435)\nBalance as of September 30, 2022 167,296,912 $ 1,890,983 $ (596,205) $ 1,294,778\n\n\nNine Months Ended September 30, 2023\n Total\n Common Stock Accumulated stockholders\u2019\n Shares Amount deficit equity\nBalance as of January 1, 2023 167,751,112 $ 1,907,784 $ (756,342) $ 1,151,442\n Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock\n awards, net of tax withholding 987,322 (13,925) \u2014 (13,925)\n Issuance of common stock/At-the-market offering, net of offering costs 27,492,345 317,232 \u2014 317,232\n Issuance of common stock in connection with acquisition of ESS Metron, LLC 70,165 \u2014 \u2014 \u2014\n Stock-based compensation \u2014 14,652 \u2014 14,652\n Net income (loss) \u2014 \u2014 (128,700) (128,700)\nBalance as of September 30, 2023 196,300,944 $ 2,225,743 $ (885,042) $ 1,340,701\n\n\nNine Months Ended September 30, 2022\n Total\n Preferred Stock Common Stock Accumulated stockholders\u2019\n Shares Amount Shares Amount deficit equity\nBalance as of January 1, 2022 2,199 $ 11 116,748,472 $ 1,595,147 $ (246,789) $ 1,348,369\n Issuance of restricted stock, net of forfeitures and delivery of common stock\n underlying stock awards, net of tax withholding \u2014 \u2014 13,493,629 (9,873) \u2014 (9,873)\n Issuance of common stock/At-the-market offering, net of offering costs \u2014 \u2014 37,052,612 298,394 \u2014 298,394\n Conversion of preferred stock to common stock (2,199) (11) 2,199 11 \u2014 \u2014\n Stock-based compensation \u2014 \u2014 \u2014 7,304 \u2014 7,304\n Net income (loss) \u2014 \u2014 \u2014 \u2014 (349,416) (349,416)\nBalance as of September 30, 2022 \u2014 $ \u2014 167,296,912 $ 1,890,983 $ (596,205) $ 1,294,778\n\n See the accompanying Notes to these Condensed Consolidated Financial Statements.\n\n\n 3\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 8 of 48\n\n\n\n Riot Platforms, Inc.\n Condensed Consolidated Statements of Cash Flows\n (Unaudited; and in thousands)\n\n Nine Months Ended\n September 30,\n 2023 2022\nOperating activities\nNet income (loss) $ (128,700) $ (349,416)\nAdjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:\n Stock-based compensation 14,652 7,304\n Depreciation and amortization 190,071 61,366\n Amortization of license fee revenue (73) (73)\n Noncash lease expense 1,858 2,891\n Deferred income tax expense (benefit) (5,045) (9,667)\n Impairment of Bitcoin 14,151 130,310\n Impairment of goodwill \u2014 335,648\n Change in fair value of derivative asset (11,274) (86,865)\n Change in fair value of contingent consideration \u2014 176\n Realized loss on sale of marketable equity securities \u2014 1,624\n Realized gain on sale of Bitcoin (47,098) (28,034)\n Unrealized loss on marketable equity securities \u2014 6,306\n Gain (loss) on sale/exchange of equipment 5,336 (16,281)\n Casualty-related charges 1,526 \u2014\n Bitcoin Mining revenue (128,987) (126,166)\n Proceeds from sale of Bitcoin 118,833 52,491\nChanges in assets and liabilities:\n (Increase)/decrease in operating assets 5,603 21,729\n Increase/(decrease) in operating liabilities (42,803) (4,307)\nNet cash provided by (used in) operating activities (11,950) (964)\n\nInvesting activities\n Proceeds from the sale of marketable equity securities \u2014 704\n Deposits on equipment (90,512) (194,923)\n Security deposits \u2014 (5,479)\n Purchases of property and equipment, including construction in progress (148,209) (129,672)\n Proceeds from the sale of equipment 6,369 \u2014\n Patent costs incurred (34) (27)\nNet cash provided by (used in) investing activities (232,386) (329,397)\n\nFinancing activities\n Proceeds from the issuance of common stock / At-the-market offering 324,600 304,849\n Offering costs for the issuance of common stock / At-the-market offering (7,368) (6,455)\n Payments on contingent consideration liability - future power credits \u2014 (15,725)\n Proceeds from Credit and Security Facility 4,420 \u2014\n Repayments of Credit and Security Facility (3,530) \u2014\n Debt issuance costs (82) \u2014\n Repurchase of common shares to pay employee withholding taxes (13,925) (9,873)\nNet cash provided by (used in) financing activities 304,115 272,796\n\nNet increase (decrease) in cash and cash equivalents 59,779 (57,565)\nCash and cash equivalents at beginning of period 230,328 312,315\n Cash and cash equivalents at end of period $ 290,107 $ 254,750\n\nSupplemental information:\n Cash paid for interest $ 35 $ \u2014\n Cash paid for taxes $ 680 $ \u2014\nNon-cash transactions\n Reclassification of deposits to property and equipment $ 33,273 $ 288,064\n Construction in progress included in accrued expenses $ 9,342 $ 9,979\n Bitcoin exchanged for employee compensation $ 696 $ 1,434\n Conversion of preferred stock to common stock $ \u2014 $ 11\n Right of use assets exchanged for new operating lease liabilities $ 1,249 $ 10,377\n Property and equipment obtained in exchange transaction $ \u2014 $ 10,409\n\n\n See the accompanying Notes to these Condensed Consolidated Financial Statements.\n\n\n\n 4\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 9 of 48\n\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nNote 1. Organization and Operation of The Company\u2019s Business\n\nNature of Operations\n\nRiot is a vertically integrated Bitcoin mining company principally engaged in enhancing the Company\u2019s capabilities to mine Bitcoin in support of the\nBitcoin blockchain. The Company also provides comprehensive and critical infrastructure for Bitcoin Mining and Data Center Hosting for its institutional-\nscale clients at its first large-scale Bitcoin mining facility in Rockdale, Texas (the \"Rockdale Facility\u201d), which currently has 700 megawatts (\"MW\u201d) in total\ndeveloped capacity. The Company is also developing a second large-scale Bitcoin Mining and Data Center Hosting facility located outside of Corsicana,\nTexas (the \"Corsicana Facility\u201d), which, upon completion, is expected to have approximately one gigawatt of capacity available for Riot\u2019s Bitcoin Mining\nactivities and Data Center Hosting services. Lastly, the Company provides Engineering services, which includes engineering, design, and manufacturing\nof electrical equipment products for third-party customers and customized electrical infrastructure essential to the Company\u2019s Bitcoin Mining activities\nand Data Center Hosting services.\n\nAs described in Note 19. Segment Information, the Company operates in three reportable business segments: Bitcoin Mining, Data Center Hosting, and\nEngineering.\n\nNote 2. Liquidity and Financial Condition\n\nAs of September 30, 2023, the Company had approximate balances of cash and cash equivalents of $290.1 million, working capital of $442.3 million, total\nstockholders\u2019 equity of $1.3 billion, and an accumulated deficit of $885.0 million. To date, the Company has, in large part, relied on equity financing to fund\nits operations and growth. During the nine months ended September 30, 2023, the Company sold 4,615 Bitcoin for proceeds of approximately $118.8\nmillion. The Company sold substantially all of the Bitcoin it produced during the period, but never more than the total number of Bitcoin it produced on a\nmonthly basis, per Company policy. Bitcoin is classified on the balance sheet as a current asset due to its ability to be sold in a highly liquid marketplace.\n\nThrough its at-the-market equity offerings (\"ATM Offerings\u201d), during the nine months ended September 30, 2023, the Company issued 27,492,345 shares\nof common stock, at a weighted average price of $11.81 per share, for net proceeds of approximately $317.2 million. Subsequent to September 30, 2023, and\nthrough November 6, 2023, the Company issued 10,196,000 shares of common stock, at a weighted average price of $10.12 per share, for net proceeds of\napproximately $101.1 million. See Note 13. Stockholders\u2019 Equity.\n\nInflation\n\nThe Company experiences the impact of domestic and global inflationary pressures and the impact of central banks\u2019 responses to such pressures. These\ninflationary pressures impact the Company\u2019s cost structure by increasing the cost of materials, parts, and labor, making both its operations and\ndevelopment more expensive, despite a continued focus on controlling the Company\u2019s costs where possible. The development of the Corsicana Facility\nhas been impacted by increased materials prices, labor costs, and higher rates for services, all of which may adversely affect the Company\u2019s ability to\ncomplete the planned expansion on time and within its anticipated budget. Management is unable to accurately predict when, or if, these inflationary\npressures will subside, or whether and to what extent a broad-based economic recession will arise in connection with these pressures. As a result,\nmanagement is unable to predict the impact these inflationary pressures and possible follow-on conditions may have on the business and results of\noperations, as well as access to financing. See the 2022 Annual Report for additional discussion regarding the potential impacts that sustained, elevated\ninflationary pressure may have on its operations and plans for expansion.\n\nNote 3. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements\n\nBasis of Presentation and Principles of Consolidation\n\nThe accompanying unaudited condensed consolidated financial statements (\"Condensed Consolidated Financial Statements\u201d) and these notes (these\n\"Notes\u201d) have been prepared in accordance with the accounting principles generally accepted in the United States of America (\"GAAP\u201d). In the opinion\nof management, the Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, considered\nnecessary for a fair presentation of such interim results. Unless otherwise\n\n\n 5\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 10 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nindicated, amounts are stated in thousands of U.S. Dollars except for share, per share, and miner amounts, and Bitcoin quantities, prices, and hash rate.\n\nThe results in the Condensed Consolidated Financial Statements, including the Condensed Consolidated Statements of Operations, and these Notes\ninclude required estimates and assumptions of management, and are not necessarily indicative of results to be expected for the fiscal year ending\nDecember 31, 2023, or for any future interim period. Further, the Condensed Consolidated Financial Statements and these Notes do not include all the\ninformation and notes required by GAAP for complete financial statements. As such, the Condensed Consolidated Financial Statements and these Notes\nshould be read in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2022, and notes thereto, included in the\n2022 Annual Report.\n\nUse of estimates\n\nThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts\nof assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and\nexpenses during the reporting periods. Actual results could differ materially from those estimates. The most significant accounting estimates inherent in\nthe preparation of the Company\u2019s financial statements include: estimates associated with valuing contingent consideration for a business combination\nand periodic reassessment of its fair value; allocating the fair value of purchase consideration to assets acquired and liabilities assumed in business\nacquisitions; revenue recognition; valuing the derivative asset classified under Level 3 fair value hierarchy; determining the useful lives and recoverability\nof long-lived assets; impairment analysis of goodwill, fixed assets, and finite-lived intangibles; stock-based compensation; and the valuation allowance\nassociated with the Company\u2019s deferred tax assets.\n\nFor more information on the factors, risks, and uncertainties that could affect these estimates, please see the discussion under the heading \"Risk Factors\u201d\nin Part II, Item 1A of this Quarterly Report and in Part I, Item 1A of the 2022 Annual Report.\n\nReclassifications\n\nCertain prior period amounts have been reclassified to conform to the current period presentation in the Condensed Consolidated Financial Statements\nand these Notes. The reclassifications did not have a material impact on the Condensed Consolidated Financial Statements and related disclosures. The\nimpact on any prior period disclosures was immaterial.\n\nSignificant Accounting Policies\n\nFor a detailed discussion about the Company\u2019s significant accounting policies, see the Company\u2019s 2022 Annual Report.\n\nRecently Issued Accounting Pronouncements\n\nThe Company has evaluated all recently issued accounting pronouncements and does not believe any such pronouncements currently have, and does\nnot expect such pronouncements to have, a material impact on the Condensed Consolidated Financial Statements on a prospective basis.\n\nNote 4. Revenue from Contracts with Customers\n\nDisaggregated revenue\n\nRevenue disaggregated by reportable segment is presented in Note 19. Segment Information.\n\nContract balances\n\nContract assets relate to uncompleted Engineering contracts. As of September 30, 2023 and December 31, 2022, contract assets were $22.5 million and\n$19.7 million, respectively.\n\n\n\n 6\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 11 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nContract liabilities primarily relate to upfront payments and consideration received for Data Center Hosting services and uncompleted Engineering\ncontracts. The following table presents changes in contract liabilities and deferred revenue:\n\n Nine Months Ended\n September 30, 2023\nBeginning balance $ 29,197\n Revenue recognized (10,220)\n Additions and other changes in contract liabilities 5,705\nEnding balance $ 24,682\n\nRemaining performance obligation\n\nThe following table presents the estimated future recognition of the Company\u2019s remaining performance obligations, which represent the transaction price\nof current contracts for work to be performed.\n\n Remainder of\n 2023 2024 2025 2026 2027 Thereafter Total\nData Center Hosting $ 697 $ 2,362 $ 2,362 $ 2,362 $ 2,362 $ 8,241 $ 18,386\nEngineering 910 4,877 \u2014 \u2014 \u2014 \u2014 5,787\nOther 24 97 97 97 97 97 509\n Total contract liabilities $ 1,631 $ 7,336 $ 2,459 $ 2,459 $ 2,459 $ 8,338 $ 24,682\n\nNote 5. Bitcoin\n\nThe following table presents information about the Company\u2019s Bitcoin holdings:\n Nine Months Ended\n September 30, 2023\nBeginning balance $ 109,420\n Revenue recognized from Bitcoin mined 128,987\n Proceeds from sale of Bitcoin (118,833)\n Exchange of Bitcoin for employee compensation (696)\n Realized gain on sale of Bitcoin 47,098\n Impairment of Bitcoin (14,151)\nEnding balance $ 151,825\n\nDuring the three months ended September 30, 2023 and 2022, the Company recorded impairment charges on its Bitcoin holdings of $4.0 million and $3.0\nmillion, respectively, and during the nine months ended September 30, 2023 and 2022, the Company recorded impairment charges on its Bitcoin holdings\nof $14.2 million and $130.3 million, respectively.\n\nApplying the market price of one Bitcoin on September 30, 2023 of approximately $26,968 to the Company\u2019s 7,327 Bitcoin held at that date resulted in an\nestimated fair value of the Company\u2019s Bitcoin of $197.6 million. Applying the market price of one Bitcoin on December 31, 2022 of approximately $16,548 to\nthe Company\u2019s 6,974 Bitcoin held at that date resulted in an estimated fair value of the Company\u2019s Bitcoin of $115.4 million. The valuation of Bitcoin held\nis classified under Level 1 of the fair value hierarchy as it is based on quoted prices in active markets for identical assets.\n\n\n\n 7\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 12 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nNote 6. Property and Equipment\n\nThe following table presents the Company\u2019s property and equipment:\n September 30, December 31,\n 2023 2022\nBuildings and building improvements $ 330,775 $ 229,685\nLand rights and land improvements 10,320 10,164\nMiners and mining equipment 477,311 441,324\nMachinery and facility equipment 38,673 35,125\nOffice and computer equipment 1,878 1,206\nConstruction in progress 107,850 97,231\n Total cost of property and equipment 966,807 814,735\nLess accumulated depreciation (298,999) (122,180)\n Property and equipment, net $ 667,808 $ 692,555\n\nThe Company did not incur any impairment charges for its property and equipment during the three and nine months ended September 30, 2023 and 2022.\n\nDuring the three months ended September 30, 2023 and 2022, depreciation expense related to property and equipment totaled $63.1 million and $26.2\nmillion, respectively, and during the nine months ended September 30, 2023 and 2022, totaled $185.7 million and $60.3 million, respectively.\n\nMiners and mining equipment\n\nAs of September 30, 2023, the Company had a total of 98,694 miners deployed in its Bitcoin mining operation at the Rockdale Facility, which excludes\n14,250 miners currently offline as a result of damage sustained to the facility\u2019s infrastructure during severe winter storms affecting Texas in December\n2022.\n\nDuring the nine months ended September 30, 2023, the Company entered into a purchase agreement with MicroBT Electronics Technology Co., LTD,\nthrough its manufacturing affiliate, SuperAcme Technology (Hong Kong) Limited (collectively, \"MicroBT\u201d) to acquire 8,320 M56S+ model miners and\n24,960 M56S++ model miners, primarily for use at the Corsicana Facility, for a total purchase price of approximately $162.9 million. Delivery of the miners is\nexpected to begin in December 2023, with all miners expected to be received and deployed by mid-2024. The purchase agreement also provides the\nCompany an option to purchase up to an additional 66,560 additional M56S++ miners, on the same terms as the initial order, through December 31, 2024.\n\nDuring the nine months ended September 30, 2023, the Company entered into a purchase agreement with Midas Green Technologies, LLC (d/b/a \"Midas\nImmersion Cooling\u201d) (\"Midas\u201d) for the purchase of 200 MW of immersion cooling systems for its Corsicana Facility. Delivery of the immersion cooling\nsystems is expected to begin in the fourth quarter of 2023 and to be completed by the end of 2023. The purchase agreement also provides the Company an\noption to purchase up to an additional 400 MW of immersion cooling systems from Midas, on the same terms as the initial order, through December 31,\n2025.\n\nAs of December 31, 2022, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain Technologies Limited\n(\"Bitmain\u201d) for a total of 5,130 S19 series miners, which were received in January 2023. As of September 30, 2023, the Company did not have any\noutstanding purchase agreements for the purchase of miners from Bitmain.\n\nCasualty-related charges (recoveries), net\n\nIn December 2022, the Rockdale Facility was damaged during severe winter storms in Texas, impacting approximately 2.5 exahash per second (\"EH/s\u201d) of\nhash rate capacity.\n\nAs of September 30, 2023, the Company has estimated that total damages of $11.2 million were incurred and no insurance recoveries have yet been\nreceived. Recoveries will be recognized when they are probable of being received.\n\n\n\n 8\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 13 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nConstruction in progress\n\nAs of September 30, 2023, the Company\u2019s expansion of the Rockdale Facility had been completed.\n\nIn 2022, the Company initiated development of the Corsicana Facility to expand its Bitcoin Mining and Data Center Hosting capabilities, on a 265-acre site\nin Navarro County, Texas, located next to the Navarro Switch. Once complete, the Company expects the Corsicana Facility to have one gigawatt of\ndeveloped capacity for its Bitcoin Mining and Data Center Hosting operations.\nThe initial phase of the development of the Corsicana Facility involves the construction of 400 MW of immersion-cooled Bitcoin Mining and Data Center\nHosting infrastructure, as well as a high-voltage power substation and transmission facilities to supply power and water to the facility. Construction of\nthe substation and the data centers is ongoing and operations are expected to commence during the first quarter of 2024, following commissioning of the\nsubstation.\nThrough September 30, 2023, the Company had incurred costs of approximately $155.2 million related to the development of the Corsicana Facility,\nincluding $10.1 million paid to acquire the land on which the facility is being developed, $140.4 million of initial developments costs and equipment, and a\n$4.7 million deposit for future power usage.\nCommitments\nDuring the nine months ended September 30, 2023, the Company paid a deposit of $48.9 million and made advanced payments of an additional $19.3\nmillion to MicroBT for the purchase of miners described herein, leaving an additional commitment of approximately $94.7 million due in installments\nthrough approximately February 2024 based on the estimated delivery schedule.\nDuring the nine months ended September 30, 2023, the Company paid a deposit of $20.8 million to Midas for the purchase of immersion cooling systems\ndescribed herein, leaving an additional commitment of approximately $31.2 million due in installments through approximately December 2023 based on the\nestimated delivery schedule.\nRelated party land transaction\n\nDuring the year ended December 31, 2022, the Company began an initiative to provide certain on-site temporary housing for stakeholders, including\npartners, analysts, stockholders, employees, vendors, and other visitors to the Rockdale Facility, which is located in a relatively remote area of central\nTexas with limited accommodations for visitors. During the nine months ended September 30, 2023, Riot completed its acquisition of property and land for\nthe development of temporary housing from Lyle Theriot (indirectly, through a limited liability company controlled by Mr. Theriot) for approximately\n$1.1 million, consisting of $0.2 million for land and $0.9 million for buildings and improvements. Mr. Theriot is part of the management team at Riot and is\nconsidered a related party of Riot. The transaction was accounted for as an asset acquisition.\n\nNote 7. Finite-Lived Intangible Assets\n\nThe following table presents the Company\u2019s finite-lived intangible assets as of September 30, 2023:\n\n Weighted-\n Gross Accumulated Net book average life\n book value amortization value (years)\nCustomer contracts $ 6,300 $ (1,137) $ 5,163 10\nTrademark 5,000 (917) 4,083 10\nUL Listings 2,700 (413) 2,287 12\nPatents 10,060 (4,434) 5,626 Various\n Finite-lived intangible assets $ 24,060 $ (6,901) $ 17,159\n\n\n\n\n 9\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 14 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nThe following table presents the Company\u2019s finite-lived intangible assets as of December 31, 2022:\n\n Weighted-\n Gross Accumulated Net book average life\n book value amortization value (years)\nCustomer contracts $ 6,300 $ (671) $ 5,629 10\nTrademark 5,000 (542) 4,458 10\nUL Listings 2,700 (244) 2,456 12\nPatents 10,060 (1,126) 8,934 Various\n Finite-lived intangible assets $ 24,060 $ (2,583) $ 21,477\n\nDuring the three months ended September 30, 2023 and 2022, amortization expense related to finite-lived intangible assets was $1.5 million and $0.4 million,\nrespectively, and during the nine months ended September 30, 2023 and 2022, was $4.4 million and $1.1 million, respectively.\n\nThe following table presents the estimated future amortization of the Company\u2019s finite-lived intangible assets as of September 30, 2023:\n\nRemainder of 2023 $ 1,522\n2024 5,815\n2025 1,355\n2026 1,355\n2027 1,355\nThereafter 5,757\n Total $ 17,159\n\nThe Company did not identify any impairment of its finite-lived intangible assets during the three and nine months ended September 30, 2023 and 2022.\n\nNote 8. Power Purchase Agreement\n\nPower Supply Contract and Demand Response Services Programs\n\nIn May 2020, the Company, through its subsidiary, Whinstone US, Inc. (\"Whinstone\u201d), entered into a long-term power purchase agreement (the \"PPA\u201d)\nto provide for the delivery of power to its Rockdale Facility, via the nearby Sandow Switch. Pursuant to the PPA, the Company has agreed to acquire a\ntotal of 345 MW of long-term, fixed-price power, in multiple blocks, as follows: 130 MW contracted in May 2020, at fixed prices through April 30, 2030; 65\nMW contracted in March 2022, at fixed prices through April 30, 2030; and 150 MW contracted in November 2022, at fixed prices through October 31, 2027.\nAdditionally under the PPA, the Company has the option to purchase additional power at market prices, as needed.