BGIN BLOCKCHAIN Ltd

BGIN BLOCKCHAIN LIMITED ("Bgin" or the "Company") operates as a digital asset technology company through its subsidiaries in Singapore, Hong Kong, and the U.S., focusing on proprietary cryptocurrency-mining technologies. The Company's business model encompasses the design, manufacturing, and sale of self-designed mining machines, conducting self-mining operations, operating mining pools, and providing mining machine hosting services to customers. Bgin is a holding company incorporated in the Cayman Islands, with no direct operations, relying entirely on its subsidiaries for business activities.

The core business model of Bgin involves generating revenue from several key areas. Sales of self-designed mining machines constituted approximately 85.43% ¹ of total revenue in fiscal year 2023, 63.57% ² in fiscal year 2024, and 22.63% ³ in fiscal year 2025. The Company also generates revenue from its self-mining operations, which became the majority revenue source in fiscal year 2025, and from mining pool services, which contributed 9.3% ⁴ of total revenue in 2023, 19.46% ⁵ in 2024, and 7.92% ⁶ in 2025. Additionally, Bgin offers miner hosting services as an elective, value-added service to customers purchasing its mining machines. The primary customer segments for mining machine sales include individual miners and distributors, with distributors representing 93.31% ⁷ of total customers in 2025.

Bgin's product and service lines are diversified across several offerings. The Company designs and sells mining machines equipped with proprietary ASIC chips under the "ICERIVER" brand, with series dedicated to mining KAS coins and ALEO coins, and previously ALPH coins and RXD coins. For fiscal year 2025, "AL" series mining machines, designed for ALEO coins, constituted approximately 88% ⁸ of machine sales, while KAS coin mining machines represented 7.7% ⁹ of machine sales. The Company also operates its own mining machines for cryptocurrency mining, with 74,743 ¹⁰ machines owned for operation purposes as of December 31, 2025, though only 4,655 ¹¹ (approximately 6.23% ¹²) were in operation due to declining KAS prices.

Mining pool services, launched in September 2023, currently support the mining of KAS. As of December 31, 2025, there were approximately 10,958 ¹³ participants in these mining pools. The Company charges pool fees of 1% ¹⁴ of rewards earned for both registered and non-registered users. Miner hosting services, introduced in November 2023, involve Bgin handling the setup, housing, operation, and monitoring of customer-owned mining machines at its facilities for a one-time setup fee of US$20 ¹⁵ per machine and an electricity fee of US$0.08 ¹⁶ per kWh. As of December 31, 2025, Bgin hosted 825 ¹⁷ machines for customers, with three in operation and 822 non-operational.

For the fiscal year ended December 31, 2025, Bgin reported total revenue of US$67,395,903 ¹⁸, a significant decrease from US$302,277,581 ¹⁹ in 2024 and US$257,268,371 ²⁰ in 2023. The Company experienced a net loss of US$176,952,806 ²¹ in 2025, compared to net incomes of US$66,140,805 ²² in 2024 and US$139,760,782 ²³ in 2023. Specific gross profit, gross margin, operating income, operating margin, diluted EPS, free cash flow, cash and equivalents, total debt, and net debt figures are not explicitly provided in the summary financial overview, but mining operations in 2025 showed a negative margin of (47%) ²⁴. As of December 31, 2025, cryptocurrencies held by the Company accounted for approximately 24.18% ²⁵ of its total assets.

Year-over-year, revenue from mining machine sales decreased substantially from US$219.78 million ²⁶ in 2023 to US$192.16 million ²⁷ in 2024, and further to US$15.25 million ²⁸ in 2025. This decline was primarily due to the decreased market price of KAS coins, which rendered KAS mining uneconomical and significantly reduced sales volume of "KS" series machines from 84,544 ²⁹ units in 2024 to 1,377 ³⁰ units in 2025. Conversely, self-mining revenue became the majority contributor in 2025, with KAS coins contributing 97.60% ³¹ of total mining revenue. The average per unit price of KAS coins decreased from $0.1440 ³² in 2024 to $0.0816 ³³ in 2025. The Company also significantly reduced the number of "KS" series machines in operation since early 2025.

Significant operational developments during the period include the launch of new "KS" series models in March 2025, with the KS7 model capable of up to 30 TH/s ³⁴ hash rate. The Company also announced the successful tape out of its BT1 ASIC chip for Bitcoin mining on March 17, 2026, and developed a functional prototype of a Bitcoin miner (BT0) based on this chip. Bgin incorporated BGIN EU LIMITED in Ireland on November 14, 2024, to launch after-sales services in Europe. The Company also acquired a parcel of land in York, Nebraska, on April 8, 2022, for a mining farm that became operational on August 28, 2023.

Bgin plans to further integrate its business model across the cryptocurrency mining value chain, focusing on research and development, chip design, mining machine design, manufacturing, selling, cryptocurrency mining, and mining farm hosting services. This strategy aims to capture additional value, scale revenue faster through cross-selling, and reduce dependency on any single business segment to mitigate revenue volatility. The Company intends to continue designing and developing new, improved ASIC chips, more efficient mining machines, and adding additional mining farms.