\n\nIf electricity used exceeds the amount contracted, the cost of the excess electricity is incurred at the then-current spot rate. Concurrently with the PPA, the\nCompany entered into an interconnection agreement for the extension of delivery system transmission/substation facilities to facilitate delivery of the\nelectricity to the Rockdale Facility (the \"Facilities Agreement\u201d). Power costs incurred under the Facilities Agreement are determined every 15 minutes\nusing settlement information provided by the Electric Reliability Council of Texas (\"ERCOT\u201d) and are recorded in Cost of revenue on the Condensed\nConsolidated Statements of Operations.\n\nIn collaboration with market participants such as the Company, ERCOT has implemented Demand Response Services Programs for customers that have\nthe ability to reduce or modify electricity use in response to ERCOT instructions or signals. These Demand Response Services Programs provide the\nERCOT market with valuable reliability and economic services by helping to preserve system reliability, enhancing competition, mitigating price spikes,\nand stabilizing the grid by encouraging the demand side of the market to give more visibility and control of their power consumption to grid operators.\nMarket participants with electrical loads like the Company may participate in these Demand Response Service Programs directly by offering their electrical\nloads into the ERCOT markets, or indirectly by voluntarily reducing their energy usage in response to increasing power demand in the ERCOT\nmarketplace.\n\n\n 10\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 15 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\n\nUnder these Demand Response Services Programs, the Company can participate in a variety of programs known as \"ancillary services\u201d by electing to\ndesignate a portion of its available electrical load for participation in such programs on an hourly basis. For each respective Demand Response Services\nProgram, the Company receives a cash payment based on hourly rates for power, and the amount of electrical load into which it bids. Through ancillary\nservices, the Company competitively bids amongst other market participants to sell ERCOT the ability to control Riot\u2019s electrical load on demand, and to\npower down when directed to by ERCOT, as part of ERCOT\u2019s efforts to stabilize the grid. The Company receives compensation for its participation in\nancillary services whether or not the Company is actually called to power down.\n\nRiot also participates in ERCOT\u2019s Four Coincident Peak (\"4CP\u201d) program, which refers to the highest-load settlement intervals in each of the four summer\nmonths (June, July, August, and September), during which time, demand for power is at its highest. 4CP participants may voluntarily power down\noperations during these times and in doing so, reduce the electrical load demand on the ERCOT grid. Participants that reduce their load in these peak\nperiods receive credits to transmission costs on future power bills during the subsequent year, reducing overall power costs. As a result of Riot\u2019s\nparticipation in 4CP in 2022, the Company\u2019s transmission charges in its ongoing 2023 monthly power bills are substantially reduced.\n\nUnder the PPA, the Company may also elect not to utilize its long-term, fixed-price power for its operations, and instead elect to sell that power in\nexchange for credits against future power costs when there is a benefit to the Company, depending on the spot market price of electricity. The Company\u2019s\npower strategy combines participation in Demand Response Services Programs and sales of power during times of peak demand, to attempt to manage\noperating costs most efficiently.\n\nDuring the three months ended September 30, 2023 and 2022, the Company earned credits against future power costs in exchange for power resold of\napproximately $49.6 million and $13.1 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company earned credits\nagainst future power costs in exchange for power resold of approximately $66.1 million and $21.3 million, respectively. These amounts are recorded in\nPower curtailment credits on the Condensed Consolidated Statements of Operations.\n\nThe Company determined the PPA meets the definition of a derivative because it allows for net settlement. However, because the Company has the ability\nto offer the power back for sale, rather than taking physical delivery, the Company determined that physical delivery is not probable through the entirety\nof the contract and therefore, the Company does not believe the normal purchases and normal sales scope exception applies to the PPA. Accordingly, the\nPPA (a non-hedging derivative contract) is accounted for as a derivative and recorded at its estimated fair value each reporting period in Derivative asset\non the Condensed Consolidated Balance Sheets with the change in the fair value recorded in Change in fair value of derivative asset on the Condensed\nConsolidated Statements of Operations. The PPA is not designated as a hedging instrument.\n\nThe estimated fair value of the Company\u2019s derivate asset is classified under Level 3 of the fair value hierarchy due to the significant unobservable inputs\nutilized in the valuation. Specifically, the Company\u2019s discounted cash flow estimation models contain quoted commodity exchange spot and forward\nprices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the PPA, which is scheduled to end as of April 30, 2030.\nThe significant assumptions used to estimate fair value of the derivative contract include a discount rate of 23.6%, which reflected the nature of the\ncontract as it relates to the risk and uncertainty of the estimated future mark-to-market adjustments, forward price curves of the power supply,\nbroker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors. The discount rate includes observable\nmarket inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors.\n\nThe terms of the PPA require margin-based collateral, calculated as exposure resulting from fluctuations in the market cost rate of electricity versus the\nfixed price stated in the contract. As of September 30, 2023, the margin-based collateral requirement of the Company was zero.\n\nWhile the Company manages operating costs at the Rockdale Facility in part by periodically selling back unused or uneconomical power, the Company\ndoes not consider such actions to be trading activities.\n\n\n\n 11\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 16 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nThe following table presents changes in the estimated fair value of the Derivative asset:\n\nBalance as of December 31, 2022 $ 97,497\n Change in fair value of derivative asset 11,274\nBalance as of September 30, 2023 $ 108,771\n\nNote 9. Deposits\n\nThe following table presents the activity of the Company\u2019s deposits paid:\n\nDeposits on equipment:\n Balance as of December 31, 2022 $ 33,273\n Additions 90,512\n Reclassifications to property and equipment (33,273)\n Balance as of September 30, 2023 90,512\nSecurity deposits 30,424\n Total long-term deposits $ 120,936\n\nDeposits on Equipment\n\nAs of December 31, 2022, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain for a total of 5,130 S19\nseries miners, which were received in January 2023. During the nine months ended September 30, 2023, the Company reclassified the outstanding deposit\nof $33.3 million to property and equipment in connection with the receipt of the miners at the Rockdale Facility. See Note 6. Property and Equipment.\n\nDuring the nine months ended September 30, 2023, the Company paid a deposit of $48.9 million and made advanced payments of an additional $19.3\nmillion to MicroBT for the purchase of miners and paid a deposit of $20.8 million to Midas for the purchase of immersion cooling systems. See Note 6.\nProperty and Equipment.\n\nSecurity Deposits\n\nDuring the nine months ended September 30, 2023, the Company paid $23.0 million as a security deposit in connection with its 215 MW increase to the\nlong-term, fixed-price power secured under the PPA, resulting in a total of 345 MW under contract at fixed prices. See Note 8. Power Purchase Agreement.\n\nAs of September 30, 2023, there were approximately $4.7 million in security deposits paid by the Company for the development of the Corsicana Facility, all\nof which was paid during the year ended December 31, 2022.\n\nAs of September 30, 2023, all $3.1 million paid in 2021 in connection with the Facilities Agreement for the construction of the electricity delivery system\nfacilities to serve the expansion of the Rockdale Facility, had been returned to the Company.\n\nThe Company has other security deposits totaling approximately $2.7 million, including $1.8 million associated with its ground lease.\n\n\n\n 12\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 17 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nNote 10. Accrued Expenses\n\nAccrued expenses consist of the following:\n September 30, December 31,\n 2023 2022\nConstruction in progress $ 9,342 $ 16,621\nPower related costs and remittances 158 32,632\nCompensation 8,836 8,582\nInsurance 2,684 3,660\nOther 4,180 3,969\n Total accrued expenses $ 25,200 $ 65,464\n\nNote 11. Debt\n\nCredit and Security Facility\n\nThe Company\u2019s subsidiary, ESS Metron, LLC, has a $10.0 million Credit and Security Facility, which consists of a $6.0 million Revolving Line of Credit and\na $4.0 million Equipment Guidance Line.\n\nThe $6.0 million Revolving Line of Credit has a term of one year with interest due monthly and principal due at maturity. All amounts borrowed under the\nRevolving Line of Credit carry a variable interest rate of not less than 4.0% and are secured by the assets of ESS Metron. As of September 30, 2023, the\ninterest rate was 8.5%. Total borrowings under the Revolving Line of Credit during the nine months ended September 30, 2023, were $3.5 million and\npayments were $3.5 million. As of September 30, 2023, the outstanding balance on the Revolving Line of Credit was $0.\n\nThe $4.0 million Equipment Guidance Line has a term of one year and permits the Company to finance up to 80.0% of certain equipment purchases. All\namounts borrowed under the Equipment Guidance Line carry a variable interest rate of not less than 4.0% and are secured by the assets of ESS Metron.\nAs of September 30, 2023, the interest rate was 8.5%. Total borrowings under the Equipment Guidance Line during the nine months ended\nSeptember 30, 2023, were approximately $0.9 million. During the nine months ended September 30, 2023, approximately $0.4 million outstanding under the\nEquipment Guidance Line converted to a fixed rate term loan (see below). As of September 30, 2023, the outstanding balance on the Equipment Guidance\nLine was approximately $0.5 million.\n\nAll borrowings and accrued interest under the Equipment Guidance Line convert to fixed rate term loans every six months, which have either five-year\nterms for borrowings used to acquire vehicles and manufacturing equipment (\"Manufacturing Term Loans\u201d) or three-year terms for borrowings of\nequipment other than vehicles and manufacturing equipment (\"Equipment Term Loans\u201d). The Manufacturing Term Loans carry interest at a fixed rate\nequal to the five-year treasury rate plus 2.5% as of conversion and the Equipment Term Loans carry interest at a fixed rate equal to the three-year treasury\nrate plus 2.5% as of conversion. During the nine months ended September 30, 2023, approximately $0.4 million outstanding under the Equipment Guidance\nLine was converted into a three-year Equipment Term Loan with a fixed interest rate of 6.6%. As of September 30, 2023, the outstanding balance on the\nEquipment Term Loan was approximately $0.4 million.\n\nAs of September 30, 2023, the outstanding balance on the Equipment Guidance Line and Equipment Term Loans was recognized net of approximately $0.1\nmillion of deferred financing costs. The net current outstanding debt balance of $0.1 million was recognized within Accrued Expenses and the net long-\nterm outstanding debt balance of $0.7 million was recognized within Other long-term liabilities on the Condensed Consolidated Balance Sheets.\n\nAs of September 30, 2023, the Company was in compliance with all covenants of the Credit and Security Facility.\n\nNote 12. Leases\n\nAs of September 30, 2023 and December 31, 2022, operating lease right of use assets were $21.1 million and $21.7 million, respectively, and operating lease\nliabilities were $21.9 million and $22.3 million, respectively.\n\n\n\n 13\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 18 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nThe following table presents the components of the Company\u2019s lease expense:\n\n Three Months Ended Nine Months Ended\n September 30, September 30,\n 2023 2022 2023 2022\nOperating lease cost $ 1,014 $ 844 $ 2,973 $ 2,268\nVariable lease cost 55 45 162 121\n Operating lease expense 1,069 889 $ 3,135 $ 2,389\n\nThe following table presents supplemental lease information:\n Three Months Ended Nine Months Ended\n September 30, September 30,\n 2023 2022 2023 2022\nOperating cash outflows for operating leases $ 806 $ 249 $ 2,600 $ 2,471\nRight of use assets exchanged for new operating lease liabilities $ 567 $ 1,088 $ 1,249 $ 10,377\nWeighted-average remaining lease term \u2013 operating leases 7.7 8.9 7.7 8.9\nWeighted-average discount rate \u2013 operating leases 6.7 % 6.6 % 6.7 % 6.6 %\n\nThe following table represents the Company\u2019s future minimum operating lease payments as of September 30, 2023:\n\n Ground lease Office and other leases Total\nRemainder of 2023 $ 484 $ 437 $ 921\n2024 1,998 1,798 3,796\n2025 2,058 1,495 3,553\n2026 2,119 1,425 3,544\n2027 2,183 1,305 3,488\nThereafter 9,618 3,444 13,062\n Total undiscounted lease payments 18,460 9,904 28,364\nLess present value discount (4,937) (1,523) (6,460)\n Present value of lease liabilities $ 13,523 $ 8,381 $ 21,904\n\nNote 13. Stockholders\u2019 Equity\n\nDuring the nine months ended September 30, 2023, approximately 5.0 million shares of common stock were issued to the Company\u2019s board of directors,\nofficers, employees, and advisors in settlement of an equal number of fully vested restricted stock awards awarded to such individuals by the Company\nunder the Company\u2019s 2019 Equity Incentive Plan, as amended (the \"2019 Equity Incentive Plan\u201d). The Company withheld approximately 1.3 million of\nthese shares, with a fair value of approximately $13.9 million, to cover the withholding taxes related to the settlement of these vested restricted stock\nawards, as permitted by the 2019 Equity Incentive Plan.\n\nAt-the-Market (\"ATM\u201d) Equity Offerings\n\n2023 ATM Offering\n\nIn August 2023, the Company entered into the 2023 ATM Offering, under which it could offer and sell up to $ 750.0 million in shares of the Company\u2019s\ncommon stock.\n\n\n\n 14\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 19 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nDuring the three months ended September 30, 2023, the Company received net proceeds of approximately $126.0 million ($129.4 million of gross proceeds,\nnet of $3.4 million in commissions and expenses) from the sale of 11,044,700 shares of its common stock at a weighted average fair value of $11.72 per\nshare under its 2023 ATM Offering.\n\nSubsequent to September 30, 2023, and through November 6, 2023, the Company received net proceeds of approximately $101.1 million from the sale of\n10,196,000 shares of its common stock at a weighted average fair value of $10.12 per share under its 2023 ATM Offering.\n\n2022 ATM Offering\n\nIn March 2022, the Company entered into the 2022 ATM Offering, under which it could offer and sell up to $500.0 million in shares of the Company\u2019s\ncommon stock.\n\nDuring the nine months ended September 30, 2023, the Company received net proceeds of approximately $191.2 million ($195.2 million of gross proceeds,\nnet of $3.9 million in commissions and expenses) from the sale of 16,447,645 shares of its common stock at a weighted average fair value of $11.86 per\nshare under its 2022 ATM Offering. With the sale and issuance of these shares, all $500.0 million in shares of the Company\u2019s common stock available for\nsale under its 2022 ATM Offering had been issued.\n\nESS Metron Holdback Shares\n\nOn December 1, 2021, the Company acquired 100% of the equity interests in ESS Metron for consideration that included 715,413 shares of the Company\u2019s\ncommon stock, 70,165 shares of which were withheld as security for the sellers\u2019 indemnification obligations for 18 months. During the nine months ended\nSeptember 30, 2023, the indemnification period ended and all 70,165 of the withheld shares were issued to the ESS Metron sellers.\n\nNote 14. Stock-Based Compensation\n\nThe 2019 Equity Incentive Plan authorizes the granting of stock-based compensation awards to directors, officers, employees, and advisors of the\nCompany in the form of restricted stock awards (\"RSAs\u201d), restricted stock units (\"RSUs\u201d), or stock options, all of which settle in shares of the Company\u2019s\ncommon stock upon vesting.\n\nAs of July 13, 2023, the Company adopted a new long-term incentive program under its 2019 Equity Incentive Plan, under which employees are eligible to\nreceive performance-based RSAs or RSUs and service-based RSAs or RSUs. The performance-based awards are eligible to vest based on the relative\nperformance of the Company\u2019s common stock (the Company \"Total Stockholder Return\u201d or \"TSR\u201d), compared to the performance of the Russell 3000\nIndex (the \"Index TSR\u201d), during the three-year performance period commencing as of the grant date of the TSR award (collectively, the \"TSR Awards\u201d).\nThe TSR Awards have a vesting range of 0% to 200% of the recipient\u2019s target award, which is calculated based on the difference between the Company\u2019s\nTSR and the Index TSR over the three-year performance period, subject to the recipient\u2019s continuous employment with the Company through the third\nanniversary of the award\u2019s grant date. The service-based awards are eligible to vest in one-third annual installments over a three-year service period\ncommencing on the award\u2019s grant date, subject to the recipient\u2019s continuous employment with the Company through the applicable vesting dates.\n\nDuring the nine months ended September 30, 2023, under its new long-term incentive program, the Company issued 1.9 million shares as TSR Awards,\nincluding 1.7 million shares as performance-based RSAs and 0.2 million shares as performance-based RSUs, with an aggregate grant date fair value of\napproximately $38.0 million, as well as 0.8 million service-based RSAs and 0.1 million service-based RSUs, with an aggregate grant date fair value of $19.7\nmillion.\n\n\n\n 15\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 20 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nThe following table presents the Company\u2019s stock-based compensation expense by category:\n\n Three Months Ended Nine Months Ended\n September 30, September 30,\n 2023 2022 2023 2022\nPerformance-based stock awards and units $ 3,926 $ 1,643 $ (12,424) $ 1,448\nService-based stock awards and units 9,593 1,918 27,076 5,856\n Total stock-based compensation $ 13,519 $ 3,561 $ 14,652 $ 7,304\n\nStock-based compensation expense is recognized in Selling, general and administrative on the Condensed Consolidated Statements of Operations.\n\nPerformance-Based Awards and Units\n\nPerformance-based awards and units are eligible to vest either: (i) over a three-year performance period ending December 31, 2023, based upon financial\nperformance targets met during the performance period, and the completion of specified performance milestones related to development and monetization\nof added infrastructure capacity; or (ii) based on the Company\u2019s TSR as compared to the Index TSR through December 31, 2025.\n\nThe following table presents a summary of the activity of the Company\u2019s performance-based RSAs:\n\n Weighted Average\n Grant-Date\n Per Share\n Number of Shares Fair Value\nBalance as of January 1, 2023 3,918,935 $ 25.92\n Granted 2,076,340 $ 17.48\n Vested (567,281) $ 24.96\n Forfeited (271,548) $ 32.16\nBalance as of September 30, 2023 5,156,446 $ 22.30\n\nAs of September 30, 2023, there was approximately $30.8 million of unrecognized compensation cost related to the performance-based RSAs, which is\nexpected to be recognized over a remaining weighted-average vesting period of approximately 1.2 years.\n\nThe following table presents a summary of the activity of the Company\u2019s performance-based RSUs:\n\n Weighted Average\n Grant-Date\n Per Share\n Number of Shares Fair Value\nBalance as of January 1, 2023 \u2014 $ \u2014\n Granted 246,426 $ 19.59\n Vested \u2014 $ \u2014\n Forfeited \u2014 $ \u2014\nBalance as of September 30, 2023 246,426 $ 19.59\n\nAs of September 30, 2023, there was approximately $4.5 million of unrecognized compensation cost related to the performance-based RSUs, which is\nexpected to be recognized over a remaining weighted-average vesting period of approximately 2.8 years.\n\n\n\n 16\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 21 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nService-Based Awards and Units\n\nService-based awards vest over one, two, and three-year service periods.\n\nThe following table presents a summary of the activity of the Company\u2019s service-based RSAs:\n\n Weighted Average\n Grant-Date\n Per Share\n Number of Shares Fair Value\nBalance as of January 1, 2023 8,855,744 $ 6.84\n Granted 1,226,762 $ 15.53\n Vested (4,386,376) $ 6.87\n Forfeited (780,672) $ 6.83\nBalance as of September 30, 2023 4,915,458 $ 9.04\n\nAs of September 30, 2023, there was approximately $37.8 million of unrecognized compensation cost related to the service-based RSAs, which is expected\nto be recognized over a remaining weighted-average vesting period of approximately 1.1 years.\n\nThe following table presents a summary of the activity of the Company\u2019s service-based RSUs:\n\n Weighted Average\n Grant-Date\n Per Share\n Number of Shares Fair Value\nBalance as of January 1, 2023 \u2014 $ \u2014\n Granted 123,213 $ 20.29\n Vested \u2014 $ \u2014\n Forfeited \u2014 $ \u2014\nBalance as of September 30, 2023 123,213 $ 20.29\n\nAs of September 30, 2023, there was approximately $2.3 million of unrecognized compensation cost related to the service-based RSUs, which is expected\nto be recognized over a remaining weighted-average vesting period of approximately 2.8 years.\n\nNote 15. Fair Value Measurements\n\nAssets and Liabilities Measured at Fair Value on a Recurring Basis:\n\nThe Company\u2019s assets and liabilities measured at fair value on a recurring basis consisted of the following as of September 30, 2023, and\nDecember 31, 2022:\n\n Fair value measured as of September 30, 2023\n Significant\n Quoted prices in Significant other unobservable\n Total carrying active markets observable inputs inputs\n Value (Level 1) (Level 2) (Level 3)\nDerivative asset (a) $ 108,771 $ \u2014 $ \u2014 $ 108,771\nContingent consideration liability (b) $ 909 $ \u2014 $ \u2014 $ 909\n\n Fair value measured as of December 31, 2022\n Significant\n Quoted prices in Significant other unobservable\n Total carrying active markets observable inputs inputs\n Value (Level 1) (Level 2) (Level 3)\nDerivative asset (a) $ 97,497 $ \u2014 $ \u2014 $ 97,497\nContingent consideration liability (b) $ 24,935 $ \u2014 $ \u2014 $ 24,935\n\n\n\n 17\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 22 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\n\n (a) See Note 8. Power Purchase Agreement.\n (b) See Note 16. Commitments and Contingencies.\n\nAssets and Liabilities Not Measured at Fair Value on a Recurring Basis:\n\nAs of September 30, 2023 and December 31, 2022, the fair values of cash and cash equivalents, accounts receivable, contract assets, prepaid expenses and\nother current assets, accounts payable, contract liabilities, and accrued expenses approximated their carrying values because of the short-term nature of\nthese instruments.\n\nNote 16. Commitments and Contingencies\n\nCommitments\n\nOperating Leases\n\nThe Company leases its primary office locations and has a ground lease for its Rockdale Facility under noncancelable lease agreements that expire on\nvarying dates through 2032. See Note 12. Leases, for additional information.\n\nWater Reservation Agreement\n\nThe Company has a water reservation agreement, as amended, with the lessor of its ground lease to secure a certain quantity of non-potable water from a\nnearby lake to be used by the Company at its Rockdale Facility. The water reservation agreement runs through January 2032 and requires annual\npayments of approximately $2.1 million.\n\nThe Company concluded that the water reservation agreement was not a lease or a derivative instrument. Because the Company obtained an additional\nright of use for the reserved water amount, and the charges were increased by a standalone price commensurate with the additional water use rights and at\nmarket rates, the water reservation agreement was determined to be a lease modification accounted for as a separate contract. As such, the fees of the\nwater reservation agreement were excluded from the lease payments of the ground lease and the water reservation agreement was accounted for as a\nseparate executory contract.\n\nContingent Consideration Liability\n\nUpon the acquisition of Whinstone in May 2021, the Company was obligated to pay up to $86.0 million, net of income taxes, (undiscounted) of\nconsideration to the seller if certain power credits were received or realized by the Company arising from a severe weather event in Texas in February 2021.\nThrough September 30, 2023, portions of the power credits were received, and a portion of the obligation was settled.\n\nThe following table presents the changes in the estimated fair value of the Company\u2019s contingent consideration liability:\n\nBalance as of December 31, 2022 $ 24,935\n Change in contingent consideration (24,026)\n Change in fair value of contingent consideration \u2014\nBalance as of September 30, 2023 $ 909\n\nThe estimated fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.\n\nUpon the acquisition of Whinstone, the Company estimated the fair value of the contingent consideration using a discounted cash flow analysis, which\nincluded estimates of both the timing and amounts of potential future power credits. These estimates were determined using the Company\u2019s historical\nconsumption quantities and patterns combined with management\u2019s expectations of its future consumption requirements, which required significant\njudgment and depend on various factors outside the Company\u2019s control, such as construction delays. The discount rate of approximately 2.5% included\nobservable market inputs, but also included unobservable inputs such as interest rate spreads, which were estimated based on qualitative judgment\nrelated to company-specific\n\n\n 18\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 23 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nrisk factors. Specifically, the Company used S&P Global\u2019s B credit rating in the yield curve to estimate a reasonable interest rate spread to determine the\ncost of debt input because the power credits are subordinated obligations for the Company\u2019s counterparty. Although these estimates are based on\nmanagement\u2019s best knowledge of current events, the estimates could change significantly from period to period.\n\nApproximately $1.2 million of remaining future power credits to be received are estimated to be received over a period of 12 years. The Company\ndetermined the value of the contingent consideration as of September 30, 2023, using a discount rate of approximately 8.0%, which was based on the\nfactors above, including the recent increase in interest rates.\n\nContingencies\n\nLegal Proceedings\n\nThe Company, and its subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to the Company\u2019s business and\ntransactions arising in the ordinary course of business, as described in the 2022 Annual Report, as supplemented by the following:\n\nNorthern Data Working Capital Disputes\n\nOn September 7, 2022, the Company filed a complaint against Northern Data AG (\"Northern Data\u201d) in the Delaware Court of Chancery (Case No. C.A. No.\n2022-0792-LWW) disputing the purchase price of Whinstone and seeking declaratory relief and specific performance of the stock purchase agreement. On\nMarch 31, 2023, the parties filed a stipulation agreeing to dismiss all claims without prejudice and to submit the dispute for final determination to an\nindependent accountant. The Company placed $29.5 million in escrow pending the final determination of the independent accountant, and, on June 9,\n2023, the independent accountant rendered a written final determination finding in favor of the Company on disputed issues totaling approximately $27.1\nmillion. Accordingly, $27.1 million of the escrowed amount was released from escrow and distributed to the Company on June 13, 2023, with the remaining\n$2.4 million held in escrow allocated to Northern Data. As a result, the Company recognized a Deferred gain on acquisition post-close dispute settlement\nof $26.0 million on the Condensed Consolidated Balance Sheets.\n\nFollowing the final determination, Northern Data filed a complaint against the Company in the Delaware Court of Chancery on July 23, 2023 (Case No. C.A.\nNo. 2023-0650-LWW) challenging the independent accountant\u2019s written final determination and seeking to re-litigate the purchase price adjustment\nprocess. The Company contests Northern Data\u2019s right to bring this new complaint and entirely disagrees with the allegations and arguments it raises, and\nthe Company filed a motion to dismiss the complaint on July 17, 2023, which is set to be heard on February 13, 2024.While the Company considers\nNorthern Data\u2019s new complaint to be without merit and intends to vigorously oppose such complaint, as appropriate, the Company cannot accurately\npredict the outcome of such ongoing litigation, or estimate the magnitude of such outcome, due to its early stage.\n\nLegacy Hosting Customer Disputes\n\nRhodium\n\nOn May 2, 2023, Whinstone filed a petition in the District Court for the 20th Judicial District of Milam County, Texas (Case No. CV41873), which it later\namended, against Rhodium 30MW, LLC, Rhodium JV, LLC, Air HPC LLC, and Jordan HPC, LLC (collectively, \"Rhodium\u201d) asserting breach of contract\nclaims for Rhodium\u2019s failure to pay amounts due under Rhodium\u2019s colocation agreements with Whinstone. The amended petition also seeks a declaration\nthat certain superseded agreements with Rhodium are terminated and that no power credits are owed to Rhodium under any agreement. Whinstone seeks\nrecovery of more than $26 million, plus reasonable attorneys\u2019 fees and costs, expenses, and pre- and post-judgment interest. On June 12, 2023, Rhodium\nanswered and, along with non-parties Rhodium Encore LLC, Rhodium 2.0 LLC, and Rhodium 10mw LLC (collectively, the \"Non-Parties\u201d), moved to compel\narbitration and filed counterclaims for breach of contract seeking recovery of at least $7-$10 million in power credits allegedly owed to Rhodium under the\nsuperseded agreements, as well as lost profits. On August 2, 2023, Rhodium disclosed the amount of damages it seeks to recover for these claims, which\nincludes at least $42 million in alleged energy credits, at least $1 million in alleged lost profits for power diversion, and at least $0.7 million in alleged direct\ndamages for breach of contract, plus lost profits and reasonable and necessary attorneys\u2019 fees. On August 28, 2023, the district court granted Rhodium\u2019s\nmotion to compel arbitration and stay litigation. On October 24, 2023, Whinstone filed a petition for writ of mandamus with the Court of Appeal for the\nThird District of Texas, Austin Division (Case No. 03-23-00717-CV), requesting that the appellate court vacate the\n\n\n 19\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 24 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\ndistrict court\u2019s order compelling arbitration or, alternatively, the portion of its order staying litigation as to all claims arising under agreements without\nmandatory arbitration provisions. Whinstone believes Rhodium\u2019s claims are without merit and intends to vigorously contest them, as appropriate.\nBecause this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of\nsuch an outcome, if any.\n\nSBI Crypto Co.\n\nOn April 5, 2023, SBI Crypto Co., Ltd. (\"SBI\u201d) filed a complaint in the United States District Court for the Western District of Texas (Case No. 6:23-cv-252),\nwhich it later amended, against Whinstone alleging breach of contract, fraud, and negligent bailment claims. On July 21, 2023, Whinstone filed a motion to\ndismiss the amended complaint, which was denied on October 25, 2023. SBI seeks recovery of at least $15 million in lost profits, at least $16 million for\nequipment damage, reasonable attorneys\u2019 fees and costs, expenses, costs, and pre- and post-judgment interest. Whinstone believes many of the claims\nare barred or waived and substantively lack merit, and Whinstone plans to vigorously contest the same, as appropriate. While a preliminary investigation\nof the merits of SBI\u2019s claims has commenced, because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of\nan unfavorable outcome or the magnitude of such an outcome, if any.\n\nGMO\n\nOn June 13, 2022, GMO Gamecenter USA, Inc. and its parent, GMO Internet, Inc., (collectively \"GMO\u201d) filed a complaint in the United States District Court\nfor the Southern District of New York (Case No. 1:22-cv-05974-JPC) against Whinstone alleging breach of contract under the colocation services\nagreement between GMO and Whinstone, seeking damages in excess of $150million. Whinstone has responded to GMO\u2019s claims and raised\ncounterclaims of its own, alleging GMO itself breached the colocation services agreement, seeking a declaratory judgment and damages in excess of $25\nmillion. On October 19, 2023, GMO filed its fourth amended complaint claiming an additional $496 million in damages, for loss of profit and profit sharing,\nbased on Whinstone\u2019s alleged wrongful termination of the colocation services agreement as of June 29, 2023. At this preliminary stage, the Company\nbelieves that GMO\u2019s claims lack merit; however, because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood\nof an unfavorable outcome or the magnitude of such an outcome, if any.\n\nClass Actions and Related Shareholder Derivative Actions\n\nOn February 17, 2018, Creighton Takata filed an action asserting putative class action claims on behalf of the Company\u2019s stockholders in the United\nStates District Court for the District of New Jersey, Takata v. Riot Blockchain Inc., et al. (Case No. 3: 18-cv-02293). On August 25, 2023, the United States\nDistrict Court for the District of New Jersey dismissed the Takata action, with prejudice, dismissing all of Takata\u2019s claims.\n\nFollowing the commencement of the Takata action, several shareholder derivative complaints were filed against the Company, all of which have been\ndismissed without prejudice. On April 5, 2018, Michael Jackson filed a shareholder derivative complaint on behalf of the Company in the Supreme Court of\nthe State of New York, County of Nassau, against certain of the Company\u2019s officers and directors, as well as against an investor ( Jackson v. Riot\nBlockchain, Inc., et al. (Case No. 604520/18)). Following dismissal of the Takata action, on October 23, 2023, the parties filed a joint stipulation of\ndiscontinuance dismissing all Jackson\u2019s claims without prejudice. On May 22, 2018, two additional shareholder derivative complaints were filed on behalf\nof the Company in the Eighth Judicial District Court of the State of Nevada in and for the County of Clark (In re Riot Blockchain, Inc. Shareholder\nDerivative Litigation (Case No. A-18-774890-B)). On January 18, 2023, the court entered an order voluntarily dismissing the two shareholder derivative\ncomplaints without prejudice. On October 22, 2018, another shareholder derivative complaint was filed on behalf of the Company in the United District\nCourt for the Southern District of New York (Finitz v. O\u2019Rourke, et al. (Case No. 1:18-cv-09640)). Following dismissal of the Takata action, on October 6,\n2023, Plaintiff filed a notice of voluntary dismissal without prejudice dismissing all Finitz\u2019s claims. Finally, on December 13, 2018, a shareholder derivative\ncomplaint was filed on behalf of the Company in the United District Court for the Northern District of New York (Monts v. O\u2019Rourke, et al. (Case No. 1:18-\ncv-01443)). Following dismissal of the Takata action, on September 26, 2023, Plaintiff filed a notice of voluntary dismissal without prejudice dismissing all\nMonts\u2019 claims.\n\nNote 17. Income Taxes\n\n\n\n 20\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 25 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nDuring the three months ended September 30, 2023 and 2022, the Company realized deferred income tax benefits of $0 and $3.0 million, respectively, and\n$5.0 million and $9.7 million during the nine months ended September 30, 2023 and 2022, respectively, related primarily to the contingent consideration\nliability and future power credits.\n\nNote 18. Earnings Per Share\n\nThe following table presents potentially dilutive securities that were not included in the computation of diluted net income (loss) per share as their\ninclusion would be anti-dilutive:\n September 30, 2023 September 30, 2022\nWarrants to purchase common stock 63,000 63,000\nUnvested restricted stock awards (a) 7,689,628 12,478,290\nUnvested restricted stock units 369,639 2,286,701\n Total 8,122,267 14,827,991\n\n (a) Unvested restricted stock awards are included in total common shares outstanding but are excluded from the calculation of basic earnings per\n share.\n\nNote 19. Segment Information\n\nThe Company has three reportable segments: Bitcoin Mining, Data Center Hosting, and Engineering. The reportable segments are identified based on the\ntypes of service performed. The chief operating decision maker (\"CODM\u201d) analyzes the performance of the segments based on reportable segment\nrevenue and reportable segment cost of revenue. No operating segments have been aggregated to form the reportable segments.\n\nThe Company does not allocate all assets to the reporting segments as they are managed on an entity-wide basis. Therefore, the Company does not\nseparately disclose the total assets of its reportable operating segments.\n\nThe Bitcoin Mining segment generates revenue from the Bitcoin the Company earns through its Bitcoin mining activities. The Data Center Hosting\nsegment generates revenue from long-term customer contracts for the provision of data center hosting/colocation services, including from the\nconsumption of electricity, construction of infrastructure, operation of data centers, and maintenance/management of computing capacity from the\nCompany\u2019s high performance data center facility in Rockdale, Texas. The Engineering segment generates revenue through customer contracts for custom\nengineered electrical products.\n\nThe Data Center Hosting segment purchases custom engineered electrical products from the Engineering segment in the ordinary course of business. All\nrevenue and cost of revenue from intersegment transactions have been eliminated in the Condensed Consolidated Statements of Operations. All Other\nrevenue is from external customers.\n\nDuring the three and nine months ended September 30, 2023, aside from the Bitcoin Mining revenue generated as a result of the Company\u2019s participation\nin a mining pool, the Company earned revenue of $6.4 million, or 12.3% of consolidated revenue, and $20.9 million, or 10.4% of consolidated revenue,\nrespectively, from one customer in its Engineering segment.\n\nDuring the three and nine months ended September 30, 2022, aside from the Bitcoin Mining revenue generated as a result of the Company\u2019s participation\nin mining pools, no single customer or related group of customers contributed 10% or more of the Company\u2019s total condensed consolidated revenue.\n\n\n\n 21\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 26 of 48\n Riot Platforms, Inc.\n Notes to Condensed Consolidated Financial Statements\n (Unaudited)\n\nThe following table presents revenue and cost of revenue for the Company\u2019s reportable segments, reconciled to the Condensed Consolidated\nStatements of Operations:\n\n Three Months Ended September 30, Nine Months Ended September 30,\n 2023 2022 2023 2022\nReportable segment revenue:\n Bitcoin Mining $ 31,222 $ 22,070 $ 128,987 $ 126,166\n Data Center Hosting 34,786 23,624 111,169 68,240\n Engineering 16,585 20,300 58,124 55,050\n Other revenue 25 25 73 73\n Eliminations (30,727) (19,729) (96,487) (50,505)\n Total segment and consolidated revenue $ 51,891 $ 46,290 $ 201,866 $ 199,024\n\nReportable segment cost of revenue:\n Bitcoin Mining 31,667 15,949 93,840 60,793\n Data Center Hosting 48,595 28,201 139,442 75,705\n Engineering 13,973 16,767 51,791 47,302\n Eliminations (30,457) (18,237) (94,210) (47,138)\n Total segment and consolidated cost of revenue $ 63,778 $ 42,680 $ 190,863 $ 136,662\n\nReconciling Items:\n Acquisition-related costs \u2014 \u2014 \u2014 (78)\n Selling, general, and administrative (29,067) (16,004) (61,578) (37,549)\n Depreciation and amortization (64,569) (26,559) (190,071) (61,366)\n Change in fair value of derivative asset 3,943 (17,749) 11,274 86,865\n Power curtailment credits 49,601 13,070 66,146 21,328\n Change in fair value of contingent consideration \u2014 \u2014 \u2014 (176)\n Realized gain on sale of Bitcoin 13,495 3,109 47,098 28,034\n (Loss) gain on sale/exchange of equipment (5,306) 7,667 (5,336) 16,281\n Casualty-related charges \u2014 \u2014 (1,526) \u2014\n Impairment of Bitcoin (4,041) (3,021) (14,151) (130,310)\n Impairment of goodwill \u2014 \u2014 \u2014 (335,648)\n Interest income (expense) 2,318 348 3,331 (9)\n Realized loss on sale of marketable equity securities \u2014 \u2014 \u2014 (1,624)\n Unrealized loss on marketable equity securities \u2014 142 \u2014 (6,306)\n Other income (expense) 31 \u2014 96 (59)\n Current income tax benefit (expense) 157 (89) (31) (828)\n Deferred income tax benefit (expense) \u2014 3,041 5,045 9,667\n Net income (loss) $ (45,325) $ (32,435) $ (128,700) $ (349,416)\n\n\n\n\n 22\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 27 of 48\n\n\nItem 2. Management\u2019s Discussion and Analysis of Financial Condition and Results of Operations\n\nThe following Management\u2019s Discussion and Analysis of Financial Condition and Results of Operations (this \"MD&A\u201d) should be read in conjunction\nwith our Condensed Consolidated Financial Statements and the related notes (the \"Notes\u201d) and other financial information included elsewhere in\nthis Quarterly Report and with our audited consolidated financial statements for the fiscal year ended December 31, 2022, as included in our 2022\nAnnual Report.\n\nThis MD&A contains statements of management\u2019s beliefs, expectations and assumptions regarding our future business, and any statements other than\nstatements of historical fact are \"forward-looking statements\u201d within the meaning of the PSLRA, which are made in reliance of the safe harbor\nprovisions of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the PSLRA. Such statements express management\u2019s beliefs,\nopinions, projections and expectations regarding future events and circumstances, based on information available to management as of the date of this\nQuarterly Report, and are subject to risks and uncertainties, and our actual results could differ materially from those discussed in these forward-\nlooking statements. Further, these forward-looking statements should not be construed either as assurances of performance or as promises of a given\ncourse of action. You should review the sections of this Quarterly Report entitled \"Cautionary Note Regarding Forward-Looking Statements\u201d and\n\"Risk Factors\u201d for a discussion of factors that could cause actual results to differ materially \u2013 and potentially adversely \u2013 from the results described in\nor implied by the forward-looking statements contained in the following this MD&A and elsewhere in this Quarterly Report.\n\nUnless otherwise indicated, amounts are stated in thousands of U.S. Dollars except for share, per share, and miner amounts, and Bitcoin quantities, prices,\nand hash rate.\n\nBusiness Overview:\n\nWe are a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin\nblockchain. We also provide comprehensive and critical infrastructure for institutional-scale hosted clients to mine Bitcoin at our Rockdale Facility. Our\nRockdale Facility is believed to be the largest Bitcoin mining facility in North America, as measured by developed capacity, and we are currently\nevaluating further growing its capacity. Additionally, we are developing the Corsicana Facility, a second large-scale Bitcoin mining data center facility,\nwhich, upon completion, is expected to have approximately one gigawatt of capacity available for our own Bitcoin Mining activities and Data Center\nHosting services for institutional-scale hosted clients.\n\nWe operate in an environment which is constantly evolving based on the proliferation of Bitcoin and cryptocurrencies in general. A significant\ncomponent of our strategy is to effectively and efficiently allocate capital between opportunities that generate the highest return on investment.\n\nIndustry Trends\n\nDuring 2022 and 2023, we have observed several companies in the Bitcoin ecosystem experience significant challenges and initiate bankruptcy\nproceedings due to the significant decline in the price of Bitcoin and other national and global macroeconomic factors. We anticipate this trend will likely\ncontinue as companies attempt to shift their business models to operate on significantly compressed margins. Further affecting the margins of the\ncompanies within the Bitcoin ecosystem, the Bitcoin reward for solving a block is subject to periodic incremental halving, which is next anticipated to\noccur in April 2024. The network halving is a preprogrammed, fixed process of the Bitcoin network where the Bitcoin reward for solving a block received\nby miners is reduced by half approximately every four years. The network halving will continue to occur on this schedule until the amount of Bitcoin in\nexistence reaches the cap of 21 million. The network halving is a process designed to implement a periodic decreasing schedule of the issuance of new\nBitcoin into the market which results in a predictable and controlled inflationary rate.\n\nThe dramatic increase in the price of Bitcoin observed in the market during prior years caused many companies to over-leverage themselves, thus\noperating in potentially unsustainable ways given the recent variability in the price of Bitcoin. Riot chose to refrain from engaging in any significant debt-\nfinancing activities during this period and, as a result, has not been subject to the significant debt-service shortfalls some of our competitors are\nexperiencing. Despite such challenges in the ecosystem, Riot continues to focus on building long-term stockholder value by taking strategic action to\nvertically integrate our business, expanding the Rockdale Facility and developing the Corsicana Facility. Management believes this focus will positively\naffect each of Riot\u2019s three business segments by providing more capacity for our Bitcoin Mining and Data Center Hosting operations, and by capitalizing\non supply chain efficiencies garnered through our Engineering segment. As we grow our business, we continue to focus on deploying our\n\n\n 23\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 28 of 48\n\n\nefficient Bitcoin mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining and Data Center Hosting facilities.\n\nWe anticipate companies in our industry will continue to experience challenges, and that the remainder of 2023 and 2024 will continue to be a period of\nconsolidation in the Bitcoin mining industry. Further, given our relative position, liquidity, and absence of any significant long-term debt, we believe we\nare well positioned to benefit from such consolidation. We are continuously evaluating strategic opportunities which we may decide to undertake as part\nof our strategic growth initiatives; however, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on\nthe schedule or within the budget we anticipate, if at all, in our competitive and evolving industry, and our business and financial results may change\nsignificantly as a result of such strategic growth.\n\nThe recent shutdowns of certain digital asset exchanges and trading platforms due to fraud or business failure has negatively impacted confidence in the\ndigital asset industry as a whole and led to increased oversight and scrutiny of the industry. We did not have any exposure to any digital asset lenders or\nexchanges who have declared bankruptcy or have suspended operations. We only hold and sell Bitcoin that we have mined and do not sell, hold, or\nredeem any Bitcoin for any other parties. Our Bitcoin is held in cold storage wallets by a well-known U.S. based third-party digital asset-focused\ncustodian. We also sell our Bitcoin using our custodian\u2019s U.S. brokerage services.\n\nIn 2023, the banking industry and financial services sector experienced disruptions and instability. In March 2023, Silvergate Capital Corporation, the\nholding company for Silvergate Bank (\"Silvergate Bank\u201d), which was primarily focused on the digital asset industry, announced its intent to wind down\noperations and voluntarily liquidate its holdings. Also in March, Silicon Valley Bank (\"Silicon Valley Bank\u201d) and Signature Bank (\"Signature Bank\u201d) both\nclosed and the Federal Deposit Insurance Corporation (\"FDIC\u201d) was appointed receiver following their closures and transferred substantially all assets of\nthe former banks to newly created, FDIC-operated bridge banks in an action to protect all depositors of the banks. In May 2023, First Republic Bank was\nclosed, and the FDIC sold substantially all of First Republic Bank\u2019s assets to JP Morgan Chase & Co.