A major growth area for Bgin is the expansion of its mining farm network. The Company is in a proactive process of constructing, leasing, or acquiring additional farms, prioritizing strategic cost-efficiency by optimizing low electricity rates and a scalable, technology-driven low operating expense structure. Preliminary discussions are underway with owners of selected mining farms or suitable land, and additional leasing options are being evaluated. The Company's current mining farms in York, Nebraska, and Omaha, Nebraska, have an aggregate power capacity of 22MW ³⁵, with machines in operation utilizing approximately 22MW ³⁶.

Another significant growth vector is the development of new ASIC chips and mining machines. Bgin's research and development team is currently designing and developing two new series: the "BL1" series ASIC chips and mining machines for Dogecoin mining, and the "BT1" series ASIC chips and mining machines for Bitcoin mining. As of the date of the annual report, the "BT1" model ASIC chip has completed its design and simulation verification, entering the tape-out phase, and a prototype Bitcoin miner based on the BT1 ASIC chip has been developed. The Company expects to incur approximately US$10 million ³⁷ in total research and development expenses for both the "BL1" and "BT1" projects, funded by cash on hand and operating activities.

Operationally, Bgin intends to wind down its mining pool business almost completely over the next 24 months, as it does not meet targeted financial or operational efficiency metrics. The Company plans to continue investing in enhancing its research and development capabilities, including recruiting additional talented personnel specialized in chip design, algorithm optimization, software development, and mining machine development, and upgrading existing research and development facilities. As of December 31, 2025, the research and development teams comprised 50 ³⁸ members.

Planned capital allocation includes funding research and development efforts for the "BL1" and "BT1" projects with approximately US$10 million ³⁹. The Company also intends to enter into leases or purchase properties through its subsidiaries to establish additional mining farms, primarily in the U.S. and/or Canada. Bgin's board of directors has complete discretion on dividend distribution, subject to Cayman Islands law, and shareholders may declare a dividend by ordinary resolution, not exceeding the amount recommended by directors.

Management explicitly flagged several structural headwinds and execution risks. Current market conditions, including recent volatility in cryptocurrency prices, rising power rates, and global trade disruptions, may limit the Company's ability to scale significantly in the near term. The Company's business operations are heavily dependent on the stability and popularity of KAS coins and ALEO coins, making it vulnerable to technical issues, security vulnerabilities, or reduced popularity of these blockchains. Furthermore, mining machines exported from Asia to the United States may be subject to additional tariffs imposed by the U.S. government, with the effective average tariff rate on Chinese imports exceeding 30% ⁴⁰, which could adversely affect the supply chain, cost structure, and results of operations.

Bgin faces material risks across several categories. Macroeconomic and market risks include the inherent volatility of cryptocurrency prices, which directly impacts mining profitability and demand for mining machines, as evidenced by the substantial decrease in the market price of KAS coins from $0.1440 ⁴¹ in 2024 to $0.0816 ⁴² in 2025, leading to a significant reduction in operational machines. The Company is also exposed to the risk of Tether breaking its U.S. dollar peg, which has occurred previously, potentially leading to losses in its significant USDT holdings. Operational risks include the capital-intensive nature of producing new mining machines and obtaining components, reliance on a single chip foundry and a few major suppliers (two suppliers contributed approximately 59.58% ⁴³ of total purchases in 2025), and dependence on a steady and inexpensive power supply. The Company's mining operations and hosting facilities are not covered by commercial insurance, exposing them to substantial losses from natural disasters or other events. Regulatory and geopolitical risks are significant, particularly concerning operations in Hong Kong, where uncertainties in the legal system and potential PRC government intervention could hinder business and asset transfers. The Holding Foreign Companies Accountable Act poses a delisting threat if PCAOB inspections of auditors are not satisfactory for two consecutive years. Furthermore, the evolving regulatory landscape for cryptocurrencies, including the CLARITY Act and GENIUS Act, introduces uncertainty regarding classification and oversight, potentially leading to increased compliance costs or requiring business model alterations. The risk of cryptocurrencies being deemed "securities" could result in significant legal and regulatory consequences, including violations of Section 5 of the Securities Act.

Management's message to shareholders emphasizes a strategic focus on maintaining operational flexibility and leveraging innovative research and development capabilities to navigate the dynamic cryptocurrency market. The Company aims to further integrate its business model across the value chain, encompassing chip design, machine manufacturing, self-mining, and hosting services, to achieve revenue diversification and stability. Key strategic priorities include expanding the mining farm network with a focus on cost-efficiency and low electricity rates, and designing new ASIC chips and mining machines for larger market capitalization cryptocurrencies like Bitcoin and Dogecoin. Management expects to incur approximately US$10 million ⁴⁴ in research and development expenses for the "BL1" and "BT1" projects, which will be funded by cash on hand and operating activities. The Company also plans to wind down its mining pool business over the next 24 months due to unsatisfactory financial and operational metrics.