\n\nAlthough we maintained certain operating accounts with Signature Bank prior to its closure, we have since transferred all our deposits previously held\nwith the bank to other banking institutions. We did not lose access to our accounts or experience interruptions in banking services, and we suffered no\nlosses with respect to our deposits at Signature Bank as a result of the bank\u2019s closure. We did not have any banking relationships with Silicon Valley\nBank, Silvergate Bank, or First Republic Bank, and currently hold our cash and cash equivalents at multiple banking institutions. Although we did not\nsuffer any losses, we continue to monitor for updates to mitigate any future impacts we may be subject to as a result of the instability of the banking\nindustry and financial services sector.\n\nBitcoin Mining\n\nWe own and operate one of the largest Bitcoin Mining operations in North America. During the nine months ended September 30, 2023, we continued to\ndeploy miners at our Rockdale Facility and continued development activities at the Corsicana Facility, with the objective of increasing our operational\nefficiency and performance in the future.\n\nAs of September 30, 2023, our Bitcoin Mining business segment operated 98,694 miners, with a hash rate capacity of 10.9 EH/s, which excludes 14,250\nminers currently offline due to infrastructure damage sustained by our Rockdale Facility during severe winter storms in December 2022. We expect repairs\nto the Rockdale Facility to be completed and to bring sidelined hash rate capacity back online during the fourth quarter of 2023. During the nine months\nended September 30, 2023, we mined 4,996 Bitcoin, which represented an increase of 30.0% over the 3,842 Bitcoin we mined in the nine months ended\nSeptember 30, 2022. We anticipate achieving a total self-mining hash rate capacity of 12.5 EH/s in the fourth quarter of 2023.\n\nIn June 2023, we entered into a purchase agreement with MicroBT to acquire 8,320 M56S+ model miners and 24,960 M56S++ model miners for a total\npurchase price of approximately $162.9 million, as well as an option to purchase up to an additional 66,560 additional M56S++ miners through December\n31, 2024, on the same terms as the initial purchase order. Delivery of the miners is expected to begin in December 2023, with all miners expected to be\nreceived and deployed by mid-2024. Upon full deployment of the 33,280 miners, we anticipate achieving a total self-mining hash rate capacity of 20.1 EH/s.\n\nFor the nine months ended September 30, 2023, Bitcoin Mining revenue was approximately $129.0 million.\n\n\n\n 24\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 29 of 48\n\n\nData Center Hosting\n\nFollowing our acquisition of Whinstone, we commenced an expansion of our Rockdale Facility, to more than double its developed capacity at the time of\nacquisition and, as of September 30, 2023, this expansion had been completed.\n\nThe expansion of our Rockdale Facility has provided capacity to enable us to deploy our current fleet of miners in a self-hosted facility, while allowing us\nto continue to operate and grow our Data Center Hosting business segment. We believe deploying our miners at the expanded Rockdale Facility offers\nmany advantages for our Bitcoin mining operations, including allowing us to operate our miners without incurring third-party colocation services fees and\nto do so at the low fixed energy costs available to the Rockdale Facility under its long-term PPA.\n\nData Center Hosting revenue includes upfront payments, which we record as deferred revenue and generally recognize as services are provided. We\nprovide energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at our Rockdale\nFacility under long-term contracts. We account for these agreements as a single performance obligation for services being delivered in a series with\ndelivery being measured by daily successful operation of the mining hardware. As such, we recognize revenue over the life of the contract as its series of\nperformance obligations are met. The contracts are recognized in the amount for which we have the right to invoice because we elected the \"right to\ninvoice\u201d practical expedient.\n\nFor the nine months ended September 30, 2023, Data Center Hosting revenue was approximately $21.8 million.\n\nEngineering\n\nOur Engineering business segment designs and manufacturers power distribution equipment and custom engineered electrical products that provide us\nwith the ability to vertically integrate many of the critical electrical components and engineering services necessary for our Corsicana and Rockdale\nFacility expansions and to reduce our execution and counter-party risk in ongoing and future expansion projects. Engineering and other specialized talent\nemployed in our Engineering business segment also allow us to continue to explore new methods to optimize and develop a best-in-class Bitcoin mining\noperation and has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin mining hardware.\n\nOur Engineering business segment also provides electricity distribution product design, manufacture, and installation services primarily focused on large-\nscale commercial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power\ngeneration, utility, water, industrial, and alternative energy. Products are custom built to client and industry specifications. Additionally, we utilize an in-\nhouse field service and repair department.\n\nEngineering revenue is derived from the sale of custom products built to customers\u2019 specifications under fixed-price contracts with one identified\nperformance obligation. Engineering revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which\nthe Company has an enforceable right to receive compensation as defined under the contract.\n\nFor the nine months ended September 30, 2023, Engineering revenue was approximately $51.0 million.\n\nGlobal Logistics\n\nGlobal supply logistics have caused delays across all channels of distribution. Similarly, we have also experienced delays in certain of our miner delivery\nschedules and in our infrastructure development schedules due to constraints on the globalized supply chains for miners, electricity distribution\nequipment and construction materials. Through the date of this Quarterly Report, we have been able to effectively mitigate any delivery delays to avoid\nmaterially impacting our miner deployment schedule, however, there are no assurances we will be able to continue to mitigate any such delivery delays in\nthe future. Additionally, the development of our new Corsicana Facility requires large quantities of construction materials, specialized electricity\ndistribution equipment and other component parts that can be difficult to source. We have procured and hold many of the required materials to help\nmitigate global supply logistic and pricing concerns. We continue to monitor developments in the global supply chain and assess their potential impact\non our expansion plans.\n\n\n\n 25\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 30 of 48\n\n\nSummary of Bitcoin Mining Results\n\nThe following tables present additional information about our Bitcoin Mining activities, including Bitcoin production and sales of the Bitcoin mined:\n\n Quantity Amounts\nBalance as of January 1, 2023 6,974 $ 109,420\n Revenue recognized from Bitcoin mined 4,996 128,987\n Proceeds from sale of Bitcoin (4,615) (118,833)\n Exchange of Bitcoin for employee compensation (28) (696)\n Realized gain on sale of Bitcoin \u2014 47,098\n Impairment of Bitcoin \u2014 (14,151)\nBalance as of September 30, 2023 7,327 $ 151,825\n\n Quantity Amounts\nBalance as of January 1, 2022 4,884 $ 150,593\n Revenue recognized from Bitcoin mined 3,842 126,166\n Proceeds from sale of Bitcoin (1,925) (52,491)\n Exchange of Bitcoin for employee compensation (35) (1,434)\n Realized gain on sale of Bitcoin \u2014 28,034\n Impairment of Bitcoin \u2014 (130,310)\nBalance as of September 30, 2022 6,766 $ 120,558\n\nResults of Operations\n\nComparative Results for the three months ended September 30, 2023 and 2022:\n\nRevenue\n\nTotal revenue for the three months ended September 30, 2023 and 2022, was $51.9 million and $46.3 million, respectively, and consisted of our Bitcoin\nMining revenue, Data Center Hosting revenue, Engineering revenue, and other revenue.\n\nFor the three months ended September 30, 2023 and 2022, Bitcoin Mining revenue was $31.2 million, and $22.1 million, respectively. The increase of $9.2\nmillion was primarily due to an increase of 64 Bitcoin mined in the 2023 period as compared to the 2022 period as a result of an increase in miners deployed\nand higher Bitcoin values in the 2023 period, partially offset by an increase in the Bitcoin network difficulty. In the 2023 period, Bitcoin prices averaged\n$28,230 per coin, as compared to $21,184 for the 2022 period. Additionally, we continued employing our power strategy to significantly reduce overall\npower costs. As noted below, during the three months ended September 30, 2023 and 2022, we earned $49.6 million and $13.1 million, respectively, in\npower credits, which were received in cash or credited against our power invoices, as a result of temporarily pausing our operations. The power credits\nequate to approximately 1,757 Bitcoin and 617 Bitcoin, respectively, as computed using the average daily Bitcoin prices for the applicable period.\n\nFor the three months ended September 30, 2023 and 2022, Data Center Hosting revenue was $5.1 million, and $8.4 million, respectively. The decrease of\n$3.3 million was primarily due to hosting fewer customers during the 2023 period as we continue to address legacy contracts.\n\nFor the three months ended September 30, 2023 and 2022, Engineering revenue was $15.5 million and $15.8 million, respectively. The decrease of $0.3\nmillion was primarily attributable to supply chain constraints resulting in decreased receipts of materials, delaying the completion of certain custom\nproducts, and therefore, the recognition of revenue. Our custom electrical products such as switchgear and power distribution centers are used as\nimportant components in data center development and in power generation and distribution facilities, and there has been increased demand for these\nproducts due to the continued increase in data center construction by developers, as well as the continually increasing worldwide demand for power.\n\nCosts and expenses\n\nCost of revenue for Bitcoin Mining for the three months ended September 30, 2023 and 2022, was $24.4 million and $14.7 million, respectively, an increase\nof approximately $9.8 million. As a percentage of Bitcoin Mining revenue, Bitcoin Mining cost of revenue\n\n\n 26\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 31 of 48\n\n\nwas 78.3% and 66.5% for the three months ended September 30, 2023 and 2022, respectively. Cost of revenue consists primarily of direct production costs\nof Bitcoin mining operations, including electricity, labor, and insurance, but excluding depreciation and amortization, which are separately stated. The\nincrease was primarily due to the increase in Bitcoin mining capacity at the Rockdale Facility, which requires more headcount and direct costs necessary\nto maintain and support our expanded Bitcoin mining operations. As noted below, during the three months ended September 30, 2023 and 2022, we earned\n$49.6 million and $13.1 million, respectively, in power credits to be credited against our power invoices, as a result of temporarily pausing our operations to\nparticipate in ERCOT\u2019s Demand Response Service Programs. Our fixed-price power purchase contracts enable us to strategically curtail our mining\noperations and participate in these programs, which significantly lower our cost to mine Bitcoin. These credits are recognized in Power curtailment\ncredits on our Condensed Consolidated Statements of Operations, outside of cost of revenue, but significantly reduce our overall cost to mine Bitcoin.\nWhen netting the power curtailment credits allocated to Bitcoin Mining with the costs of revenue, the net costs as a percentage of Bitcoin Mining\nrevenue were (21.8)% and 38.8% for the three months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023,\nthe net costs as a percentage of Bitcoin Mining revenue were negative due to power curtailment credits exceeding costs of revenue.\n\nCost of revenue for Data Center Hosting for the three months ended September 30, 2023 and 2022, was $26.1 million and $14.2 million, respectively, an\nincrease of approximately $11.9 million. The costs consisted primarily of direct power costs, with the balance primarily incurred for rent and compensation\ncosts. The increase was primarily attributable to the significant increase in size of our Rockdale Facility over the period, which has more than doubled\nsince 2021.\n\nCost of revenue for Engineering for the three months ended September 30, 2023 and 2022, was $13.2 million and $13.8 million, respectively, a decrease of\napproximately $0.6 million. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs. The decrease was primarily\ndue to decreased receipts of materials resulting from increased competition for direct materials due to supply chain constraints.\n\nSelling, general and administrative expenses for the three months ended September 30, 2023 and 2022, were $29.1 million and $16.0 million, respectively, an\nincrease of approximately $13.1 million. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees, and\nother personnel and related costs. The increase was primarily due to increases in stock compensation expenses of $10.0 million due to our long-term\nincentive program implemented during the quarter, compensation expenses of $2.0 million as a result of hiring additional employees to support our\nongoing growth, and increased legal and professional fees of $2.3 million primarily related to ongoing litigation and public company compliance, partially\noffset by decreases of $1.3 million in other general operating costs, including information technology projects.\n\nDepreciation and amortization for the three months ended September 30, 2023 and 2022, was $64.6 million and $26.6 million, respectively, an increase of\napproximately $38.0 million. The increase was primarily due to higher depreciation expense recognized for the Rockdale Facility and significant increase in\nnumber of recently acquired miners.\n\nThe change in fair value of our derivative asset for the three months ended September 30, 2023 and 2022, was a gain of $3.9 million and a loss of $17.7\nmillion, respectively, and was recorded to adjust the fair value of our PPA, which was classified as a derivative asset and measured at fair value. The\nchanges in fair value were due to changes in future power prices over the applicable period.\n\nPower curtailment credits for the three months ended September 30, 2023 and 2022, were $49.6 million and $13.1 million, respectively, and represent sales of\nunused power under our PPA and participation in ancillary services under ERCOT Demand Response Services Programs. The amount of these credits\nvaries from period to period depending on various factors impacting the supply of power to, and the demand for power on, the ERCOT grid, such as\nweather and global fuel costs.\n\nRealized gains on the sale of Bitcoin for the three months ended September 30, 2023 and 2022, were $13.5 million and $3.1 million, respectively. The\nincrease was primarily attributable to an increase of 115 Bitcoin sold in the 2023 period as compared to the 2022 period and increased Bitcoin values in the\n2023 period as compared to the 2022 period.\n\nImpairment of Bitcoin for the three months ended September 30, 2023 and 2022, was $4.0 million and $3.0 million, respectively, arising from declines in\nBitcoin prices during the respective periods.\n\n\n\n 27\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 32 of 48\n\n\nComparative Results for the nine months ended September 30, 2023 and 2022:\n\nRevenue\n\nTotal revenue for the nine months ended September 30, 2023 and 2022 was $201.9 million and $199.0 million, respectively, and consisted of our Bitcoin\nMining revenue, Data Center Hosting revenue, Engineering revenue, and other revenue.\n\nFor the nine months ended September 30, 2023 and 2022, Bitcoin Mining revenue was $129.0 million, and $126.2 million, respectively. The increase of $2.8\nmillion was primarily due to an increase of 1,154 Bitcoin mined in the 2023 period as compared to the 2022 period as a result of an increase in miners\ndeployed, partially offset by lower Bitcoin values in the 2023 period, averaging $25,818 per coin, as compared to $32,839 for the 2022 period, and an\nincrease in the Bitcoin network difficulty. Additionally, we continued employing our power strategy to significantly reduce overall power costs. As\ndescribed below, during the nine months ended September 30, 2023, we earned $66.1 million in power credits, which were received in cash or credited\nagainst our power invoices, as a result of temporarily pausing operations. The power credits equate to approximately 2,562 Bitcoin, as computed using the\naverage daily Bitcoin prices for the 2023 period. During the nine months ended September 30, 2022, we earned $21.3 million in power credits, or the\nequivalent of approximately 649 Bitcoin, as computed using the average daily Bitcoin prices for the 2022 period.\n\nFor the nine months ended September 30, 2023 and 2022, Data Center Hosting revenue was $21.8 million, and $27.9 million, respectively. The decrease of\n$6.1 million was primarily due to lower revenue share from customers due to the lower Bitcoin values in the 2023 period, as noted above, combined with\nhosting fewer customers during 2023 as we continue to address legacy contracts.\n\nFor the nine months ended September 30, 2023 and 2022, Engineering revenue was $51.0 million and $44.9 million, respectively. The increase of $6.1 million\nwas primarily attributable to an increase in data center development across the country. Our custom electrical products such as switchgear and power\ndistribution centers are used as important components in data center development and in power generation and distribution facilities, and there has been\nincreased demand for these products due to the continued increase in data center construction by developers, as well as the continually increasing\nworldwide demand for power.\n\nCosts and expenses\n\nCost of revenue for Bitcoin Mining for the nine months ended September 30, 2023 and 2022, was $70.0 million and $51.8 million, respectively, an increase\nof approximately $18.2 million. As a percentage of Bitcoin Mining revenue, cost of revenue totaled 54.3% and 41.0% for the nine months ended\nSeptember 30, 2023 and 2022, respectively. Cost of revenue consists primarily of direct production costs of Bitcoin mining operations, including electricity,\nlabor, and insurance, but excluding depreciation and amortization, which are separately stated. The increase was primarily due to the increase in Bitcoin\nmining capacity at the Rockdale Facility, which requires more headcount and direct costs to maintain and support the Bitcoin mining operations. As noted\nbelow, during the nine months ended September 30, 2023 and 2022, we earned $66.1 million and $21.3 million, respectively, in power credits to be credited\nagainst our power invoices, as a result of temporarily pausing our operations to participate in ERCOT\u2019s demand response and ancillary services programs.\nOur fixed-price power contracts enable us to strategically curtail our mining operations and participate in these programs, which significantly lower our\ncost to mine Bitcoin. These credits are recognized in Power curtailment credits on our Condensed Consolidated Statements of Operations, outside of\ncost of revenue, but significantly reduce our overall cost to mine Bitcoin. When netting the power curtailment credits allocated to Bitcoin Mining with the\ncosts of revenue, the net costs as a percentage of Bitcoin Mining revenue were 21.4% and 34.6% for the nine months ended September 30, 2023 and 2022,\nrespectively.\n\nCost of revenue for Data Center Hosting for the nine months ended September 30, 2023 and 2022, was $73.9 million and $44.4 million, respectively, an\nincrease of approximately $29.5 million. The costs consisted primarily of direct power costs, with the balance primarily incurred for rent and compensation\ncosts. The increase was primarily attributable to the significant increase in size of our Rockdale Facility over the period, which has more than doubled\nsince 2021.\n\nCost of revenue for Engineering for the nine months ended September 30, 2023 and 2022, was $46.9 million and $40.5 million, respectively, an increase of\napproximately $6.4 million. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs. The increase was primarily\ndue to an increase in materials purchased, as well as additional labor required to support increased demand for our custom electricity transmission\nproducts. Increased competition for direct materials due to supply chain constraints contributed to additional costs, as well as inflationary pressure for\nlabor in manufacturing.\n\n\n\n 28\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 33 of 48\n\n\nSelling, general and administrative expenses for the nine months ended September 30, 2023 and 2022, were $61.6 million and $37.5 million, respectively, an\nincrease of approximately $24.0 million. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees and\nother personnel and related costs. The increase was primarily due to increases in compensation expenses of $7.7 million as a result of hiring additional\nemployees to support our ongoing growth, increased stock-based compensation of $7.4 million due to the adoption of the long-term incentive plan and\nadditional headcount, increased legal and professional fees of $6.1 million primarily related to ongoing litigation and public company compliance, and\nincreases of $2.8 million in other general operating costs such as information technology projects to support our growth.\n\nDepreciation and amortization expense for the nine months ended September 30, 2023 and 2022, was $190.1 million and $61.4 million, respectively, an\nincrease of approximately $128.7 million. The increase was primarily due to higher depreciation expense recognized for the Rockdale Facility and\nsignificant increase in number of recently acquired miners.\n\nThe increase in fair value of our derivative asset for the nine months ended September 30, 2023 and 2022, was $11.3 million and $86.9 million, respectively,\nand was recorded to adjust the fair value of our PPA, which was classified as a derivative asset and measured at fair value. The increases in fair value were\ndue to increases in future power prices over the applicable period.\n\nPower curtailment credits for the nine months ended September 30, 2023 and 2022, were $66.1 million and $21.3 million, respectively, which represent sales\nof unused power under our PPA and participation in ancillary services under ERCOT Demand Response Services Programs. The amount of these credits\nvaries from period to period depending on various factors impacting the supply of power to and the demand on the power grid, including weather and\nglobal fuel costs.\n\nThe realized gain on sale of Bitcoin for the nine months ended September 30, 2023 and 2022 was $47.1 million and $28.0 million, respectively. The increase\nwas primarily attributable to 2,690 more Bitcoin sold in the 2023 period as compared to the 2022 period, partially offset by decreased Bitcoin values in the\n2023 period as compared to the 2022 period.\n\nImpairment of Bitcoin for the nine months ended September 30, 2023 and 2022, was $14.2 million and $130.3 million, respectively, arising from declines in\nBitcoin prices during the respective periods, with more significant declines occurring in the 2022 period.\n\nNon-GAAP Measures\n\nIn addition to financial measures presented under GAAP, we consistently evaluate our use of and calculation of non-GAAP financial measures such as\n\"Adjusted EBITDA.\u201d EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure\ndefined as EBITDA further adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic\nbusiness operations, which management believes results in a performance measurement that represents a key indicator of our core business operations of\nBitcoin mining. The adjustments include fair value adjustments such as derivative power contract adjustments, equity securities value changes, and non-\ncash stock-based compensation expense, in addition to financing and legacy business income and expense items.\n\nWe believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and\ncompare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. Additionally,\nAdjusted EBITDA is used as a performance metric for share-based compensation.\n\nAdjusted EBITDA is provided in addition to, and should not be considered to be a substitute for, or superior to, net income, the most comparable\nmeasure under GAAP to Adjusted EBITDA. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted\nearnings per share or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a\nmeasure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this measure either in isolation or as a\nsubstitute for analyzing our results as reported under GAAP.\n\n\n\n 29\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 34 of 48\n\n\nThe following table reconciles Adjusted EBITDA to Net income (loss), the most comparable GAAP financial measure:\n\n Three Months Ended Nine Months Ended\n September 30, September 30,\n 2023 2022 2023 2022\nNet income (loss) $ (45,325) $ (32,435) $ (128,700) $ (349,416)\n Interest (income) expense (2,318) (348) (3,331) 9\n Income tax expense (benefit) (157) (2,952) (5,014) (8,839)\n Depreciation and amortization 64,569 26,559 190,071 61,366\nEBITDA 16,769 (9,176) 53,026 (296,880)\n\nAdjustments:\n Stock-based compensation expense 13,519 3,561 14,652 7,304\n Acquisition-related costs \u2014 \u2014 \u2014 78\n Change in fair value of derivative asset (3,943) 17,749 (11,274) (86,865)\n Change in fair value of contingent consideration \u2014 \u2014 \u2014 176\n Realized loss on sale of marketable equity securities \u2014 \u2014 \u2014 1,624\n Unrealized (gain) loss on marketable equity securities \u2014 (142) \u2014 6,306\n Loss (gain) on sale/exchange of equipment 5,306 (7,667) 5,336 (16,281)\n Casualty-related charges \u2014 \u2014 1,526 \u2014\n Impairment of goodwill \u2014 \u2014 \u2014 335,648\n Other (income) expense (31) \u2014 (96) 59\n License fees (25) (25) (73) (73)\nAdjusted EBITDA $ 31,595 $ 4,300 $ 63,097 $ (48,904)\n\nIn addition to Adjusted EBITDA, we believe \"Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits\u201d, \"Data Center\nHosting revenue in excess of cost of revenue, net of power curtailment credits\u201d, \"Cost of revenue \u2013 Bitcoin Mining, net of power curtailment credits\u201d and\n\"Cost of revenue \u2013 Data Center Hosting, net of power curtailment credits\u201d are additional non-GAAP performance measurements that represent a key\nindicator of our core business operations of both Bitcoin Mining and Data Center Hosting.\n\nWe believe our ability to offer power back to the grid at market-driven spot prices, thereby reducing our operating costs, is integral to our overall strategy,\nspecifically our power management strategy and our commitment to supporting the ERCOT grid. While participation in various grid demand response\nprograms may impact our Bitcoin production, we view this as an important part of our partnership-driven approach with ERCOT and our commitment to\nbeing a good corporate citizen in our communities.\n\nWe also believe netting the power sales against our costs can be an important financial measure because it allows management, investors, and our board\nof directors to evaluate and compare our operating results, including our operating efficiencies, from period-to-period by making such adjustments. We\nhave allocated the benefit of the power sales to our Data Center Hosting and Bitcoin Mining segments based on their proportional power consumption\nduring the periods presented.\n\nBitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, Data Center Hosting revenue in excess of cost of revenue, net of\npower curtailment credits, Cost of revenue \u2013 Bitcoin Mining, net of power curtailment credits and Cost of revenue \u2013 Data Center Hosting, net of power\ncurtailment credits are provided in addition to and should not be considered to be a substitute for, or superior to Revenue \u2013 Bitcoin Mining, Revenue \u2013\nData Center Hosting, Cost of revenue \u2013 Bitcoin Mining or Cost of revenue \u2013 Data Center Hosting as presented in our Condensed Consolidated\nStatements of Operations.\n\n\n\n 30\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 35 of 48\n\n\nThe following table presents reconciliations of these measurements to the most comparable GAAP financial measures:\n\n Three Months Ended Nine Months Ended\n September 30, September 30,\n 2023 2022 2023 2022\nBitcoin Mining\nRevenue $ 31,222 $ 22,070 $ 128,987 $ 126,166\n\nCost of revenue 24,449 14,677 69,995 51,766\nPower curtailment credits allocated to Bitcoin Mining (31,249) (6,104) (42,333) (8,175)\nCost of revenue, net of power curtailment credits (6,800) 8,573 27,662 43,591\nBitcoin mining revenue in excess of cost of revenue, net of power curtailment\ncredits $ 38,022 $ 13,497 $ 101,325 $ 82,575\nBitcoin mining revenue in excess of cost of revenue, net of power curtailment\ncredits as a percentage of revenue 121.8% 61.2% 78.6% 65.4%\n\nData Center Hosting\nRevenue $ 5,108 $ 8,371 $ 21,811 $ 27,899\n\nCost of revenue 26,135 $ 14,223 $ 73,929 $ 44,392\nPower curtailment credits allocated to Data Center Hosting (18,352) (6,996) (23,813) (13,153)\nCost of revenue, net of power curtailment credits 7,783 7,227 50,116 31,239\nData Center Hosting revenue in excess of cost of revenue, net of power curtailment\ncredits $ (2,675) $ 1,144 $ (28,305) $ (3,340)\nData Center Hosting revenue in excess of cost of revenue, net of power curtailment\ncredits as a percentage of revenue (52.4)% 13.7% (129.8)% (12.0)%\n\nTotal consolidated power curtailment credits $ (49,601) $ (13,070) $ (66,146) $ (21,328)\n\nLIQUIDITY AND CAPITAL RESOURCES\n\nAs of September 30, 2023, we had working capital of approximately $442.3 million, which included cash and cash equivalents of $290.1 million. We reported\na net loss of $128.7 million during the nine months ended September 30, 2023, which included $35.1 million in non-cash expenses, primarily consisting of\ndepreciation and amortization of $190.1 million, partially offset by Bitcoin Mining revenue of $129.0 million and gains on the sale of Bitcoin of $47.1 million.\n\nDuring the nine months ended September 30, 2023, we sold 4,615 Bitcoin for proceeds of approximately $118.8 million. We monitor our balance sheet on an\nongoing basis and evaluate the level of Bitcoin retained in consideration of our cash requirements and ongoing operations. Our Bitcoin sales for the 2023\nperiod were for substantially all of our Bitcoin production, but never more than our production on a monthly basis per our internal policy.\n\nThrough our ATM offerings, during the nine months ended September 30, 2023, we issued 27,492,345 shares of common stock, at a weighted average\nprice of $11.81 per share, for net proceeds of approximately $317.2 million. Subsequent to September 30, 2023, and through November 6, 2023, we received\nnet proceeds of approximately $101.1 million from the sale of 10,196,000 shares of our common stock at a weighted average price of $10.12 per share under\nour 2023 ATM Offering.\n\nWe believe our current financial position and operations give us the ability to meet cash requirements and plans in the short-term and long-term.\n\nMiners\n\nAs of December 31, 2022, we had outstanding executed purchase agreements for the purchase of miners from Bitmain for a total of 5,130 S19 series miners,\nall of which were received in January 2023.\n\nIn June 2023, we entered into a purchase agreement with MicroBT to acquire 8,320 M56S+ model miners and 24,960 M56S++ model miners for a total\npurchase price of approximately $162.9 million. Delivery of the miners is expected to begin in December 2023, with all miners expected to be received and\ndeployed by mid-2024. Upon full deployment of the 33,280 miners, we anticipate\n\n\n 31\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 36 of 48\n\n\nachieving a total self-mining hash rate capacity of 20.1 EH/s. The purchase agreement also provides us the option to purchase up to an additional 66,560\nadditional M56S++ miners on the same terms as the original purchase through December 31, 2024.\n\nDevelopment of the Corsicana Facility Data Center\n\nIn 2022, we announced our planned development of the Corsicana Facility, our second large-scale Bitcoin mining and data center hosting facility located\non a 265-acre site in Navarro County, Texas. The Corsicana Facility is expected, upon completion, to have one-gigawatt of developed capacity for Bitcoin\nmining and data center hosting, securely supplied with power by a substation being developed for us on the premises that will be interconnected with the\nnearby Navarro Switch. The strategic decision to locate the Corsicana Facility next to the Navarro Switch was made to limit electricity lost in transmission\nand maximize the efficiency of our substation\u2019s power distribution facilities. The initial phase of the development of the Corsicana Facility involves the\nconstruction of 400 MW of immersion-cooled Bitcoin mining and data center hosting infrastructure spread across multiple buildings, as well as\nconstruction of various utilities, offices, warehouses, and infrastructure to support the facility\u2019s operations. Construction of the substation and the data\ncenters is expected to be carried out through the first quarter of 2024, with Bitcoin Mining and Data Center Hosting operations expected to commence\nfollowing the commissioning of the substation.\n\nThis first phase of the development of the Corsicana Facility includes land acquisition, site preparation, substation development, and transmission\nconstruction, along with construction of ancillary buildings and four buildings utilizing our immersion-cooling infrastructure and technology. We estimate\nthat the total cost of the first phase of the development will be approximately $333 million, which is scheduled to be invested through the first quarter of\n2024. Through September 30, 2023, we had incurred costs of approximately $155.2 million related to the development of the Corsicana Facility, which\nconsisted of $10.1 million for land, $140.4 million of initial developments costs and equipment and a $4.7 million deposit for future power usage. We expect\nto incur costs of approximately $128 million during the remainder of 2023 and approximately $50 million during the first quarter of 2024.\n\nRevenue from Operations\n\nBitcoin Mining\n\nWe expect to generate ongoing revenue from Bitcoin rewards from our Bitcoin Mining operations and our ability to liquidate Bitcoin rewards at future\nvalues will be regularly evaluated to generate cash for operations.\n\nGenerating Bitcoin rewards which exceed our production and overhead costs will determine our ability to report profit margins related to such Bitcoin\nmining operations, although accounting for our reported profitability is significantly complex. Furthermore, regardless of our ability to generate proceeds\nfrom the sale of our Bitcoin produced from our Bitcoin Mining business, we may need to raise additional capital in the form of equity or debt to fund our\noperations and pursue our business strategy.\n\nThe ability to raise funds through the sale of equity, debt financings, or the sale of Bitcoin to maintain our operations is subject to many risks and\nuncertainties and, even if we were successful, future equity issuances or convertible debt offerings could result in dilution to our existing stockholders,\nand any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize\nrevenue through Bitcoin production and successfully convert Bitcoin into cash or fund overhead with Bitcoin is subject to a number of risks, including\nregulatory, financial and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the\nmarket price of Bitcoin and, as such, future prices cannot be predicted.\n\nData Center Hosting\n\nGenerally, we provide power for our hosted/co-located Bitcoin mining data center clients on a variable (sub-metered) basis. Each client pays us\nvariable monthly fees based on the amount of power, networking costs, and other basic hosting services utilized by such client\u2019s hosted operations, at\nrates specified in such client\u2019s hosting agreement. In addition to power charges and basic hosting charges, our hosting agreements with certain clients\nprovide for revenue sharing, based on the clients\u2019 operating revenue, net of direct hosting costs paid to us. We recognize variable hosting revenue\neach month, as the hosting fees and revenue sharing payments due to us from our hosting clients are subject to various uncertainties largely outside of\nour control, including the amount of power used by the hosted client, the market price for Bitcoin, the Bitcoin network difficulty and global hash rate, as\nwell as other factors.\n\nWe generate engineering and construction services revenue from the fabrication and deployment of immersion cooling technology for Bitcoin mining\nclients, for which we bill the client at a fixed monthly fee or at an hourly rate. For the installation and maintenance of client-owned equipment, revenue is\nrecognized upon completion of each phase of the installation project, as defined in each\n\n\n 32\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 37 of 48\n\n\nclient\u2019s hosting agreement. For the construction of assets owned by us but paid for and used by the client during the term of their data center hosting\ncontract, revenue is recognized on a straight-line basis over the remaining life of the contract.\n\nMaintenance services include cleaning, cabling, and other services to maintain the clients\u2019 equipment. We bill the client at a fixed monthly fee or at an\nhourly rate. Revenue is recognized as these services are provided.\n\nFor a number of clients inherited as a result of the Whinstone acquisition, we provide data center hosting services pursuant to hosting agreements\ncontaining below-market terms, including as to power costs (\"Legacy Contracts\u201d). Accordingly, our hosting revenue from such Legacy Contracts has,\nhistorically, been less than our cost to provide such clients with hosting services. We are presently engaged in litigation relating to such Legacy\nContracts, further increasing our costs associated with these Legacy Contracts. Our goal is to protect and advance, to the extent it is within our control,\nthe value of our Data Center Hosting business. In advancement of this goal, we are actively monitoring the performance of such remaining Legacy\nContract clients, with a focus on maximizing revenue and enhancing efficiencies both within the segment and through vertical integration across our\nbusiness segments.\n\nLegacy Hosting Agreements\n\nManagement continually assesses the performance of our business segments, to maximize revenue, minimize costs, and enhance efficiencies. As part of\ntheir examination of our Data Center Hosting business segment, management identified several Legacy Contracts inherited through the Whinstone\nacquisition containing below-market terms. Approximately 200 MW of the total capacity of the Rockdale Facility is occupied by Legacy Contract\ncustomers GMO and Rhodium. Management identified, through its assessment of our business segments, that these Legacy Contract customers have\nsought to take advantage of the legacy hosting arrangements to the detriment of our Data Center Hosting business. As such, Whinstone believes both\nGMO and Rhodium are in material breach of their obligations under their respective Legacy Contracts. Whinstone has made reasonable efforts to resolve\nthese Legacy Contract disputes and enter into revised hosting agreements on market terms and is presently engaged in litigation with both GMO and\nRhodium.\n\nTermination of GMO Legacy Hosting Agreement\n\nFollowing repeated attempts to reach a negotiated resolution of the matter before and after the GMO lawsuit was initiated, Whinstone terminated its\nLegacy Contract with GMO, effective as of June 29, 2023. Whinstone\u2019s removal of GMO\u2019s legacy miners from the Rockdale Facility, because of this\ntermination, will free up approximately 75 MW of mining capacity. In support of our growth and efficiencies, Whinstone intends to use the 75 MW area\nformerly occupied by GMO within the Rockdale Facility to host more powerful and efficient miners, either for its Data Center Hosting operations, on terms\nmore accretive to the Company than the terminated legacy agreement, or as part of our Bitcoin Mining operations.\n\nEngineering\n\nSubstantially all engineering revenue is derived from the sale of custom products built to customers\u2019 specifications under fixed-price contracts. Revenue\nis recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive\ncompensation as defined under the contract. The length of time required to complete a custom product varies but is typically between four and 12 weeks.\n\nCustomers are typically required to make periodic progress payments based on contractually agreed-upon milestones.\n\nIf we are unable to generate sufficient revenue from our Bitcoin Mining, Data Center Hosting, or Engineering operations when needed or secure additional\nsources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.\n\n\n\n 33\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 38 of 48\n\n\nOperating Activities\n\nFor the nine months ended September 30, 2023, net cash used in operating activities was $12.0 million, which primarily consisted of the net loss of $128.7\nmillion, partially offset by net cash inflows of $81.6 million due to changes in operating assets and liabilities, including proceeds from the sale of Bitcoin,\nand a net loss on non-cash reconciling items of $35.1 million. The net cash inflow due to changes in operating assets and liabilities primarily consisted of\nnet cash inflows of $118.8 from the sale of Bitcoin, partially offset by net cash outflows of $37.2 million attributable to changes in non-Bitcoin operating\nassets and liabilities. The non-cash net loss primarily consisted of depreciation and amortization of $190.0 million, primarily attributable to depreciation of\nour miners, partially offset by revenue of $129.0 million from our Bitcoin Mining operations and $47.1 million of gains on the sale of Bitcoin.\n\nFor the nine months ended September 30, 2022, net cash used in operating activities was $1.0 million, which primarily consisted of the net loss of $349.4\nmillion, partially offset by a net loss on non-cash reconciling items of $278.5 million and net cash inflows attributable to changes in operating assets and\nliabilities, including proceeds from the sale of Bitcoin, and of $70.0 million. The non-cash net loss primarily consisted of goodwill impairment of $335.6\nmillion and impairment of Bitcoin of $130.3 million, partially offset by Bitcoin Mining revenue of $126.2 million and an increase in the fair value of the\nderivative asset of $86.9 million, attributable to the increased value of our fixed price power agreement as compared to the forward power curve. The net\ncash inflows from operating assets and liabilities primarily consisted of proceeds from the sale of Bitcoin of $52.5 million, partially offset by changes in\nnon-Bitcoin operating assets and liabilities.\n\nInvesting Activities\n\nFor the nine months ended September 30, 2023, net cash used in investing activities was $232.4 million, which primarily consisted of purchases of property\nand equipment of $148.2 million attributable to the now complete expansion of the Rockdale Facility, ongoing development of the Corsicana Facility,\ncontinued deployment of miners, and payments for deposits on equipment of $90.5 million.\n\nFor the nine months ended September 30, 2022, net cash used in investing activities was $329.4 million, which primarily consisted of deposits paid on\nfuture shipments of miners of $194.9 million and purchases of property and equipment of $129.7 million, primarily attributable to the expansion of the\nRockdale Facility and continued deployment of miners.\n\nFinancing Activities\n\nFor the nine months ended September 30, 2023, net cash provided by financing activities was $304.1 million, which consisted of net proceeds from the\nissuance of shares under the ATM program of $317.2 million to be used to fund ongoing growth, partially offset by the repurchase of shares of common\nstock withheld to satisfy employee withholding taxes of $13.9 million in connection with the settlement of vested equity awards granted under our 2019\nEquity Incentive Plan.\n\nFor the nine months ended September 30, 2022, net cash provided by financing activities was $272.8 million, which consisted of net proceeds from the\nissuance of shares under the ATM program of $298.4 million used to fund ongoing growth, partially offset by payments on our contingent consideration\nliability of $15.7 million related to our acquisition of Whinstone and the repurchase of shares of common stock withheld to satisfy employee withholding\ntaxes of $9.9 million in connection with the settlement of vested equity awards granted under our 2019 Equity Incentive Plan.\n\nCritical Accounting Policies and Estimates and New Accounting Pronouncements\n\nOur critical accounting policies and significant estimates have not changed from those detailed in our 2022 Annual Report, except for those accounting\nsubjects described under the heading \"Recently Issued Accounting Pronouncements\u201d in Note 3, Basis of Presentation, Summary of Significant\nAccounting Policies and Recent Accounting Pronouncements in the Notes.\n\nWe have evaluated all recently issued accounting pronouncements and do not believe any such pronouncements currently have, and do not expect such\npronouncements to have, a material impact on our Condensed Consolidated Financial Statements on a prospective basis.\n\nOff-Balance Sheet Arrangements\n\nWe do not have any off-balance sheet arrangements.\n\n\n\n 34\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 39 of 48\n\n\nItem 3. Quantitative and Qualitative Disclosures About Market Risk\n\nMarket risk is the risk to earnings or asset and liability values resulting from movements in market prices. The following discussion about our market risk\nexposure involves forward-looking statements. Actual results could differ materially from those projected in our forward-looking statements. For more\ninformation regarding the forward-looking statements used in this section and elsewhere in this Quarterly Report, see the Cautionary Note Regarding\nForward-Looking Statements at the forepart of this Quarterly Report.\n\nRisk Regarding the Price of Bitcoin\n\nOur business and development strategy is focused on maintaining and expanding our Bitcoin Mining operations to maximize the amount of new Bitcoin\nrewards we earn. As of September 30, 2023, we held 7,327 Bitcoin with a carrying value of $151.8 million, all of which were produced from our Bitcoin\nmining operations. The carrying value of our Bitcoin assets reflects the $14.2 million of impairment charges we recorded against the value of our Bitcoin\nassets during the nine months ended September 30, 2023, due to decreases in the fair value of our Bitcoin after receipt.\n\nBitcoin held are accounted for as indefinite-lived intangible assets. Bitcoin are measured on a first-in-first-out (\"FIFO\u201d) basis and measured for impairment\ndaily based on the intraday low quoted price of Bitcoin. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the\nBitcoin. Subsequent reversal of impairment losses is not permitted.\n\nWe cannot accurately predict the future market price of Bitcoin and, as such, we cannot accurately predict whether we will record impairment of the value\nof our Bitcoin assets. The future value of Bitcoin will affect revenue from our operations, and any future impairment of the value of the Bitcoin we mine\nand hold for our account will be reported in our financial statements and results of operations as charges against net income, which could have a material\nadverse effect on the market price for our securities.\n\nItem 4. Controls and Procedures\n\nEvaluation of Disclosure Controls and Procedures:\n\nOur management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial\nofficer), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the\nExchange Act) as of September 30, 2023 to ensure that the information required to be disclosed by the Company in the reports that it files or submits\nunder the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information\nrequired to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our\nChief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. It should be noted that the design of any\nsystem of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will\nsucceed in achieving its stated goals under all potential future conditions, regardless of how remote.\n\nBased on this evaluation, our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer\n(principal financial officer), concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30,\n2023.\n\nChanges in Internal Control over Financial Reporting:\n\nThere have not been any changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2023 that materially\naffected, or are reasonably likely to materially affect, our internal control over financial reporting.\n\nPART II - OTHER INFORMATION\n\nItem 1. Legal Proceedings\n\nDisclosure under this Item is incorporated by reference to the disclosure provided in Note 16. Commitments and Contingencies in the Notes.\n\n\n\n 35\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 40 of 48\n\n\nItem 1A. Risk Factors\n\nInvestors should carefully review and consider the information regarding certain factors that could materially affect our business, results of operations,\nfinancial condition, cash flows and equity as set forth in Part I, Item 1A. Risk Factors in our 2022 Annual Report. There have been no material changes to\nthe risk factors disclosed in our 2022 Annual Report. We may disclose changes to our risk factors or disclose additional risk factors from time to time in\nour future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently believe not to be material also may\nadversely impact our business, financial condition, results of operations, cash flow and equity.\n\nItem 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities\n\nDuring the three months ended September 30, 2023, certain of our employees surrendered shares of common stock awarded to them to satisfy statutory\nminimum federal and state tax obligations associated with the vesting of restricted stock awards issued under our 2019 Equity Incentive Plan. The\nfollowing table summarizes these repurchases:\n\n Total Number Maximum\n of Shares Number of\n Purchased as Shares that\n Total Part of May Yet Be\n Number of Average Publicly Purchased\n Shares Price Paid Announced Plans Under the Plans\nPeriod Purchased per Share (a) or Programs or Programs\nJuly 1, 2023 through July 31, 2023 58,587 $ 16.95 N/A N/A\nAugust 1, 2023 through August 31, 2023 7,103 13.66 N/A N/A\nSeptember 1, 2023 through September 30, 2023 1,655 10.51 N/A N/A\nTotal 67,345 $ 16.45\n\n (a) The price paid per share is based on the closing price of our common stock as of the date of the determination of the statutory minimum for\n federal and state tax obligations.\n\nItem 5. Other Information\n\nDuring the three months ended September 30, 2023 none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted,\nmodified, or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative\ndefense conditions of Rule 10b5-1(c) under the Exchange Act or any \"non-Rule 10b5-1 arrangement\u201d as defined in Item 408(c) of Regulation S-K, except as\nfollows:\n\nEffective August 31, 2023, the Rule 10b5-1 sales plan of our director, Lance D\u2019Ambrosio, terminated at its plan end date in accordance with the terms of\nthe plan. Mr. D\u2019Ambrosio\u2019s Rule 10b5-1 sales plan became effective October 31, 2022, and instructed for the sale of vested shares of Riot stock in four\nequal tranches of 26,000 shares, quarterly, through the plan end date.\n\n\n\n\n 36\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 41 of 48\n\n\nItem 6. Index of Exhibits\n\nThe following exhibits are filed herewith or are incorporated herein by reference to exhibits previously filed with the SEC at the\nlocation indicated below:\n\nExhibit Description Location\n2.1 Plan of Merger, dated effective as of December 30, 2022, by and Exhibit 2.1 of the Current Report on Form 8-K filed January 3,\n between Riot Blockchain, Inc. and Riot Platforms, Inc. 2023.\n\n3.1 Articles of Incorporation filed September 20, 2017. Exhibit 3.1 of the Current Report on Form 8-K filed September\n 25, 2017.\n\n3.2 Amendment to the Articles of Incorporation of Riot Blockchain, Exhibit 3.1 of the Current Report on Form 8-K filed November\n Inc. dated November 21, 2022. 23, 2022.\n\n3.3 Amended and Restated Bylaws effective June 27, 2023. Exhibit 3.1 of the Current Report on Form 8-K filed June 30,\n 2023.\n\n3.4 Articles of Merger between Bioptix, Inc. and Riot Blockchain, Inc. Exhibit 3.1 of the Current Report on Form 8-K filed October 4,\n 2017.\n\n3.5 Articles of Merger between Riot Blockchain, Inc. and Riot Exhibit 3.1 of the Current Report on Form 8-K filed January 3,\n Platforms, Inc. 2023.\n\n10.1+ Form of Riot Platforms, Inc. Long-Term Incentive Program Award Exhibit 10.1 of the Current Report on Form 8-K filed July 19,\n Agreement. 2023.\n\n10.2* Controlled Equity OfferingSM Sales Agreement, dated as of August Exhibit 1.1 of the Current Report on Form 8-K filed August 9,\n 9, 2023, by and among Riot Platforms, Inc. and the Sales Agents. 2023.\n\n31.1 Rule 13a-14(a)/15d-14(a) - Certification of Chief Executive Officer Filed herewith.\n (principal executive officer).\n\n31.2 Rule 13a-14(a)/15d-14(a) - Certification of Chief Financial Officer Filed herewith.\n (principal financial officer).\n\n32.1 Section 1350 Certification Pursuant to 18 U.S.C. Section 1350, as Filed herewith.\n Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of\n 2002 (Principal Executive Officer).\n\n32.2 Section 1350 Certification Pursuant to 18 U.S.C. Section 1350, as Filed herewith.\n Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of\n 2002 (Principal Financial Officer).\n\n101 The following unaudited condensed consolidated financial Filed herewith.\n statements from this Quarterly Report, formatted in iXBRL (inline\n eXtensible Business Reporting Language) includes: (i) the\n Condensed Consolidated Balance Sheets as of September 30, 2023\n and December 31, 2022 (Unaudited); (ii) the Condensed\n Consolidated Statements of Operations for the Three and Nine\n Months Ended September 30, 2023 and 2022 (Unaudited); (iii) the\n Condensed Consolidated\n\n\n 37\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 42 of 48\n\n\n Statements of Stockholders\u2019 Equity for the Three and Nine\n Months Ended September 30, 2023 and 2022 (Unaudited); (iv) the\n Condensed Consolidated Statements of Cash Flows for the Nine\n Months Ended September 30, 2023 and 2022 (Unaudited); and (v)\n the Notes to Condensed Consolidated Financial Statements\n (Unaudited).\n\n104 Cover Page Interactive Data File (formatted as Inline XBRL and Filed herewith.\n contained in Exhibit 101).\n\n+ Indicates a management contract or compensatory plan or arrangement\n\n* Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Subject to Item 601(b)(10)(iv) of Regulation\nS-K, the Company undertakes to furnish supplemental copies of any of the omitted schedules to the SEC, upon its request.\n\n\n\n\n 38\n\f Case 6:24-cv-00099-ADA\nTable of Contents Document 18-6 Filed 02/27/24 Page 43 of 48\n\n\n SIGNATURES\n\nPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on\nits behalf by the undersigned thereunto duly authorized.\n\n Riot Platforms, Inc. (Registrant)\n\nDate: November 8, 2023 /s/ Jason Les\n Jason Les\n Chief Executive Officer\n (principal executive officer and duly authorized officer)\n\n /s/ Colin Yee\n Colin Yee\n Chief Financial Officer\n (principal financial officer and duly authorized officer)\n\n\n\n\n 39\n\f Case 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 44 of 48 Exhibit 31.1\n\n CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER\n\nI, Jason Les, certify that:\n\n1) I have reviewed this quarterly report on Form 10-Q of Riot Platforms, Inc. for the quarter ended September 30, 2023;\n\n2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the\n statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;\n\n3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial\n condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.\n\n4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in\n Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for\n the registrant and have:\n\n a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to\n ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,\n particularly during the period in which this report is being prepared;\n\n b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our\n supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external\n purposes in accordance with generally accepted accounting principles;\n\n c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the\n effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and\n\n d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal\n quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the\n registrant's internal control over financial reporting; and\n\n5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the\n registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):\n\n a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely\n to adversely affect the registrant's ability to record, process, summarize and report financial information; and\n\n b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over\n financial reporting.\n\nNovember 8, 2023 /s/ Jason Les\n Jason Les\n Chief Executive Officer\n (Principal Executive Officer)\n\f Case 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 45 of 48 Exhibit 31.2\n\n CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER\n\nI, Colin Yee, certify that:\n\n1) I have reviewed this quarterly report on Form 10-Q of Riot Platforms, Inc. for the quarter ended September 30, 2023;\n\n2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the\n statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;\n\n3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial\n condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.\n\n4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in\n Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for\n the registrant and have:\n\n a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to\n ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,\n particularly during the period in which this report is being prepared;\n\n b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our\n supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external\n purposes in accordance with generally accepted accounting principles;\n\n c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the\n effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and\n\n d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal\n quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the\n registrant's internal control over financial reporting; and\n\n5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the\n registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):\n\n a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely\n to adversely affect the registrant's ability to record, process, summarize and report financial information; and\n\n b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over\n financial reporting.\n\nNovember 8, 2023 /s/ Colin Yee\n Colin Yee\n Chief Financial Officer\n (Principal Financial Officer)\n\f Case 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 46 of 48 Exhibit 32.1\n\n CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,\n AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002\n\nIn connection with the Quarterly Report of Riot Platforms, Inc. (the \"Company\u201d) on Form 10-Q for the quarter ended September 30, 2023, as filed with the\nSecurities and Exchange Commission on the date hereof (the \"Report\u201d), the undersigned Chief Executive Officer (principal executive officer) of the Company,\nJason Les, hereby certifies, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code as adopted pursuant to Section 906 of the Sarbanes-\nOxley Act of 2002, that:\n\n (1) the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and\n\n (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.\n\nNovember 8, 2023 /s/ Jason Les\n Jason Les\n Chief Executive Officer\n (Principal Executive Officer)\n\f Case 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 47 of 48 Exhibit 32.2\n\n CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,\n AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002\n\nIn connection with the Quarterly Report of Riot Platforms, Inc. (the \"Company\u201d) on Form 10-Q for the quarter ended September 30, 2023, as filed with the\nSecurities and Exchange Commission on the date hereof (the \"Report\u201d), the undersigned Chief Financial Officer (principal financial officer) of the Company,\nColin Yee, hereby certifies, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code as adopted pursuant to Section 906 of the Sarbanes-\nOxley Act of 2002, that:\n\n (1) the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and\n\n (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.\n\nNovember 8, 2023 /s/ Colin Yee\n Colin Yee\n Chief Financial Officer\n (Principal Financial Officer)\n\fCase 6:24-cv-00099-ADA Document 18-6 Filed 02/27/24 Page 48 of 48\n\f","ocr_status":2,"date_upload":"2024-02-28T08:47:51.633086-08:00","document_number":"18","attachment_number":6,"pacer_doc_id":"181031729620","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Exhibit Exhibit E to Amicus Brief (Riot 10-Q)","acms_document_guid":""}],"date_created":"2024-02-27T18:25:32.373039-08:00","date_modified":"2025-01-22T17:34:00.804161-08:00","date_filed":"2024-02-27","time_filed":"19:31:44","entry_number":18,"recap_sequence_number":"2024-02-27.003","pacer_sequence_number":67,"description":"MOTION for Leave to File Amicus Brief by Casey Roberts. by Sierra Club. (Attachments: # (1) Exhibit Amicus Brief of Sierra Club, # (2) Exhibit Exhibit A to Amicus Brief (Reed Declaration), # (3) Exhibit Exhibit B to Amicus Brief (ERCOT PowerPoint), # (4) Exhibit Exhibit C to Amicus Brief (Fisher Declaration), # (5) Exhibit Exhibit D to Amicus Brief (Riot 10-K), # (6) Exhibit Exhibit E to Amicus Brief (Riot 10-Q))(Roberts, Casey)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379615113/","id":379615113,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387339019/","id":387339019,"tags":[],"absolute_url":"/docket/68276281/17/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-27T13:06:17.787995-08:00","date_modified":"2025-01-22T17:34:00.790800-08:00","sha1":"85089d87ae45cad195f1bdc5622dd426e94ba585","page_count":2,"file_size":128171,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.17.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.17.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387339019.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 17 Filed 02/27/24 Page 1 of 2\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\nTEXAS BLOCKCHAIN COUNCIL, A \u00a7\nNONPROFIT ASSOCIATION; AND \u00a7\nRIOT PLATFORMS, INC., \u00a7 W-24-CV-00099-ADA\n Plaintiffs, \u00a7\n \u00a7\nv. \u00a7\n \u00a7\nDEPARTMENT OF ENERGY, \u00a7\nJENNIFER M. GRANHOLM, IN HER\nOFFICIAL CAPACITY AS\nSECRETARY OF ENERGY; ENERGY\nINFORMATION ADMINISTRATION,\nJOSEPH DECAROLIS, IN HIS\nOFFICIAL CAPACITY AS\nADMINISTRATOR OF ENERGY\nINFORMATION ADMINISTRATION;\nOFFICE OF MANAGEMENT AND\nBUDGET, SHALANDA YOUNG, IN\nHER OFFICIAL CAPACITY AS\nDIRECTOR OF OFFICE OF\nMANAGEMENT AND BUDGET; AND\nCHAMBER OF DIGITAL\nCOMMERCE,\n Defendants.\n\n ORDER CANCELLING PRELIMINARY INJUNCTION HEARING\n\n During a telephonic conference on February 27th, 2024, the parties represented to the Court\n\nthat an agreement-in-principle was reached on the underlying disputes in the above captioned\n\nmatter. The parties then jointly requested that the preliminary injunction hearing be cancelled.\n\nTherefore, IT IS HEREBY ORDERED that the above entitled and numbered case having been\n\nset for PRELIMINARY INJUNCTION HEARING on Wednesday, February 28, 2024 at\n\n10:00 AM is hereby CANCELLED until further order of the court. The Parties are also\n\nORDERED to memorialize their agreement by filing it on the docket and attach a proposed order\n\non or before March 1, 2024.\n\n SIGNED this 27th day of February, 2024.\n\fCase 6:24-cv-00099-ADA Document 17 Filed 02/27/24 Page 2 of 2\n\f","ocr_status":2,"date_upload":"2024-02-27T13:17:57.202388-08:00","document_number":"17","attachment_number":null,"pacer_doc_id":"181031726880","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order Cancelling Deadline","acms_document_guid":""}],"date_created":"2024-02-27T13:06:17.727912-08:00","date_modified":"2025-01-22T17:34:00.776016-08:00","date_filed":"2024-02-27","time_filed":"14:28:27","entry_number":17,"recap_sequence_number":"2024-02-27.002","pacer_sequence_number":65,"description":"ORDER CANCELLING PRELIMINARY INJUNCTION HEARING. IT IS HEREBY ORDERED that the above entitled and numbered case having been set for PRELIMINARY INJUNCTION HEARING on Wednesday, February 28, 2024 at 10:00 AM is hereby CANCELLED until further order of the court. The Parties are also ORDERED to memorialize their agreement by filing it on the docket and attach a proposed order on or before March 1, 2024. Signed by Judge Alan D Albright. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379521419/","id":379521419,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387240762/","id":387240762,"tags":[],"absolute_url":"/docket/68276281/16/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-26T16:10:02.877667-08:00","date_modified":"2025-01-22T17:34:00.705473-08:00","sha1":"f3c307c34425e729530d2d4cbcd11e57e72f78bf","page_count":5,"file_size":120042,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.16.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.16.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387240762.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 16 Filed 02/26/24 Page 1 of 5\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n TEXAS BLOCKCHAIN COUNCIL, a\n nonprofit association; RIOT PLATFORMS,\n INC.,\n\n Plaintiffs,\n\n v. Case No. 6:24-cv-99\n\n DEPARTMENT OF ENERGY; JENNIFER\n M. GRANHOLM, in her official capacity as\n Secretary of Energy; ENERGY\n INFORMATION ADMINISTRATION;\n JOSEPH DECAROLIS, in his official\n capacity as Administrator of Energy\n Information Administration; OFFICE OF\n MANAGEMENT AND BUDGET;\n SHALANDA YOUNG, in her official\n capacity as Director of Office of\n Management and Budget,\n\n Defendants.\n\n\nCHAMBER OF DIGITIAL COMMERCE\u2019S MOTION FOR LEAVE TO INTERVENE AS\n PLAINTIFF\n\n Pursuant to Fed. R. Civ. P. 24, the Chamber of Digital Commerce (\u201cChamber\u201d), a trade\n\nassociation representing multiple affected parties, asks the Court for leave to intervene and join\n\nthe existing Plaintiffs. Permissive intervention is appropriate because the Chamber has claims with\n\nthe main action common questions of law and fact. Fed. R. Civ. P. 24(b)(1).\n\n Founded in 2014, the Chamber is the world\u2019s largest blockchain trade association. The\n\nChamber represents more than 150 diverse members of the blockchain industry globally, including\n\ncryptocurrency miners, startups, and other blockchain economy participants. An important aspect\n\n\n\n4883-6709-3929.1\n\f Case 6:24-cv-00099-ADA Document 16 Filed 02/26/24 Page 2 of 5\n\n\n\n\nof that mission is representing the interests of its members in novel cases that implicate issues of\n\nimportance to the blockchain community.\n\n The interests of the Chamber are inextricably linked to the outcome of this case. The\n\nChamber\u2019s membership encompasses over 75 percent of the total market capitalization of North\n\nAmerican proof-of-work cryptocurrency mining operations as of February 2024. Among these\n\nminers are those required to complete the \u201cemergency\u201d survey at issue here, EIA-862. This\n\nrequirement threatens to imminently and irreparably harm these Chamber members. The\n\nChamber\u2019s miner members include miners that are not members of Texas Blockchain Council\n\n(\u201cTBC\u201d), the current organizational plaintiff. Accordingly, it is appropriate for the Court to allow\n\nthe Chamber to intervene to ensure that its members\u2019 voices are heard.\n\n Intervention would not impede these proceedings, as the Chamber seeks the same relief as\n\nthe existing plaintiffs and is prepared to move forward as scheduled. Finally, the existing\n\nPlaintiffs\u2014TBC and Riot Platforms, Inc.\u2014do not oppose intervention.\n\n\n\n\n4883-6709-3929.1\n\f Case 6:24-cv-00099-ADA Document 16 Filed 02/26/24 Page 3 of 5\n\n\n\n\n Respectfully,\n\n /s/ Joshua Smeltzer\n Chris Davis\n Joshua D. Smeltzer\n GRAY REED\n 1601 Elm St., Suite 4600\n Dallas, TX 75201\n cdavis@grayreed.com\n Tel: (469) 320-6215\n Fax: (469) 320-6926\n jsmeltzer@grayreed.com\n Tel: (469) 320-6225\n Fax: (469) 320-6930\n\n Greg White\n 900 Washington Avenue\n Suite 800\n Waco, Texas 76701\n gwhite@grayreed.com\n Tel: (254) 342-3003\n Fax: (469) 320-6926\n\n Mark D. Siegmund\n State Bar Number 24117055\n CHERRY JOHNSON SIEGMUND JAMES\n PLLC\n The Roosevelt Tower\n 400 Austin Avenue, 9th Floor\n Waco, Texas 76701\n Tel: (254) 732-2242\n Fax: (866) 627-3509\n msiegmund@cjsjlaw.com\n\n Counsel for Intervenor\n\n\n\n\n4883-6709-3929.1\n\f Case 6:24-cv-00099-ADA Document 16 Filed 02/26/24 Page 4 of 5\n\n\n\n\n CERTIFICATE OF CONFERENCE\n\n I hereby certify that I conferred with counsel for Plaintiffs and Defendants regarding the\n\nrelief sought in this motion. Plaintiffs are UNOPPOSED. A conference was held with counsel for\n\nDefendants on February 25, 2004 and February 26, 2024. Defendant\u2019s counsel stated that it was\n\nnot taking a position on the motion at the time of the Plaintiff\u2019s filing.\n\n /s/ Chris Davis\n Chris Davis\n GRAY REED\n 1601 Elm St., Suite 4600\n Dallas, TX 75201\n cdavis@grayreed.com\n Tel: (469) 320-6215\n Fax: (469) 320-6926\n\n\n\n\n4883-6709-3929.1\n\f Case 6:24-cv-00099-ADA Document 16 Filed 02/26/24 Page 5 of 5\n\n\n\n\n CERTIFICATE OF SERVICE\n\n I am an attorney and hereby certify that on February 26, 2024, I electronically filed the\n\nforegoing CHAMBER OF DIGITIAL COMMERCE\u2019S MOTION FOR LEAVE TO INTERVENE\n\nAS PLAINTIFF with the Clerk of the Court for the United States District Court Western District\n\nof Texas by using the CM/ECF system which will send notice to all counsel of record for both\n\nPlaintiffs and Defendants.\n\n\n /s/ Joshua Smeltzer\n Joshua D. Smeltzer\n GRAY REED\n 1601 Elm St., Suite 4600\n Dallas, TX 75201\n jsmeltzer@grayreed.com\n Tel: (469) 320-6225\n Fax: (469) 320-6930\n\n\n\n\n4883-6709-3929.1\n\f","ocr_status":2,"date_upload":"2024-02-26T16:18:40.096256-08:00","document_number":"16","attachment_number":null,"pacer_doc_id":"181031721573","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Motion for Miscellaneous Relief","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387241253/","id":387241253,"tags":[],"absolute_url":"/docket/68276281/16/1/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-26T16:18:31.149495-08:00","date_modified":"2025-01-22T17:33:57.097687-08:00","sha1":"94fdae34acf12f7933ff809394ff826d6d67b136","page_count":15,"file_size":177113,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.16.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.16.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 1 of 15\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n TEXAS BLOCKCHAIN COUNCIL, a\n nonprofit association;\n RIOT PLATFORMS, et al,\n Civil Action No. 6:24-cv-99\n Plaintiffs,\n\n v.\n\n DEPARTMENT OF ENERGY,\n JENNIFER M. GRANHOLM in her\n official capacity as Secretary of Energy;\n ENERGY INFORMATION\n ADMINISTRATION; JOSEPH\n DECAROLIS, in his official capacity as\n Administrator of Energy Information\n Administration; OFFICE OF\n MANAGEMENT AND BUDGET;\n SHALANDA YOUNG, in her official\n capacity as Director of Office of\n Management and Budget\n\n Defendants.\n\n\n\n\nMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION\nTO INTERVENE BY THE CHAMBER OF DIGITAL COMMERCE ON BEHALF\n OF ITS AFFECTED MEMBER PARTIES\n\n\n INTRODUCTION\n\n\n 1. The Court is guided primarily by practical and equitable considerations when faced\n\nwith determining whether intervention is appropriate. See United States ex. rel. McGough v.\n\n\n 1\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 2 of 15\n\n\n\n\nCovington Techs. Co., 967 F.2d 1391, 1394 (9th Cir. 1992). The rule for intervention is broadly\n\nconstrued in favor of intervenors. United States v. City of Los Angeles, 288 F.3d 391, 397 (9th Cir.\n\n2002). \u201cA liberal policy in favor of intervention serves both efficient resolution of issues and\n\nbroadened access to the courts.\u201d Id. at 397- 98 (citation omitted).\n\n 2. Under Rule 24(b) (permissive intervention), courts may permit anyone to intervene\n\nwhen (1) the applicant\u2019s motion is timely; (2) there are independent grounds for jurisdiction; and\n\n(3) the applicant has a claim or defense that shares a common question of law or fact with the\n\naction. Id. at 403. \u201c[C]ourts are guided primarily by practical and equitable considerations.\u201d Id.\n\nat 397 (quotation omitted). The individual applicants move for mandatory intervention, or\n\nalternatively, for permissive intervention.\n\n\n A. STANDING AS TRADE ASSOCIATION ON BEHALF OF IT\u2019S MEMBERS\n\n 3. The Chamber asserts standing in this matter through the vindication of its interests\n\nand the interests of its Members. Organizations or associations \u201care unable to establish standing\n\nsolely on the basis of institutional interest in a legal issue.\u201d Pa. Prison Soc'y v. Cortes, 508 F.3d\n\n156, 162 (3d Cir. 2007). Instead, an organization may assert standing (a) through direct injury to\n\nthe organization or (b) as a representative of injured members of the organization. Id. As the\n\nrepresentative of the largest contingent of U.S. cryptocurrency Members, of which are subject to\n\nthe harm created by the EIA\u2019s mandatory survey, the Chamber asserts standing as their\n\nrepresentative.\n\n 4. The U.S. Supreme Court has held that an association has standing to sue on behalf\n\nof its members if the following conditions are met: (1) the association\u2019s members would otherwise\n\nhave standing in their own right, (2) the interest the association is seeking to protect is germane to\n\nthe association\u2019s purpose, and (3) neither the claim asserted, nor the relief requested, requires\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 3 of 15\n\n\n\n\nparticipation of individual members in the lawsuit. Hunt v. Wash. State Apple Adver. Comm\u2019n, 432\n\nU.S. 333 (1977).\n\n 5. Each of the Hunt factors are easily met here. The Chamber\u2019s Members include\n\ncryptocurrency miners who (1) would otherwise have standing in their own right as they are mining\n\ncompanies who also received the data request at issue and allege that divulging this information\n\nwould cause them irreparable and immediate harm. See Decl. at \u00b62-4 (attesting that Chamber\n\nincludes mining companies who have reporting obligations at issue). (2) As a trade association for\n\nthe cryptocurrency sector for nearly 10 years, protecting the interest of the Chamber\u2019s Members is\n\ngermane to the purpose of the Association. Defending proof-of-work cryptocurrency miners,\n\nBitcoin mining companies in particular, has long been an interest of the Chamber. The Chamber\n\nhas been an active participant in multiple policy and legal challenges in this arena in the past 10\n\nyears, even responding to previous requests for information by the Defendants related to the\n\noperations of cryptocurrency miners. (3) The claims at issue, or the relief requested, do not require\n\ndirect participation from individual Members \u2013 among other reasons, because the existence of the\n\nsurvey letter and data request itself is acknowledged and not contested by any party, and their\n\nstatus as bitcoin mining companies is not disputed. The legal dispute centers around whether the\n\ngovernment is abiding by its own rules \u2013 the adjudication of which does not require participation\n\nof any of the Chamber\u2019s Members directly.\n\n\n B. THE COURT SHOULD EXERCISE ITS DISCRETION TO GRANT\n PERMISSIVE INTERVENTION\n\n 6. The Intervenor Plaintiff respectfully request that this Court grant permission to\n\nintervene in this suit pursuant to Rule 24(b) of the Federal Rules of Civil Procedure. An applicant\n\nseeking permissive intervention must meet three threshold requirements: (1) it shares a common\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 4 of 15\n\n\n\n\nquestion of law or fact with the main action; (2) its motion is timely; and (3) the court has an\n\nindependent basis for jurisdiction over the applicant\u2019s claims. Northwest Forest Resource Council,\n\n82 F.3d at 839. Permissive intervention is justified in this matter because there are independent\n\ngrounds for jurisdiction and the applicants share a common question of law or fact with this action.\n\nSee United States v. LULAC, 793 F.2d 636, 644 (5th Cir. 1986) (\u201cAlthough the court erred in\n\ngranting intervention as of right, it might have granted permissive intervention under Rule 24(b)\n\nbecause the intervenors raise common questions of law and fact.\u201d). The Chamber here satisfies\n\neach factor.\n\n 1. Common Question of Law or Fact with the Main Action\n\n 7. The plaintiffs raise claims under the Paperwork Reduction Act (\u201cPRA\u201d) and\n\nAdministrative Procedure Act (\u201cAPA\u201d). Intervenor Plaintiff raises the exact same claims.\n\nIntervenor Plaintiff Agrees to all aspects of the allegations of the complaint including its factual\n\nand legal allegations. (See Dkt. #1.)\n\n 8. Like Plaintiffs, Intervenor Plaintiff represents crypto mining companies. Like\n\nPlaintiff, Intervenor Plaintiff\u2019s crypto mining companies received the same survey at issue in this\n\ncase in the same process. Like Plaintiff, Intervenor Plaintiff alleges that this survey, by way of this\n\nprocess, violates the PRA and APA in exactly the way so alleged in Plaintiff\u2019s Complaint.\n\n 9. The PRA and its implementing regulations set forth a comprehensive scheme for\n\napproving collections of information. 44 U.S.C. \u00a7 3507; 5 C.F.R. \u00a7\u00a7 1320.9-13. Under that scheme,\n\nproposed collections are grouped into one of three categories: (1) collections that are not contained\n\nin proposed or current rules, 44 U.S.C. \u00a7 3507(c); 5 C.F.R. \u00a7 1320.10; (2) collections contained in\n\nproposed rules, 44 U.S.C. \u00a7 3507(d); 5 C.F.R. \u00a7 1320.11; and (3) collections contained in existing\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 5 of 15\n\n\n\n\nrules, 44 U.S.C. \u00a7 3507(h)(2); 5 C.F.R. \u00a7 1320.12. The survey launched by EIA is in the first\n\ncategory.\n\n 10. The PRA also permits an accelerated or \u201cemergency\u201d process. 44 U.S.C. \u00a7 3507(j);\n\n5 C.F.R. \u00a7 1320.13. Under emergency processing, an agency may request authorization of a\n\ncollection of information if its head determines that:\n\n (A) a collection of information\u2013\n\n (i) is needed prior to the expiration of time periods established under this\n subchapter; and\n (ii) is essential to the mission of the agency; and\n\n (B) the agency cannot reasonably comply with the provisions of this subchapter because\n\n (i) public harm is reasonably likely to result if normal clearance procedures are\n followed;\n (ii) an unanticipated event has occurred; or\n (iii) the use of normal clearance procedures is reasonably likely to prevent or disrupt\n the collection of information or is reasonably likely to cause a statutory or court\n ordered deadline to be missed.\n\n 11. Agencies shall not conduct information collections without proper authorization\n\nfrom OMB in compliance with the PRA. 44 U.S.C. \u00a7 3506(a)(1); 5 C.F.R. \u00a7 1320. As the PRA\u2019s\n\nadministrator, OMB is likewise under a duty to ensure that the law is followed. 44 U.S.C. \u00a7\u00a7 3503,\n\n3504. As a result, Plaintiffs claim that Defendants have failed to meet these obligations and\n\nviolated the PRA.\n\n 12. The plaintiffs raise claims under the APA which establishes how federal\n\nadministrative agencies make rules and adjudicate administrative litigation. 5 U.S.C. \u00a7 552.\n\n 13. The plaintiffs provide that courts \u201cshall\u201d hold unlawful and set aside agency action\n\nthat is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;\n\ncontrary to constitutional right, power, privilege, or immunity; in excess of statutory jurisdiction,\n\nauthority, or limitations, or short of statutory right; and/or without observance of procedure\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 6 of 15\n\n\n\n\nrequired by law. 5 U.S.C. \u00a7 706(2). Accordingly, the emergency request and approval of the Survey\n\nunder the APA should be held unlawful and set aside for the following reasons:\n\n a. OMB acted arbitrarily or capriciously by approving EIA\u2019s emergency collection request,\n\n which did not meet the standards established under the PRA and its implementing\n\n regulations.\n\n b. OMB abused its discretion by approving EIA\u2019s emergency collection request, which did\n\n not meet the standards established under the PRA and its implementing regulations.\n\n c. Administrator DeCarolis and EIA acted in excess of statutory authority by seeking\n\n sensitive proprietary information that goes beyond the \u201cenergy consumption\u201d information\n\n they are permitted to request under 15 U.S.C. \u00a7 772(b).\n\n d. Administrator DeCarolis acted arbitrarily or capriciously by determining that the Survey\n\n information collection was \u201cneeded\u201d before the time periods prescribed by the PRA and\n\n its implementing regulations, and that EIA could not comply with the standard clearance\n\n process because \u201cpublic harm was reasonably likely\u201d to occur.\n\n e. Administrator DeCarolis abused his discretion by determining that the Survey\n\n information collection was \u201cneeded\u201d before the time periods prescribed by the PRA and\n\n its implementing regulations, and that EIA could not comply with the standard clearance\n\n process because \u201cpublic harm was reasonably likely\u201d to occur.\n\n f. Administrator DeCarolis acted contrary to law when he, or EIA at his direction, did not\n\n take steps to consult with members of the public before seeking emergency processing, 5\n\n C.F.R. \u00a7 1320.13(d), and failed to provide the public notice required by 5 C.F.R. \u00a7\n\n 1320.13(d).\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 7 of 15\n\n\n\n\n g. OMB acted in excess of statutory authority when it approved a 189-day emergency\n\n authorization for the Survey pursuant to 44 U.S.C. \u00a7 3507(j)(2). Section 3508(j)(2) allows\n\n such collections for a maximum 180 days and the agency was without statutory authority\n\n to grant the collection for a period in excess of that.\n\n h. OMB acted contrary to law when it violated its own regulation, 5 C.F.R. \u00a7 1320.13(f),\n\n which limits its authority to grant an emergency collection to a maximum of 90 days and\n\n instead granted an emergency collection request for 189 days.\n\n 14. Plaintiff-Intervenors claim the emergency authorization claimed by the EIA is\n\nwoefully inadequate, lacking the substantive justification and procedural rigor demanded by its\n\nenabling statutes. The EIA has not demonstrated a compelling need for such sweeping data\n\ncollection, nor has it provided a clear rationale for its expedited implementation, rendering the\n\nmandate both arbitrary and capricious. The Plaintiffs\u2019 complaint shares essentially identical\n\nquestions of law and fact with the Intervenor and, as such, unquestionably satisfies the criteria for\n\npermissive intervention.\n\n 2. This Motion is Timely\n\n 15. The first factor for permissive intervention, timeliness of the application, is\n\nunquestionably met. In considering the timeliness of the intervention, the Court should consider\n\nthe totality of the circumstances. NAACP v. New York, 413 U.S. 345, 366 (1973). The Fifth Circuit\n\nhas noted that Rule 24\u2019s timeliness inquiry \u201cis contextual; absolute measures of timeliness should\n\nbe ignored.\u201d Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994).\n\n 16. Plaintiffs filed their complaint on February 22, 2024. This Motion to Intervene is\n\nfiled within two business days of the complaint. (See Dkt. #1.) Beyond the complaint, no other\n\npleadings have been filed in this matter. As of the date of this filing, Defendants have not filed a\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 8 of 15\n\n\n\n\nresponse. This motion is \u201cfiled at a very early stage, before any hearings or rulings on substantive\n\nmatters.\u201d Idaho Farm Bureau Fed\u2019n v. Babbitt, 58 F.3d 1392, 1397 (9th Cir. 1995). Aside from\n\nthe emergency hearing on the Temporary Restraining Order held on February 23, 2024, this motion\n\nis filed before all other substantive hearings \u2013 including the scheduled hearing on February 28,\n\n2024.\n\n 17. Intervenor here has clearly acted with promptly, exceeding the timeliness\n\nrequirement for intervention. Intervenor even held Meet and Confer sessions with the government\n\non February 22, 2024.\n\n 3. The Court Has an Independent Basis for Jurisdiction Over the\n\n Applicant\u2019s Claims\n\n 18. The State Movants have standing under Article III of the United States Constitution.\n\nTo establish standing under Article III, a prospective intervenor must show: (1) injury-in-fact, (2)\n\ncausation, and (3) redressability. As described above, the Plaintiff-Intervenor \u2013 by way of its\n\nconstituent members \u2013 have significant and concrete interests in this litigation, and these interests\n\nwould be harmed if Defendants prevail, and the government is not enjoined.\n\n 19. The Chamber\u2019s membership includes Members who do not belong to the Texas\n\nBlockchain Council. At least ten Members of the Chamber participate in proof-of-work\n\ncryptocurrency mining and are not represented by the Texas Blockchain Council. Additionally, at\n\nleast four of the Chamber\u2019s Members have received notice mandating they respond to the EIA\u2019s\n\nsurvey and are not legally represented among the existing parties. This number could grow as the\n\nChamber\u2019s Members continue to receive the EIA\u2019s survey letter for various reasons. First, the letter\n\nwas not sent through a certified delivery service. Instead, it was mailed through the United States\n\nPostal Service resulting in a delay leaving some Members with less than 10 business days to\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 9 of 15\n\n\n\n\nrespond with initial survey letters and follow-up reminder letters sent to different addresses.\n\nSecond, in some cases, the letter was mailed to an incorrect address or recipient. Finally, in at least\n\none instance, the letter was addressed to a Member but mailed to a facility that the Member has\n\nnot owned for several years.\n\n 20. As demonstrated in the attached Declaration, The Chamber includes Members\n\nthat received the survey, and are thereby affected parties, with operations in Texas. These\n\ninclude Members not already covered by Plaintiff. See Ex. A at \u00b65.\n\n C. INTERVENTION IS ALLOWED IN TRO AND PRELMINARY INJUNCTION\n CONTEXT\n\n 21. Federal courts have often granted intervenors\u2019 motions to join temporary restraining\n\norders and preliminary injunctions. See E. Bay Sanctuary Covenant House v. Barr, Case No. 19-\n\ncv-04073-JST, (N.D. Cal. Oct. 17, 2020); see also Planned Parenthood et al. v. Daniel Cameron\n\net al., Case No. 3:22-cv-198-RGJ (W.D. Ky. April 26, 2022) (granting Motion to Intervene for\n\nInjunctive Relief and considering Temporary Restraining Order, but considering it Moot on other\n\ngrounds).\n\n D. ADDITIONAL FACTORS FOR CONSIDERATION\n\n 22. The Plaintiff-Intervenor asserts a right to intervene, premised on their status as\n\nbeing similarly situated to the original plaintiffs. This similarity extends to the nature and\n\nmagnitude of the harms anticipated from the challenged actions of the U.S. Department of Energy,\n\nand the EIA. Specifically, the Plaintiff-Intervenor would endure harms identical to those articulated\n\nin the initial complaint, underscoring a direct and substantial interest in the outcome of the\n\ncomplaint. Moreover, the absence of an injunction against the Defendants\u2019 actions poses a\n\nsignificant risk of irreparable injury to the Plaintiff-Intervenor\u2019s interests.\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 10 of 15\n\n\n\n\n 23. Whether an applicant for intervention demonstrates sufficient interest in an action\n\nis a practical, threshold inquiry. No specific legal or equitable interest need be established.\u201d S.W.\n\nCenter for Bio. Diversity v. Berg, 268 F.3d 810, 818 (9th Cir. 2001) (quotation omitted). An\n\napplicant demonstrates a \u201csignificant protectable interest\u201d in an action if (1) it asserts an interest\n\nthat is protected under some law, and (2) there is a \u201crelationship\u201d between its legally protected\n\ninterest and the Plaintiff\u2019s claims. Donnelly v. Glickman, 159 F.3d 404, 409 (9th Cir. 2006); citing\n\nNorthwest Forest Resource Council v. Glickman, 82 F.3d 825, 837 (9th Cir. 1996). The interests\n\nof the individual applicants far exceed this minimum threshold inquiry. \u201cAn applicant generally\n\nsatisfies the relationship requirement only if the resolution to the Plaintiff\u2019s claims actually will\n\naffect the applicant.\u201d Donnelly, 159 F.3d at 410. See Greene v. United States, 996 F.2d 973, 976-\n\n78 (9th Cir. 1993) (holding that an applicant lacked a \u201csignificant protectable interest\u201d in an action\n\nwhen the resolution of the Plaintiff\u2019s claims would not affect the 18 applicants directly). Here, the\n\nChamber\u2019s Members will be directly affected by the disposition of this action.\n\n 24. Should Defendants prevail, or Plaintiff\u2019s motion not otherwise be granted with\n\nbroad relief for all similarly situated Members, Chamber\u2019s Members\u2019 rights will be directly\n\nimpacted by the compelling speech the EIA is requiring. The Supreme Court has long recognized\n\nthose very First Amendment implications of compelled speech. Board of Regents of University of\n\nWisconsin v. Southworth, 529 U.S. 217, 230 (2000). Further, the Chamber\u2019s Member\u2019s Fifth\n\nAmendment Due Process Rights are also impacted because the cryptocurrency miners were not\n\nafforded adequate notice to respond to the survey request. Although the EIA released their desire\n\nto issue the survey request on January 31, 2024, many cryptocurrency miners either did not receive\n\nthe survey at all or received it less than one week prior to the February 23, 2024, submission\n\ndeadline.\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 11 of 15\n\n\n\n\n 25. Here, there is a significant possibility that the Plaintiffs will not adequately\n\nrepresent the interests the individual applicants given the discrepancy in membership of the Texas\n\nBlockchain Council and the Chamber\u2019s representation of a large community of cryptocurrency\n\nminers impacted by the EIA\u2019s mandate. The Chamber, by virtue of its representation of a\n\nsignificant portion of the U.S. cryptocurrency mining industry, possesses a direct and substantial\n\ninterest in the outcome of this litigation. Accordingly, intervention should be granted of right.\n\n\n E. CONCLUSION\n\n 26. The Court should grant the Plaintiff-Intervenor\u2019s Motion to Intervene permissively,\n\nand grant Plaintiff-Intervenor \u2013 and its constituent Members by implication \u2013 all the same rights\n\nand responsibilities as a party to the lawsuit.\n\n 27. The Chamber\u2019s Members are required to abide by the Order by Friday, February\n\n23, 2024. If this Motion is not granted, the Chamber\u2019s Members include companies not currently\n\navailed of the pending complaint. Thus, if the TRO is granted for the Plaintiffs alone, then\n\nChamber\u2019s Members would be in an impossible position to abide by the Order or risk civil\n\npenalties for failure to do so. Given that there is already an ongoing action on this matter, case law,\n\nequities and common-sense dictates that affected parties not otherwise represented by the action\n\nbe allowed to also be so protected by this Court\u2019s declaratory and injunctive relief.\n\n 28. Intervention in this matter is necessary and supported by case law. Intervention\n\nwould not cause prejudice or delay, and participation of the applicants would assist this Court\u2019s\n\nresolution of the issues. For all these reasons, the applicants respectfully request that the Court\n\ngrant their motion to intervene.\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 12 of 15\n\n\n\n\n Respectfully submitted,\n\nDate: February 26, 2024 /s/ Joshua Smeltzer\n Chris Davis\n Joshua D. Smeltzer\n GRAY REED\n 1601 Elm St., Suite 4600\n Dallas, TX 75201\n cdavis@grayreed.com\n Tel: (469) 320-6215\n Fax: (469) 320-6926\n jsmeltzer@grayreed.com\n Tel: (469) 320-6225\n Fax: (469) 320-6930\n\n Greg White\n 900 Washington Avenue\n Suite 800\n Waco, Texas 76701\n gwhite@grayreed.com\n Tel: (254) 342-3003\n Fax: (469) 320-6926\n\n Mark D. Siegmund\n State Bar Number 24117055\n CHERRY JOHNSON SIEGMUND JAMES\n PLLC\n The Roosevelt Tower\n 400 Austin Avenue, 9th Floor\n Waco, Texas 76701\n Tel: (254) 732-2242\n Fax: (866) 627-3509\n msiegmund@cjsjlaw.com\n\n Attorneys for Plaintiff-Intervenor\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 13 of 15\n\n\n\n\n EXHIBIT A\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 14 of 15\n\n\n\n\n DECLARATION OF CODY CARBONE\n\nI, Cody Carbone, declare based upon my personal knowledge:\n\n 1. I serve as Chief Policy Officer at the Chamber of Digital Commerce and have been\n\nemployed by the Chamber since 2022.\n\n 2. As the Chief Policy Officer, I lead the Chamber\u2019s policy initiatives and member\n\nservices, representing a diverse membership of cryptocurrency mining members. These Members\n\nface direct impacts from the issue at hand that extend beyond the scope addressed by the Plaintiffs.\n\n 3. Our Members include 18 bitcoin mining companies, constituting over 75% of the\n\nmarket capitalization for bitcoin mining in the United States. As a national trade association, our\n\ncryptocurrency mining Members include companies with facilities in Texas and throughout the\n\nUnited States.\n\n 4. Upon conducting a thorough review of our membership and engaging in\n\ndiscussions with our Members, it has become evident that a significant portion of our\n\ncryptocurrency mining Members are directly impacted by the EIA\u2019s mandate to submit detailed\n\noperational data by February 23, 2024. This mandate, as outlined in the EIA\u2019s correspondence,\n\nplaces a substantial burden on these Members. Notably, these affected members are distinct from\n\nthe plaintiffs currently represented in this lawsuit, as they are affiliated with our organization rather\n\nthan the Texas Blockchain Council. This discrepancy in representation underscores the critical\n\nneed for our intervention to ensure that the interests of all impacted parties, particularly those\n\nwithin our membership who lack direct representation in the ongoing suit, and adequately\n\naddressed and protected.\n\n\n\n\n4856-2670-6601.1\n\f Case 6:24-cv-00099-ADA Document 16-1 Filed 02/26/24 Page 15 of 15\n\n\n\n\n 5. After reviewing our Membership again, I have determined that our Members have\n\noperations in Texas that are not already covered by the Texas Blockchain Council.\n\n\n I Cody Carbone, pursuant to 28 U.S.C. \u00a7 1746, declare under penalty of perjury under the\n\nlaws of the United States of America that the foregoing is true and correct.\n\n\n Executed on February 26, 2024 /s/ Cody Carbone\n\n\n Cody Carbone (NY Bar No. 5539093)\n E: Cody@digitalchamber.org\n P: (908) 399-8099\n Address:\n 1667 K Street NW, Suite 640\n Washington, DC 20006\n\n\n\n\n4856-2670-6601.1\n\f","ocr_status":2,"date_upload":"2024-02-27T13:19:11.513809-08:00","document_number":"16","attachment_number":1,"pacer_doc_id":"181031721574","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Brief Memo in Support with Exhibit A","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387241254/","id":387241254,"tags":[],"absolute_url":"/docket/68276281/16/2/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-26T16:18:31.220748-08:00","date_modified":"2025-01-22T17:33:57.109789-08:00","sha1":"d02e92cc50e5b1846cfc36e0690da57a79848237","page_count":2,"file_size":87667,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.16.2.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.16.2.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":" IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n TEXAS BLOCKCHAIN COUNCIL, a\n nonprofit association; RIOT PLATFORMS,\n INC.,\n\n Plaintiffs,\n\n v. Case No. 6:24-cv-99\n\n DEPARTMENT OF ENERGY; JENNIFER\n M. GRANHOLM, in her official capacity as\n Secretary of Energy; ENERGY\n INFORMATION ADMINISTRATION;\n JOSEPH DECAROLIS, in his official\n capacity as Administrator of Energy\n Information Administration; OFFICE OF\n MANAGEMENT AND BUDGET;\n SHALANDA YOUNG, in her official\n capacity as Director of Office of\n Management and Budget,\n\n Defendants.\n\n\n ORDER\n\n Having considered the CHAMBER OF DIGITIAL COMMERCE\u2019S MOTION FOR\n\nLEAVE TO INTERVENE AS PLAINTIFF, and any opposition thereto, IT IS ORDERED that the\n\nmotion is GRANTED.\n\n The Chamber of Digital Commerce is HEREBY allowed to permissively intervene in the\n\nabove captioned matter will all the same rights and responsibilities as a party to the lawsuit.\n\n\n\n\n4865-0751-0441.1\n\fSIGNED THIS ____ DAY OF _______________, 2024\n\n\n\n\n _________________________________________\n UNITED STATES DISTRICT COURT JUDGE\n\n\n\n\n4865-0751-0441.1\n\f","ocr_status":2,"date_upload":"2024-02-27T13:19:34.113807-08:00","document_number":"16","attachment_number":2,"pacer_doc_id":"181031721575","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Proposed Order","acms_document_guid":""}],"date_created":"2024-02-26T16:10:02.849501-08:00","date_modified":"2025-01-22T17:34:00.676725-08:00","date_filed":"2024-02-26","time_filed":"17:23:05","entry_number":16,"recap_sequence_number":"2024-02-26.002","pacer_sequence_number":60,"description":"MOTION CHAMBER OF DIGITIAL COMMERCES MOTION FOR LEAVE TO INTERVENE AS PLAINTIFF by Chamber of Digital Commerce. (Attachments: # (1) Brief Memo in Support with Exhibit A, # (2) Proposed Order)(Smeltzer, Joshua)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379455493/","id":379455493,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387173919/","id":387173919,"tags":[],"absolute_url":"/docket/68276281/15/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-26T09:55:15.882324-08:00","date_modified":"2025-01-22T17:34:00.665574-08:00","sha1":"79747ece7d14987bc4334b5c71fd31ac56d2146f","page_count":4,"file_size":257530,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.15.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.15.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387173919.thumb.1068.png","thumbnail_status":1,"plain_text":"UNITED STATES DISTRICT COURT\nWESTERN DISTRICT OF TEXAS\n\nWACO DIVISION\nTEXAS BLOCKCHAIN COUNCIL, et. al.\n\nVS. Case No.: 6:24-cv-99\nDEPARTMENT OF ENERGY, et al.\nMOTION FOR ADMISSION PRO HAC VICE\n\nTO THE HONORABLE JUDGE OF SAID COURT:\n\nComes now Kara McKenna Rollins\n\n, applicant herein, and\n\nmoves this Court to grant admission to the United States District Court for the Western District of\n\nTexas pro hac vice to represent 1\u00a2xas Blockchain Council & Riot Platforms _ in this case, and\n\nwould respectfully show the Court as follows:\n\n1, Applicant is an attorney and a member of the law firm (or practices under the name of)\n\nNew Civil Liberties Alliance with offices at:\n\nMailing address: 1225 19th St. NW, Suite 450\n\nCity, State, Zip Code: Washington, DC 20036\n\nTelephone; (202) 869-5210 Facsimile: (202) 869-5238\n\nDecember 22, 2014\n\n2. Since , Applicant has been and presently is a\n\nmember of and in good standing with the Bar of the State of New Jersey\n\nApplicant's bar license number is 107002014 . |\n\n3, Applicant has been admitted to practice before the following courts:\n\nCourt: Admission date:\n\nSee attached supplemental admission\n\n\fApplicant is presently a member in good standing of the bars of the courts listed above,\nexcept as provided below (list any court named in the preceding paragraph before which\n\nApplicant is no longer admitted to practice):\n\nI have < have not previously applied to Appear Pro Hac Vice in this district\n\ncourt in Case[s]:\n\nNumber: onthe _\u2014_s dayof ,\n_Number: onthe ss dayoof ,\nNumber: onthe ss dayof ,\n\nApplicant has never been subject to grievance proceedings or involuntary removal\nproceedings while a member of the bar of any state or federal court, except as\n\nprovided:\n\nApplicant has not been charged, arrested, or convicted of a criminal offense or offenses,\n\nexcept as provided below (omit minor traffic offenses):\n\nApplicant has read and is familiar with the Local Rules of the Western District of Texas\n\nand will comply with the standards of practice set out therein.\n\fApplicant will file an Application for Admission to Practice before the United States\nDistrict Court for the Western District of Texas, if so requested; or Applicant has\nco-counsel in this case who is admitted to practice before the United States District\nCourt for the Western District of Texas.\n\nCo-counsel: Mark D. Siegmund\n\nMailing address: 400 Austin Ave Suite 903\n\nCity, State, Zip Code: Waco, TX 76701\nTelephone: (254) 633-3011\n\nShould the Court grant applicant's motion, Applicant shall tender the amount of $100.00 pro hac\n\nvice fee in compliance with Local Court Rule AT-I(f)(2) [checks made payable to: Clerk, U.S. District\n\nWherefore, Applicant prays that this Court enter an order permitting the admission of\n\nKara McKenna Rollins\n\nto the Western District of Texas pro hac vice for this case only.\n\nRespectfully submitted,\n\nKara McKenna Rollins\n[printed name of Applicant]\n\n[signature of Applicant]\n\nCERTIFICATE OF SERVICE\n\nThereby certify that I have served a true and correct copy of this motion upon each attorney of\n\nrecord and the original upon the Clerk of Court on this the 23 _ day of February , 2024 \u00a9\n\nKara McKenna Rollins\n[printed name of Applicant]\n\n[signature of Applicant]\n\n\fUNITED STATES DISTRICT COURT\n\nWESTERN DISTRICT OF TEXAS\n\nWACO DIVISION\n\nSupplemental Statement of Kara McKenna Rollins\n\nQuestion 3 \u2014 Supplemental Bar Admission Information:\n\nTenth Circuit\n\nName of State or Bat Number Date Status\n\nFederal Bar or Court (if any) Admitted.\nNew Jersey 107002014 12/22/2014 Active\nNew York 5389622 12/02/2015 Active\nDistrict of Columbia 1046799 05/05/2017 Active\nU.S. District Court for the 1046799 03/05/2018 Active\nDistrict of Columbia\nU.S. Supreme Court 04/30/2018 Active\nU.S. Court of Appeals for the 3363313022 02/08/2019 Active\nFleventh Circuit\nU.S. Court of Appeals for the 03/13/2020 Active\nSecond Citcuit\nU.S. District Court for the 107002014 06/23/2020 Active\nDistrict of New Jersey\nU.S. Circuit Court for the \u2018Third 03/06/2021 Active\nCircuit .\nU.S. Court of Appeals for the 02/01/2021 Active\nFederal Circuit\nU.S. Court of Appeals for the 000001851 03/08/2022 Active\nFifth Circuit\nU.S. Court of Federal Claims 09/29 /2022 Active\nU.S. Court of Appeals for the 12/12/2022 Active\n\n","ocr_status":1,"date_upload":"2024-02-26T13:47:01.800623-08:00","document_number":"15","attachment_number":null,"pacer_doc_id":"181031717055","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Motion to Appear Pro Hac Vice","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387219613/","id":387219613,"tags":[],"absolute_url":"/docket/68276281/15/1/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-26T13:46:53.007449-08:00","date_modified":"2025-01-22T17:33:56.983632-08:00","sha1":"ba51c2e8e4b63b0c9d357ba186a7363b6a719ced","page_count":1,"file_size":19829,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.15.1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.15.1.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 6:24-cv-00099-ADA Document 15-1 Filed 02/26/24 Page 1of1\n\nUNITED STATES DISTRICT COURT\nWESTERN DISTRICT OF TEXAS\n\nWACO DIVISION\n\nTEXAS BLOCKCHAIN COUNCIL, et. al.\n\nvs, Case No.: 6:24-cvy-99\nDEPARTMENT OF ENERGY, et al.\n\nORDER\nBE IT REMEMBERED on this day, there was presented to the Court the Motion for\n\nAdmission Pro Hac Vice filed by Kara McKenna Rollins , counsel for\n\nTexas Blockchain Council & Riot Platforms , and the Court, having reviewed the motion, enters\n\nthe following order:\n\nIT IS ORDERED that the Motion for Admission Pro Hac Vice is GRANTED, and\n\nKara McKenna Rollins _ may appear on behalf of Texas Blockchain Council & Riot ol\n\nin the above case.\n\nIT IS FURTHER ORDERED that Kata McKenna Rollins , if he/she\n\nhas not already done so, shall immediately tender the amount of $100.00, made payable to: Clerk, U.S.\nDistrict Court, in compliance with Local Court Rule AT-I(f)(2).\n\nSIGNED this the day of February , 20\n\nUNITED STATES DISTRICT JUDGE\n","ocr_status":1,"date_upload":"2024-02-26T13:47:29.178532-08:00","document_number":"15","attachment_number":1,"pacer_doc_id":"181031717056","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Proposed Order","acms_document_guid":""}],"date_created":"2024-02-26T09:55:15.866076-08:00","date_modified":"2025-01-22T17:34:00.647615-08:00","date_filed":"2024-02-26","time_filed":"10:55:44","entry_number":15,"recap_sequence_number":"2024-02-26.001","pacer_sequence_number":58,"description":"Proposed MOTION to Appear Pro Hac Vice by Chris Davis obo Kara Rollins ( Filing fee $ 100 receipt number ATXWDC-18457892) by on behalf of Texas Blockchain Council. (Attachments: # (1) Proposed Order)(Davis, Chris)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379436169/","id":379436169,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/427936985/","id":427936985,"tags":[],"absolute_url":"","date_created":"2025-01-22T17:34:00.360114-08:00","date_modified":"2025-01-22T17:34:00.368332-08:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Set/Reset Hearings","acms_document_guid":""}],"date_created":"2024-02-26T07:53:48.076448-08:00","date_modified":"2025-01-22T17:34:00.321736-08:00","date_filed":"2024-02-23","time_filed":null,"entry_number":null,"recap_sequence_number":"2024-02-23.001","pacer_sequence_number":null,"description":"Set Hearings: PRELIMINARY INJUNCTION HEARING set for 2/28/2024 10:00 AM before Judge Alan D Albright. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379436135/","id":379436135,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387154319/","id":387154319,"tags":[],"absolute_url":"/docket/68276281/14/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-26T07:52:56.265663-08:00","date_modified":"2025-01-22T17:34:00.633793-08:00","sha1":"855487274542be6441f7722bc79d7443f7f09d52","page_count":1,"file_size":98803,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.14.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.14.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387154319.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 14 Filed 02/23/24 Page 1 of 1\n\n\n\n\n UNITED STATES DISTRICT COURT\n WESTERN DISTRICT OF TEXAS\n WACO DIVISION\nTEXAS BLOCKCHAIN COUNCIL, A \u00a7\nNONPROFIT ASSOCIATION, RIOT \u00a7 CIVIL NO:\nPLATFORMS, INC. \u00a7 WA:24-CV-00099-ADA\n \u00a7\nvs. \u00a7\n\nDEPARTMENT OF ENERGY, JENNIFER\nM. GRANHOLM, IN HER OFFICIAL\nCAPACITY AS SECRETARY, ENERGY\nINFORMATION ADMINISTRATION,\nJOSEPH DECAROLIS, IN HIS OFFICIAL\nCAPACITY AS ADMINISTRATOR,\nOFFICE OF MANAGEMENT AND\nBUDGET, SHALANDA YOUNG, IN HER\nOFFICIAL CAPACITY AS DIRECTOR OF\nOFF\n\n ORDER SETTING PRELIMINARY INJUNCTION HEARING\n IT IS HEREBY ORDERED that the above entitled and numbered case is set for\nPRELIMINARY INJUNCTION HEARING in District Courtroom #1, on the Third Floor of\nthe United States Courthouse, 800 Franklin Ave, Waco, TX, on Wednesday, February 28,\n2024 at 10:00 AM. All parties and counsel must appear at this hearing.\n\n IT IS SO ORDERED this 23rd day of February, 2024.\n\n\n\n\n ______________________________\n ALAN D ALBRIGHT\n UNITED STATES DISTRICT JUDGE\n\f","ocr_status":2,"date_upload":"2024-02-26T13:46:42.908046-08:00","document_number":"14","attachment_number":null,"pacer_doc_id":"181031716063","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order","acms_document_guid":""}],"date_created":"2024-02-26T07:52:56.251522-08:00","date_modified":"2025-01-22T17:34:00.612851-08:00","date_filed":"2024-02-23","time_filed":null,"entry_number":14,"recap_sequence_number":"2024-02-23.009","pacer_sequence_number":53,"description":"ORDER SETTING PRELIMINARY INJUNCTION HEARING. PRELIMINARY INJUNCTION HEARING in District Courtroom #1, on the Third Floor of the United States Courthouse, 800 Franklin Ave, Waco, TX, on Wednesday, February 28, 2024 at 10:00 AM. All parties and counsel must appear at this hearing. Signed by Judge Alan D Albright. (zv)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379436129/","id":379436129,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387154313/","id":387154313,"tags":[],"absolute_url":"","date_created":"2024-02-26T07:52:55.676937-08:00","date_modified":"2024-02-26T07:52:55.680498-08:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"","attachment_number":null,"pacer_doc_id":"","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Set/Reset Hearings","acms_document_guid":""}],"date_created":"2024-02-26T07:52:55.669139-08:00","date_modified":"2024-02-26T07:52:55.669148-08:00","date_filed":"2024-02-26","time_filed":"09:01:17","entry_number":null,"recap_sequence_number":"2024-02-26.001","pacer_sequence_number":null,"description":"","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379329427/","id":379329427,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387044857/","id":387044857,"tags":[],"absolute_url":"/docket/68276281/13/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-23T16:11:07.624806-08:00","date_modified":"2025-01-22T17:34:00.597888-08:00","sha1":"6261f68bf5902fa34258a3e6295c0e9401bf91d0","page_count":6,"file_size":228618,"filepath_local":"recap/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.13.0_1.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.txwd.1172776308/gov.uscourts.txwd.1172776308.13.0.pdf","ia_upload_failure_count":null,"thumbnail":"recap-thumbnails/gov.uscourts.txwd.1172776308/387044857.thumb.1068.png","thumbnail_status":1,"plain_text":" Case 6:24-cv-00099-ADA Document 13 Filed 02/23/24 Page 1 of 6\n\n\n\n\n IN THE UNITED STATES DISTRICT COURT\n FOR THE WESTERN DISTRICT OF TEXAS\n WACO DIVISION\n\n\nTEXAS BLOCKCHAIN COUNCIL, A \u00a7\nNONPROFIT ASSOCIATION; AND \u00a7\nRIOT PLATFORMS, INC., \u00a7 W-24-CV-00099-ADA\n Plaintiffs, \u00a7\n \u00a7\nv. \u00a7\n \u00a7\nDEPARTMENT OF ENERGY, \u00a7\nJENNIFER M. GRANHOLM, IN HER \u00a7\nOFFICIAL CAPACITY AS \u00a7\nSECRETARY OF ENERGY; ENERGY \u00a7\nINFORMATION ADMINISTRATION, \u00a7\nJOSEPH DECAROLIS, IN HIS \u00a7\nOFFICIAL CAPACITY AS \u00a7\nADMINISTRATOR OF ENERGY \u00a7\nINFORMATION ADMINISTRATION; \u00a7\nOFFICE OF MANAGEMENT AND \u00a7\nBUDGET, SHALANDA YOUNG, IN \u00a7\nHER OFFICIAL CAPACITY AS \u00a7\nDIRECTOR OF OFFICE OF \u00a7\nMANAGEMENT AND BUDGET; \u00a7\n Defendants. \u00a7\n \u00a7\n\n\n\n ORDER GRANTING PLAINTIFFS\u2019 MOTION FOR\n TEMPORARY RESTRAINING ORDER\n\n\n I. Introduction\n\n Before the Court is Plaintiffs\u2019 Motion for a Temporary Restraining Order (ECF No. 5).\n\nPlaintiff Texas Blockchain Council (\u201cTBC\u201d) is a Texas non-profit 501(c)(6) trade association that\n\nadvocates for the cryptocurrency industry in Texas. Plaintiff Riot Platforms, Inc., is a Nevada\n\ncorporation with bitcoin mining operations in Rockdale, Texas. Plaintiffs bring this suit to enjoin\n\nenforcement of the Department of Energy (\u201cDOE\u201d) and Energy Information Administration\u2019s\n\n(\u201cEIA\u201d) recent emergency information collection survey\u2014titled \u201cEIA-862, Cryptocurrency\n\n\n 1\n\f Case 6:24-cv-00099-ADA Document 13 Filed 02/23/24 Page 2 of 6\n\n\n\n\nMining Facilities Report\u201d (hereinafter, the \u201cSurvey\u201d). Plaintiffs also seek declaratory relief by\n\nasking this Court to find the administrative process followed by the Defendants in approving and\n\nimplementing the Survey was unlawful. On the day the enforcement of the Survey was set to go\n\ninto effect, Defendants filed declarations which ostensibly agreed to halt any enforcement of the\n\nSurvey until March 25, 2024 and remove the Survey from the OMB website. ECF Nos. 10, 11.\n\nThose declarations, signed by EIA administrator Joeseph DeCarolis\u2014state the following:\n\n \u201c2. . . . In order to facilitate the Court\u2019s ability to hear\n from all parties in advance of issuing a decision on Plaintiffs\u2019\n request for emergency relief, EIA has determined to exercise\n its discretion not to enforce any requirement to file the\n survey form EIA-862 through March 22, 2024. EIA commits\n not to seek or impose any fines, penalties, or other adverse\n consequences based on a failure to respond to the survey\n before March 25, 2024, the first business day after March 22,\n 2024.\n 3 EIA further agrees that it will sequester and not\n share any data received from any party responding to form\n EIA-862 before March 25, 2024.\u201d\n\nECF No. 10 at 1\u20132.\n\n The Court held a hearing on this Motion on February 23, 2024. Counsel of record for both\n\nDefendants and Plaintiffs were present. After representations from Defendants\u2019 counsel during the\n\nhearing, it appeared to the Court that the parties were prepared to agree to an order that\n\nmemorialized the effect of the declaration, however, the Court has been informed that no such\n\nagreement could be reached. While the Court appreciates the EIA Administrator\u2019s willingness to\n\nallow the parties time to fully brief the issues presented before any enforcement occurs, the Court\n\nis not satisfied with a mere declaration. The declaration fails to bind all Defendants, does not\n\nremove the credible threat of enforcement from other defendants (or the EIA after March 25), and\n\ndoes not address Plaintiffs\u2019 alleged costs of compliance with the Survey. The Court is also\n\n\n\n\n 2\n\f Case 6:24-cv-00099-ADA Document 13 Filed 02/23/24 Page 3 of 6\n\n\n\n\nconcerned that that the declaration lacks any enforcement mechanism in the event the EIA\n\nAdministrator chooses not to honor the terms set forth in his declarations. s\n\n II. DISCUSSION\n\n The Court believes that the Temporary Restraining Order should be issued because\n\nPlaintiffs have met their burden under Federal Rule of Civil Procedure 65. Under Rule 65, the\n\nCourt finds that Plaintiffs have shown through a verified complaint and supporting evidence that\n\nimmediate and irreparable injury, loss, or damage will result if a TRO is not issued. Plaintiffs have\n\nalso shown a likelihood of success on the merits on their claims under the Administrative\n\nProcedure Act, the Paperwork Reduction Act, and the Declaratory Judgment Act. See ECF No. 1\n\nat \u00b6\u00b6 127\u2013142. These statutory rights asserted by the Plaintiffs include the right to be free from\n\ncollections of information beyond authorized by law. See Opulent Life Church v. City of Holly\n\nSprings, Miss., 697 F.3d 279, 297 (5th Cir. 2012).\n\n In light of the arguments presented by Defendants\u2019 counsel at the TRO hearing, the Court\n\nwill first address Plaintiffs\u2019 alleged irreparable injury. Plaintiffs have alleged three main sources\n\nof irreparable injury: 1) nonrecoverable costs of compliance with the Survey, 2) a credible threat\n\nof prosecution if they do not comply with the Survey, and 3) the disclosure of proprietary\n\ninformation requested by the Survey, thus risking disclosure of sensitive business strategy. ECF\n\nNo. 5 at 11\u201314. As discussed above, Defendants argued that the EIA Administrator\u2019s declaration\n\nneutralizes any credible threat of enforcement that Plaintiffs could fear. The Court disagrees. The\n\ndeclaration does not bind the other Defendants. The Court understands the declaration itself to\n\nshow an intent on behalf of the EIA Administrator to enforce the Survey at the expiration of its\n\npromise\u2014March 25. A credible threat of enforcement, albeit delayed, still exists. And while this\n\nTRO will expire before March 25, it seeks to preserve the status quo.\n\n\n\n 3\n\f Case 6:24-cv-00099-ADA Document 13 Filed 02/23/24 Page 4 of 6\n\n\n\n\n More importantly, this TRO addresses the Plaintiffs\u2019 other alleged injuries: costs of\n\ncompliance. \u201c[T]he nonrecoverable costs of complying with a putatively invalid [agency action]\n\ntypically constitute irreparable harm.\u201d Restaurant Law Center v. Dep\u2019t of Lab., 66 F.4th 593, 597\n\n(5th Cir. 2023); see also Louisiana v. Biden, 55 F.4th 1017, 1034 (5th Cir. 2022). The Defendants\n\nargued at the TRO hearing that any cost of compliance with the survey is de minmus given the\n\nEIA\u2019s estimated time for completion of the survey\u201430 minutes. That said, Defendants have\n\nsufficiently challenged that estimate in their verified complaint by stating their costs of compliance\n\nthus far has been over 40 hours. Upon inspection of the Survey itself, the Court finds the 30-minute\n\nestimated time of completion is extremely inaccurate, if not grossly misleading. See ECF No. 1-8\n\n(EIA-862, Cryptocurrency Mining Facilities Report). The Court is satisfied that Plaintiffs have\n\nshown that, without a TRO, irreparable injury will result.\n\n Plaintiffs also demonstrate that they are likely to succeed on the merits. The Survey was\n\nproposed and approved under an emergency provision of the PRA. That provision sensibly allows\n\nexecutive agencies, in emergent situations where time is of the essence, to bypass typical clearance\n\nprocedures akin to notice-and-comment periods, and instead request information from the public\n\non a much faster timeline. 44 U.S.C. \u00a7 3507(j)(1); 5 C.F.R. \u00a7 1320.13. The power to utilize that\n\nauthority under these provisions is not unlimited. Such emergency requests are only appropriate\n\nupon an agency head\u2019s determination that public harm is reasonably likely to result if normal\n\nclearance procedures are followed. 5 C.F.R. \u00a7 1320.13(a). The Court believes that Plaintiffs are\n\nlikely to succeed in showing that the facts alleged by Defendants to support an emergency request\n\nfall far short of justifying such an action. As a result, the determination likely violates the APA as\n\n\u201carbitrary, capricious, [or] an abuse of discretion.\u201d 5 U.S.C. \u00a7 706(2)(A). This finding alone is\n\nsufficient to satisfy this element of the TRO analysis.\n\n\n\n 4\n\f Case 6:24-cv-00099-ADA Document 13 Filed 02/23/24 Page 5 of 6\n\n\n\n\n Finally, the Court finds the balance of harms favors granting a TRO. \u201cOnce a court has\n\nconcluded that [the movant\u2019s] harm is irreparable ... [the nonmovant] would need to present\n\npowerful evidence of harm to its interests to prevent [the movant] from meeting this requirement.\u201d\n\nTexas Bankers Ass\u2019n v. CFPB, No. 7:23-CV-00144, 2023 WL 4872398, at *7 (S.D. Tex. July 31,\n\n2023) (cleaned up). There is significant public interest in making sure administrative agencies\n\nabide by boundaries set forth in regulations and statutes. Further, \u201c[t]here is generally no public\n\ninterest in the perpetuation of unlawful agency action.\u201d Texas v. Biden, 10 F.4th 538, 560 (5th Cir.\n\n2021) (per curiam) (quotation omitted); see also Louisiana v. Biden, 55 F.4th at 1035. The Court\n\nagrees with Plaintiffs that the balance of harms favors a restraining order. To quickly resolve the\n\nissues raised by Plaintiffs and give the Defendants an opportunity to respond, the Court ORDERS\n\nthis case is set for a preliminary injunction hearing at 10:00 AM on Tuesday, February 27, 2024.\n\nIII. Conclusion\n\n This Temporary Restraining Order maintains the pre-enforcement status quo of\n\nDefendants\u2019 Survey, EIA-862, until such time a preliminary injunction hearing can be held. With\n\nthat said, the Court hereby ORDERS the following relief 1:\n\nThe Defendants are:\n\n 1. restrained from requiring Plaintiffs or their members to respond to the Survey,\n\n 2. restrained from collecting data required by the Survey, and\n\n 3. shall sequester and not share any such data that Defendants have already received from\n\n Survey respondents.\n\n\n\n\n1\n At the TRO hearing, the Court indicated that it would enter more strenuous relief, including a public notice by the\nDefendants concerning the restraint placed by this Court on Defendants\u2019 ability to solicit the information demanded\nby the Survey. However, the Court does not impose this requirement at this stage, because Plaintiffs did not seek such\nrelief. Instead, the Court\u2019s relief simply mirrors that requested by Plaintiffs in their Motion.\n\n 5\n\f Case 6:24-cv-00099-ADA Document 13 Filed 02/23/24 Page 6 of 6\n\n\n\n\n 4. Plaintiffs shall not be required to give security under Fed. R. Civ. P. 65(c). See City of\n\n Atlanta v. Metro. Atlanta Rapid Transit Auth., 636 F.2d 1084, 1094 (5th Cir. 1981).\n\n This order shall be promptly filed in the clerk\u2019s office and entered in the record. It shall\n\nexpire 14 days from the date of entry\u2014unless before that time the Court, for good cause, extends\n\nit for a like period, or Defendants consent to a longer extension.\n\nIT IS SO ORDERED this 23rd day of February, 2024.\n\n\n\n\n 6\n\f","ocr_status":2,"date_upload":"2024-02-28T12:41:33.750915-08:00","document_number":"13","attachment_number":null,"pacer_doc_id":"181031714821","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Order on Motion for TRO","acms_document_guid":""}],"date_created":"2024-02-23T16:11:07.582412-08:00","date_modified":"2025-01-22T17:34:00.581659-08:00","date_filed":"2024-02-23","time_filed":"17:58:31","entry_number":13,"recap_sequence_number":"2024-02-23.008","pacer_sequence_number":51,"description":"ORDER GRANTING [5] Motion for TRO Signed by Judge Alan D Albright. (lad)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/379293780/","id":379293780,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/68276281/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/387008445/","id":387008445,"tags":[],"absolute_url":"/docket/68276281/12/texas-blockchain-council-v-department-of-energy/","date_created":"2024-02-23T13:15:40.744891-08:00","date_modified":"2025-01-22T17:34:00.567899-08:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"12","attachment_number":null,"pacer_doc_id":"181031710271","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Miscellaneous Hearing","acms_document_guid":""}],"date_created":"2024-02-23T13:15:40.729820-08:00","date_modified":"2025-01-22T17:34:00.554414-08:00","date_filed":"2024-02-23","time_filed":"15:11:04","entry_number":12,"recap_sequence_number":"2024-02-23.007","pacer_sequence_number":49,"description":"Minute Entry for proceedings held before Judge Alan D Albright: TEMPORARY RESTRAINING ORDER HEARING Hearing held on 2/23/2024 - PARTIES ANNOUNCE READY. STATEMENTS AND ARGUMENTS OF COUNSEL HEARD. WRITTEN ORDER FORTHCOMING - The parties will submit an agreed proposed order that will cover the nation, They will take the survey down, there will be a notice stating there are 4 more weeks.reprieve. Any information previously obtained from the survey will be sequestered. (Minute entry documents are not available electronically.) (Court Reporter Kristie Davis.)(ad3)","tags":[]}],"entries_total":"https://www.courtlistener.com/api/rest/v4/docket-entries/?count=on&docket=68276281&page_size=40"}